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SMART KPIs

SMART KPIs. Characteristics of good KPIs. 1. Simple 2. Practical 3. Specific 4. Measurable 5. Attainable 6. Relevant 7. Time-bounded 8. Dynamic 2. “Simple” easily understandable and not sophisticated “Practical”

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SMART KPIs

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  1. SMART KPIs

  2. Characteristics of good KPIs 1. Simple 2. Practical 3. Specific 4. Measurable 5. Attainable 6. Relevant 7. Time-bounded 8. Dynamic 2

  3. “Simple” easily understandable and not sophisticated “Practical” easily workable and get to the point “Specific” ‘Reduce expense’ is definitely not specific KPIs should detail what expense specifically to be reduced, electric or traveling expense or….etc. “Measurable” From previous example KPIs must also be specified the target of the reduction, such as reduce electric bills down10%. “Attainable” KPIs must be attainable and also challenging. If target is set too low or too high staff may be de-motivated. “Relevant” KPIs must be relevant to Organization targets so everyone is heading to the same target same direction “Time-Bounded” Indicate when the target should be reached so staff know how much time they have. “Dynamic” change overtime and benchmarking 3

  4. Classification of KPIs • Efficiency / Effectiveness • Common / Corporate / Functional • Positive / Negative • Balanced Scorecard • 4.1 Lag indicator / Lead indicator • 4.2 Financial Perspective / Customer Perspective/ • Internal perspective / Learning Perspective / • Growth Perspective • 5. Value Chain • 6. Strategic /Non-Strategic • (Technical or Administrative) 4

  5. The Generic Value Chain FIRM INFRASTRUCTURE M HUMAN RESOURCE MANAGEMENT Support activities A TECHNOLOGY DEVELOPMENT PROCUREMENT R G OUTBOUND LOGISTICS MAKETING AND SALES SERVICE OPERATIONS INBOUND LOGISTICS I N PRIMARY ACTIVITIES 5

  6. Productivity • Efficiency • Quality-Uniqueness 6

  7. Strategic Positioning 7 Cost Differentiation

  8. Relationship • KPI • Target • Benchmarking 8

  9. Benchmarking • Competitive • Non Competitive • Internal • Generic (best practice) 9

  10. Strategic Planning and KPIs 10

  11. VISION SWOT SWOT MISSION Objective Strategy Action Plan SWOT 11

  12. MISSION SWOT SWOT Objective Strategy Action Plan 12 SWOT

  13. Cases in Vision and Mission Case 1 : New Port News Shipbuilding’s Mission Statement “ We shall build good ships here – at the profit if we can – at the loss if we must – but always good ships. ” 13

  14. Case 2 : Maytag Corporation’s Mission “ To improve the quality of home life by designing, building, marketing, and servicing the best appliances in the world.” 14

  15. Case 3 : Harley Davidson’s Vision and Mission Vision “Harley Davidson,Inc. is an action-oriented,international company, a leader in its commitment to continuously improve our mutually beneficial relationships with stakeholders [ customers, suppliers,employees, shareholders, governments and society ] We believe the key to success is to balance stakeholders’ interests through the empowerment of all employees to focus on value-added activities.” 15

  16. Case 4 : วิสัยทัศน์และพันธกิจของปตท. VISION The leading petroleum exploration and production company with operational excellence, international best practices, and world-class competitive strengthsMISSIONTo conduct our core business by operating and investing in petroleum exploration, development, production, and strategic related business in Thailand and overseas 16

  17. Case 5 :Starbucks’ Mission Statement “ Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principle while we grow ” • Six Guiding Principles : • Provide a great work environment and treat each other with respect and dignity • Embrace diversity as an essential component in the way we do business. 17

  18. Case 6 : Vermont Teddy Bear’s Mission Statement “The Vermont Teddy Bear provides our customers with a tangible expression of their best feelings for their family, friends, and associates. We facilitate, communicate,and therefore participate in caring events and special occasion that celebrate and enrich our customers’ life experience. Our products will represent unmatchable craftsmanship balanced with optimal quality and value. We will strive to wholesomely entertain our guests while consistently exceeding our external and internal customer service expectations. 18

  19. Harley Davidson “ More Than A Motorcycle ” “ Fulfilling Dreams ” Vermont Teddy Bear “ A Lifetime Emotional Symbol of Love and Care” Starbuck “ Third Home ” Carnival “ Funship” 19

  20. Maytag Company • Mission • - Developed in 1989 for the Maytag Company : “ To provide our customers with products of unsurpassed performance that last longer,need fever repairs , and are produced at the lowest possible cost.” • - Updated in 1991 : “Our collective mission is world class quality.” Expands Maytag’s belief in product quality to all aspects of operations. 20

  21. 2. Objectives • “To be profitability leader in industry for every • product line Maytag’s manufactures.” • Selected profitability rather than market share. • “To be number one in total customer • satisfaction.” • “To grow the North American appliance • business and become the third largest • appliance manufacturer (in unit sales) in • North America.” 21

  22. -To increase profitable market share growth in North American appliance and floor care business, 6.5% return on sales, 10% return on assets, 20% return on equity, beat competition in satisfying customers, dealer, builder and endorser, move into third place in totals units shipped per year. 22

  23. 3. Strategies - Global growth through acquisition and alliance with Bosch Siemens. - Differentiate brand names for competitive advantage. - Create synergy between companies, product improvement, investment in plant and equipment. 23

  24. Policies • - Cost reduction is secondary to high quality. • - Promotion from within. • - Slow, but sure R&D: Maytag slow to respond to • changes in market 24

  25. Case in KPI 25

  26. KPI -Objective 26

  27. KPI – StrategyObjective : Increase Efficiency 27

  28. KPI – Strategy Objective : Enhance Quality 28

  29. KPI – Action PlanStrategy :Hiring Consultants 29

  30. KPI and Balanced Scorecard 30

  31. Strategic Objective : “Develop the competencies needed to support the sales process” • Strategic Outcome • Measure • (Lag indicator) • Revenue per Employeeor • Sales per Salesperson • Performance • Driver • (Lead indicator) • Strategic Job Coverage Ratio • Strategic Initiative • Redesign the Staff Development Process1. Identify strategic jobs2. Build competency profiles3. Assess current staff4. Forecast requirements5. Identify gap6. Build staff development plan 31

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  33. Financial Perspective Strategic Themes Growth Business Unit Strategy Sustain Harvest 33

  34. The Customer Perspective - Core Measures Market Share Customer Acquisition Customer Profitability Customer Retention Customer Satisfaction 34

  35. The Customer Value Proposition Generic Model = + + Value Product/Service Attributes Image Relationship Functionality Quality Price Time Example : Retail Banking Value Proposition Product / Service Attributes Image Relationship Breadth of Offering Error Free Seamless Services Knowledgeable Convenient Personal Advisor Responsive Strategic Measures * Service * Request Failure Fulfillment Index Time 35

  36. The Customer Value Proposition (Tier I) - Rockwater Product / Service Attributes Image Relationship Functionality Quality Price Timeliness Professional Management Relationship * Safety * Minimum * Hours * Meeting Schedule * Honesty and Openness Revision of Worked of Contractor * Engineering Submitted * Timely Submission Service Procedures * Value for of Procedures * Flexibility * Quality and Money Awareness of * Contractual Performance * Innovativeness Responsiveness * Standard of to Reduce Cost Equipment * Team Rapport/ Provided Spirit * Quality of Personnel * Production Quality 36

  37. The Internal - Business - Process Perspective - The Generic Value Chain Model Postsale Service Process Innovation Process Operations Process Customer Need Identified Customer Need Satisfied Identified the Market Create the Product/Service Offering Build the Products/ Services Deliver the Products/ Services Service the Customer The Internal - Business - Process Perspective - The Innovation Process Postsale Service Process Innovation Process Operations Process Customer Need Identified Customer Need Satisfied Identified the Market Create the Product/Service Offering Build the Products/ Services Deliver the Products/ Services Service the Customer 37

  38. The Learning and Growth Measurement Framework Core Measurements Results Employee Retention Employee Productivity Employee Satisfaction Enablers Staff Competencies Technology Infrastructure Climate for Action 38

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