kpis key performance indicators which way for true ... key performance indicators which way for true...
TRANSCRIPT
KPIsKey Performance Indicators
Which way for true performance reporting?27th July 2017
Swati Nathwani, CIMA Kenya Chair
CIMA
Swati Nathwani, CIMA Kenya Chair
Introduction
• Why use KPIs?
• How to set effective KPIs
• How to present KPIs
Why use KPIs?
Strategy KPI Resources
Why Use KPIs?
• To monitor progress towards accomplishing the strategic objectives, typically communicated in a strategy map
• Typically included in a reporting scorecard or dashboard that enables top management, the board or other stakeholders to focus on the metrics deemed most critical i.e “key” to the success of an organisation.
Why use KPIs?
Too little information
Too much information: Big Data
KPI
KPI
KPI
KPI
Why use KPIs?
Example:
Count the times the players wearing white, pass the basketball
(No talking out loud)
Why use KPIs?
Why use KPIs?
• There is so much going on at the same time in business and in terms of data that it is difficult to focus
• Hence the need for KPIsWhether there is too much or too little data, the KPI relates to the core of the business
Developing KPIs
•What is truly essential to the growth and success of the organisation?
•Understand the core activities and competencies that define the organisation’s success and that underpin it
Developing KPIs
• Once core values / priorities are established, they need to be translated into meaningful KPIs for every level of the organisation.
•Only a few KPIs at the top level
• The wrong KPI = wrong behaviour
• The right KPI = aligning behaviour with strategy
Developing KPIs
KPIs are financial and non financial.
The definition of “key” is unique to each company and its strategy, whether private, public or non profit
Why non financial KPIs?
Non Financial KPIs
Non-financial KPIs are the intellectual capital of an organisation:
• knowledge, skills,
• brands, corporate reputation, relationships, information and data,
• patents, processes, trust or an innovative organisational culture.
Developing KPIs
KPIs
FinancialInternal Business Process
Human ResourcesEnvironmentalCompetitor
Customer
Financial KPIs
*Unilever 2015 Annual Report - extract
Non Financial KPIs Example
* Source Safaricom Sustainability report 2015
“Our network is core to our business. The quality and availability of our network is an essential part of our business since all of the services we provide to our customers are delivered through the network platform. Our network allows us to differentiate ourselves in a highly competitive market and is the medium through which we transform lives. It is also a dynamic environment that constantly evolves as we keep up with growth, both in terms of number of customers (e.g. volume of traffic) and their increasingly sophisticated needs.”
Non Financial KPIs Example
Two factors in the Management’s Approach:
• Network Quality
•Network Availability
Non Financial KPIs Example
* Source Safaricom Sustainability report 2015
Network Quality
“network quality, a key constraint is the fact that spectrum is allocated evenly among network providers in Kenya…Our response to this is primarily managed through our Best Network in Kenya (BNK) programme, which remains a strategic pillar of the company”
Non Financial KPIs Example
* Source Safaricom Sustainability report 2015
Non Financial KPIs Example
* Source Safaricom Sustainability report 2015
Second factor in Management’s approach:Network Availability
“network availability, a key factor is ensuring a secure and sustainable supply of energy. The reliability and growth of our network is directly dependent on the availability of energy”
Non Financial KPIs Example
* Source Safaricom Sustainability report 2015
Safaricom KPIs Example
KPIs
FinancialEnergy Costs
Internal Business Process
Which department responsible
Human Resources
EnvironmentalGreen Energy
CompetitorBest Network
CustomerGrowth
Retention
Network Quality and Availability
Other factors in setting KPIs
• ActionableØTimely - which is more important than ‘perfect’ØRelevant – is it meaningful and able to influence
• Forward-looking – Predictive KPIs rather than backward looking• Feedback, both upwards & downwards –Strategies are not set in stone. KPIs are not set perfectly. Is the KPI dynamic?
Other factors in setting KPIs
Are our existing management information systems adequate to support the collection, analysis and reporting process?
Presenting KPIs
The future of management accountants
Do we present numbers and data?Or
Do we provide insight?
Business Partner
Providing Insight
ABC Ltd
• Bank Balance
130,000Business Current Account
•Invoice Status
50,000 1 Open64,000 1 Overdue
• Bill Status
150,000 2 Open24,000 1 Overdue
•Payments in the next 7 days
Corporation Tax,year ending
4th August 2017 80,000
Rent on Warehouse 70,000150,000
KPI : 7 Day Cashflow27th July 2017
In Summary
ØDefine your core values
Ø Determine the key factors in driving the success of core values
Ø Design financial and non financial KPIs that align with these core values, taking into limiting factors
In Summary
ØPresent the KPIs in a meaningful way with maximum impact: the number of KPIs, format, etc.
Ø Have a feedback system – and
ØRefine the KPIs in line with the feedback
Wrong KPI = Wrong Behaviour
* From United Airlines website, posted 8th February 2017 by Oscar Munoz, CEO, United Airlines
“Our Shared Purpose Connecting People.Uniting The World.”
“Every day, we help unite the world by connecting people to the moments that matter most. This shared purpose drives us to be the best airline for our employees, customers and everyone we serve.”
Interactive Session