Key Performance Indicators: Developing, Implementing, and Using Winning KPIs by David Parmenter

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Key Performance Indicators: Developing, Implementing, and Using Winning KPIs
By David Parmenter
Key Performance Indicators: Developing, Implementing, and Using Winning KPIs

Contents
About the Author xiii
Preface xv
Acknowledgments xxxi
PART I: Setting the Scene 1
CHAPTER 1 The Great KPI Misunderstanding 3
Key Result Indicators 4
Result Indicators 5
Performance Indicators 7
Key Performance Indicators 7
Seven Characteristics of KPIs 11
Difference between KRIs and KPIs and RIs and PIs 14
Lead and Lag Confusion 15
Number of Measures Required—The 10/80/10
Rule 19
Importance of Timely Measurement 21
Where Are You in Your Journey with Performance
Measures? 22
Notes 23
CHAPTER 2 The Myths of Performance Measurement 25
Myth #1: Most Measures Lead to Better
Performance 26
Myth #2: All Measures Can Work Successfully in
Any Organization, At Any Time 26
Myth #3: All Performance Measures Are KPIs 27
Myth #4: By Tying KPIs to Remuneration You Will
Increase Performance 28
Myth #5: We Can Set Relevant Year-End Targets 28
Myth #6: Measuring Performance Is Relatively
Simple and the Appropriate Measures Are
Obvious 30
Myth #7: KPIs Are Financial and Nonfinancial
Indicators 31
Myth #8: You Can Delegate a Performance
Management Project to a Consulting Firm 31
The Myths Around the Balanced Scorecard 32
Notes 42
CHAPTER 3 Unintended Consequence: The Dark Side of
Measures 43
Example: City Train Service 44
Example: Accident and Emergency Department 44
Examples from Dean Spitzer’s Book 45
Performance-Related Pay 46
Dysfunctional Performance Measures Checklist 47
Notes 48
CHAPTER 4 Revitalizing Performance 49
Five Foundation Stones 51
The Many Facets of Performance Management 73
Notes 85
CHAPTER 5 Strategy and Its Relevance to Performance
Measures 87
Articulate Your Organization’s Mission, Vision,
Values, and Lean Management Principles 89
Create a Strategy That Is Understood by Staff 90
Ensure That Your Strategy Is Balanced 92
Monitor Implementation of Your Strategy 94
Creating the Future 96
Notes 97
PART II: Winning KPI Methodology 99
CHAPTER 6 Background to the Winning KPI Methodology and
Its Migration 101
The Original 12-Step Process 101
The New Six-Stage Process 103
Winning KPI Methodology and Its Migration 103
An Overview of the Six Stages 105
CHAPTER 7 Foundation Stones for Implementing Key
Performance Indicators 107
“Partnership with the Staff, Unions, and Third
Parties” Foundation Stone 109
“Transfer of Power to the Front Line” Foundation
Stone 110
“Measure and Report Only What Matters”
Foundation Stone 111
“Source KPIs from the Critical Success Factors”
Foundation Stone 113
“Abandon Processes That Do Not Deliver”
Foundation Stone 114
“Appointment of a Home-Grown Chief
Measurement Officer” Foundation Stone 116
“Organization-Wide Understanding of the Winning
KPIs Definition” Foundation Stone 118
Notes 119
CHAPTER 8 Getting the CEO and Senior Management
Committed to the Change (Stage 1) 121
Obtaining Senior Management Team Commitment 122
Agree on Timing, Resources, and Approach 126
Benefits of This Stage 131
Templates and Checklists 132
Notes 132
CHAPTER 9 Up-Skill In-House Resources to Manage the KPI
Project (Stage 2) 133
Establish a Winning KPI Team Working Full Time
on the Project 133
Establish a Just-Do-It Culture and Process 139
Benefits of This Stage 144
Templates and Checklists 144
Notes 144
CHAPTER 10 Leading and Selling the Change (Stage 3) 145
Leading Change by John Kotter 146
Learn to Sell by Appreciating the Emotional
Drivers of the Buyer 147
Sales Pitches You Will Need to Make to Get the
Go-Ahead 149
Selling the Winning KPIs to the Organization’s Staff 156
Benefits of This Stage 160
Templates and Checklists 160
Notes 160
CHAPTER 11 Finding Your Organization’s Operational Critical
Success Factors (Stage 4) 161
Operational Critical Success Factors versus
External Outcomes 162
Operational Critical Success Factors—The Missing
Link 163
Rules For Ascertaining the Operational Critical
Success Factors 165
Characteristics of Critical Success Factors 170
Four Tasks for Identifying Operational Critical
Success Factors 170
Alternative Methodologies 185
Benefits of This Stage 187
Templates and Checklists 188
Notes 188
CHAPTER 12 Determining Measures That Will Work in Your
Organization (Stage 5) 189
How to Derive Measures: An Overview 190
Ascertain the Team Performance Measures 191
Recording Performance Measures in a Database 199
Sorting the Wheat from the Chaff 202
Find the KRIs That Need to Be Reported to the
Board 203
Find the Winning KPIs 205
Measures Gallery 206
Benefits of This Stage 208
Templates and Checklists 208
Notes 208
CHAPTER 13 Get the Measures to Drive Performance (Stage 6) 209
Develop the Reporting Framework at All Levels 209
Facilitate the Use of Winning KPIs 213
Refine KPIs to Maintain Their Relevance 217
Benefits of This Stage 218
Templates and Checklists 219
Notes 219
CHAPTER 14 Reporting Performance Measures 221
The Work of Stephen Few in Data Visualization 222
Reporting the KPIs to Management and Staff 223
Reporting Performance Measures to Management 228
Reporting Performance Measures to Staff 231
Reporting Performance Measures to the Board 231
Reporting Team Performance Measures 241
How the Reporting of Performance Measures Fits
Together 243
Designing Reports Around Current Technology 244
Notes 245
PART III: Chief Measurement Officer’s Toolkit 247
CHAPTER 15 Resources for the Chief Measurement Officer 249
The CMO Needs a Cluster of Mentors 249
Guidelines for the External KPI Facilitator 250
Remember the Fundamentals 252
Resources 253
Running Workshops 256
Implementation Lessons 257
Templates and Checklists 268
Notes 269
CHAPTER 16 Case Studies on the Critical Success Factor
Workshops 271
Private Sector Case Study # 1: An Asian
Conglomerate 271
Private Sector Case Study #2: Medical Company 274
Private Sector Case Study #3: Forestry Company 276
Private Sector Case Study #4: Car Manufacturer 277
Private Sector Case Study #5: Timber Merchant 278
Private Sector Case Study #6: Investment Bank 278
Nonprofit Membership Organization
Case Study #1: Golf Club 279
Nonprofit Membership Organization
Case Study #2: Surf Life Saving 281
Government Department Case Study #1 284
Government Department Case Study #2 286
Professional Accounting Body Case Study 287
Charity Case Study 287
CHAPTER 17 Common Critical Success Factors and Their Likely
Measures 289
CHAPTER 18 Comparison to Other Methodologies 299
Main Differences Between the Balanced-Scorecard
and Winning-KPIs Methodologies 299
Stacey Barr’s PuMP 304
Paul Niven’s Balanced Scorecard Work 307
Notes 309
CHAPTER 19 CEO Toolkit 311
Letter to You, the Chief Executive Officer 311
Measurement Leadership Has to Come from the
Chief Executive Officer 314
Note 316
APPENDIX A Foundation Stones of Performance-Related Pay
Schemes 317
The Billion-Dollar Giveaway 317
The Foundation Stones 318
Notes 333
APPENDIX B Draft Job Description for the Chief Measurement
Officer 335
Outline 335
Duties/Responsibilities of the Chief Measurement
Officer 336
Skills and Experience 337
APPENDIX C Delivering Bulletproof Presentations 339
APPENDIX D Presentation Templates 347
APPENDIX E Performance Measures Database 349
Index 399


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