We’ve all heard the saying, “What gets measured gets done.” It means regular measurement and reporting keeps you focused — because you use that information to make decisions to improve your results. Your most critical measurements are called Key Performance Indicators.
In a recent post we looked at ways to keep a focus on what’s important today. In this post, we explain how to use these Key Performance Indicators to keep a focus on what’s important long term.
What are Key Performance Indicators?
Key Performance Indicators (KPI’s) are a small number of agreed-upon measurements that reflect your organization’s critical goals for success — a numerical snapshot. They are measurable, objective, and actionable. You may have heard the term “metrics” and wondered if it’s the same thing. Think of it this way: you have dozens of metrics that let you know that things are running fine on a daily basis. With KPI’s, you elevate a few of your most important metrics to become strategic touchstones for your team or service — Key Performance Indicators.
You might think KPI’s are only for managing a process or service, but you can measure anything your organization cares about: percentage of new ideas that are turned into innovations; number of software updates delivered on a timely basis; or revenue per patent.
Here are a few examples of KPI’s and some questions to show what we mean by actionable:
- Cost of service measures overall value: What is the cost of the service you are providing? A simple calculation is to total the cost of staffing and infrastructure, then divide that by the number of transactions. What is your cost per item, service or product? Does the cost match the value you are providing?
- Percentage of technical support tickets closed within a specific time measures timeliness: Are your new procedures allowing you to close tickets for your service more quickly than before? Will that reduce your cost of providing service?
- Percentage of satisfied users measures user satisfaction: Can you provide better FAQs to improve user satisfaction scores in the next quarter?
It’s important to make sure that your KPI’s are aligned with each other to avoid unintended consequences later. For instance, you may announce happily that your ticket closures are more efficient, so you are saving money on the service. Looking at the next quarter’s KPI’s, you then discover that you’ve angered your users by closing tickets without solving the real problem and therefore your satisfaction scores have plummeted.
7 Steps to Get Started with Key Performance Indicators
1. Ensure your team understands KPI’s. You’ll be an expert once you read the information linked below in “Now It’s Your Turn.”
2. Determine what indicators are important. What are those vital few indicators that tell you things are working as intended?
3. Assess which data elements can be collected easily. If it’s too difficult, you will lose interest and stop.
4. Express the KPI as a formula (e.g. cost/searches=cost per search) and make sure you calculate it the same way every time.
5. Create a simple “dashboard” — a place to track the data on your internal website or on a shared Excel document.
6. Discuss the results every month with your team and make changes to your KPI’s until you are satisfied they are correct.
7. Dig down to analyze the KPI’s for your planning efforts.
KPI’s are one measurement technique in your arsenal. They can be a quick and useful tool to let you diagnose strengths and weaknesses in your process, make strategic decisions, and ensure you are heading in the right direction. Don’t forget: the real value is in the discussion of results with your team, not the numbers themselves.
“Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” —
Now It’s Your Turn
1. Read these articles to learn more about KPIs:
- The basics of KPIs: Key Performance Indicators for Nonprofits: An Introduction (PDF)
- Advice on web KPI’s from Avinash Kaushik of the blog Occam’s Razor:
- Especially for Libraries: Library Key Performance Indicators from Radboud University Nijmegen (Netherlands)
2. Look at what other institutions are doing: check out the KPI Library website and sign up for their free newsletter.
3. Begin to develop KPI’s within your group or service.