Key Performance Indicators

KEY PERFORMANCE INDICATORS FOURTH EDITION "This book, already a performance measurement classic, firmly establishes David Parmenter as the 'King of the KPIs'. His first chapter, a timeless classic, is worth the cost of the book alone." --Harry Mills, subject matter expert on persuasion for the Harvard ManageMentor program Rife with examples, worksheets, practice exercises, templates, and other valuable tools, Key Performance Indicators is truly a field guide. Readers will walk away with an understanding of the what, why, and--most importantly--the how of building appropriate and effective KPIs into organizations of all sizes. Key performance indicators are crucial to defining and tracking your organization's progress toward its goals. Setting up the wrong performance measures can lead to unwanted behaviors across an organization, perhaps even destroying value through misalignment and confusion. If you are building KPIs for your organization, Key Performance Indicators will help you avoid these common mistakes and ensure your efforts result in ownership, empowerment, and fulfillment at all levels. This Fourth Edition has been improved by:

• Simplifying, reorganizing, and refining the Winning KPI methodology process into a three-stage process
• Refining the "selling the change" process by incorporating more reference to the psychology behind resistance to change
• A new chapter on the rules for designing measures
• New methods David Parmenter has used in KPI implementations
• A further refined performance measures database

About the Author xiii
Acknowledgments xv
Introduction xvii
Chapter 1 The Great KPI Misunderstanding 3
The Four Types of Performance Measures 3
Number of Measures Required: The 10/80/10 Rule 13
Difference between KRIs and KPIs and RIs and PIs 15
The Lead and Lag Confusion 16
Have a Mix of 60 Percent Past, 20 Percent Current, and 20 Percent Future-Oriented Measures 17
Importance of Timely Measurement 20
Where Are You in Your Journey with Performance Measures? 21
Chapter 2 The Myths of Performance Measurement 25
The Myths Surrounding Performance Measures 25
The Myths around the Balanced Scorecard 30
Chapter 3 Background to the Winning KPI Methodology 41
Winning KPI Methodology 41
Seven Foundation Stones of the Winning KPIs Process 46
Implementation Variations and Shortcuts for Small to Medium-Sized Enterprises 56
Chapter 4 Leading and Selling the Change 63
Steve Zaffron and Dave Logan: Why So Many Initiatives Fail 63
Harry Mills: The Importance of Self-Persuasion 64
John Kotter: How to Lead Change Successfully 65
Learn to Sell by Appreciating the Emotional Drivers of the Buyer 67
Selling the KPI Project 70
Selling the Winning KPIs to the Organization's Staff 75
Delivering Bulletproof PowerPoint Presentations 79
PDF Download 83
Chapter 5 Getting the CEO and Senior Management Committed to the Change 85
CEO and Senior Management Commitment 85
Guidelines for the External KPI Facilitator 91
PDF Download 94
Chapter 6 Up-Skill In-House Resources to Manage the KPI Project 97
Establishing a Winning KPI Project Team 97
PDF Download 111
Chapter 7 Finding Your Organization's Critical Success Factors 115
Why Critical Success Factors Are So Important 118
Relationship between CSFs and KPIs 123
Common Misunderstandings 124
Task 1: Wording the Success Factors and the External Outcomes 127
Task 2: Determining the Critical Success Factors in a Two-Day Workshop 130
Task 3: Presenting the Critical Success Factors to the Staff 141
Task 4: Get the CSFs on the Wall in Every Workplace 143
PDF Download 144
Chapter 8 Characteristics of Meaningful Measures 149
Common Measurement Traps 149
Wisdom on Measures from Other Authors 149
Rules for Designing Measures 154
Suggested Exercises to Improve Measure Design 156
PDF Download 165
Chapter 9 Designing and Refining Measures 167
Running the Two-Day Performance Measures Workshop 169
Refining Performance Measures after the Workshops 181
Teams Select Their Relevant Performance Measures 185
Finding the KRIs That Need to Be Reported to the Board 187
The KPI Team Ascertaining the Winning KPIs 190
PDF Download 191
Chapter 10 Reporting Performance Measures 195
Develop the Reporting Framework at All Levels 195
The Common Faults with Reporting 196
Designing an Appropriate Reporting Regime 197
Reporting the KPIs to Management and Staff 206
Reporting RIs and PIs to Management 210
Reporting Performance Measures to Staff 215
Reporting Performance Measures to the Board 216
Reporting Team Performance Measures 221
The Performance Reporting Portfolio 223
PDF Download 224
Chapter 11 Ongoing Support and Refinement of KPIs and CSFs 227
Facilitate the Ongoing Support and Refinement of KPIs and CSFs 229
PDF Download 235
Chapter 12 Implementation Case Studies and Lessons 237
Recent Case Studies 237
Previously Reported Case Studies 243
Implementation Lessons 256
Comparison to Other KPI Methodologies 267
PDF Download 273
Appendix Performance Measures Database 275
Index 323