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Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 1
KPI for Business Performance Analysis
• Rupak M Nasrullah Zaidi, KPI, HR, OD Practitioner, Business & Management Consultant
• KPI & Performance Consultant • Business & Management Consultant • Senior Fellow, Management & Strategy Institute, USA • International Professional Member, Association of Talent Development
(ATD), USA • Member, Certified Professional Trainers’ Network, Canada • Member, American Management Association, USA • Consultant for HR & Organization Development
Email: rmnzaidi@gmail.com, FB: f:/zaidirupak Cell: 01936000036, 01799985299, 01740868520
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 2
Easy & Better for us
Be VALUE able to get POWER in Professional area
Objective of the session
• Exchange the views regarding concept and practices of KPI
• Share knowledge on Business Performance Area • Participate cross learning on “Drive Business
Performance through KPI based PMS”
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 3
Indicator • Means: Measurement factor/ areas • Time factor: within this month/ this week/
year etc • Quality / quantity standard: 10/15/ 0%
error/ 1 % error/ 1 crore etc • Cost • Profitability • Sales Volume • Retention • Engagement • Learning
Performance Indicator
• Measurement areas of Results
• Differ due to different positions
• NOT Target/ Goal • Measurement area of Target
/ GOAL Achievement
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 4
KEY Performance Indicator
• Measurement areas of Key Results
• NOT all results • Measurement area of Target /
GOAL Achievement [Key Goals]
Result Area
•Area through which the Result is visible •Example: Profit, Compliance
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 5
Goal/ Target
• Future oriented • Based on Prediction • Sometimes Goal setting
influenced by Performance Indicator
Measures/ Source of Information
• Instrument/ Tools/ Record / report through which achievement can be identified
• Balance Sheet for measuring organizational Performance
• Sales volume for measuring performance of Sales people
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 6
Consultancy Service by Rupak Zaidi • KPI Setting • Performance Improvement Strategy development • Business Process reengineering • Employee Accountability & Monitoring System development • Manpower Assessment • Competency Mapping • Setting 5 S & Kaizen culture • Business Strategy Development • Visual Management System development • Business Automation • HR Auditing • Business Consultancy • Management Consultancy
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KPI: Insights
Indicator not target 1
Universal 2
Relevant 4
Aligned 3
Standard measurement tools
5
More focused on number oriented goal
7
Cascade down to individual
6
Verifiable 9 Cost Effective 8
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 7
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
THE VALUE ADDED BY KPIs
Clarity
Improvement
Focus
Communication
The World of KPIs
13
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
TERMINOLOGY STANDARDS Objectives
start with
Verb
KPIs start with
$ = Value of
# = Number of
% = Percentage of
Initiatives start with
Noun
Increase customer satisfaction $ Revenue per client CRM software implementation
# Complaints received
% Customer satisfaction
Understand KPIs 14
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 8
Program for Sales Personnel by Rupak Zaidi • Selling Skill for Show Room Sales Persons • Customer Service Excellence for Sales Professional • Salesmanship Master Class • Competitor Analysis: Tool for business decision • Customer Service Master Class • Brand Leadership Master Class • Blue Ocean Strategy for Sales • Innovative Business Strategy • The Sales PRO: Think, Act & Sale like PRO • Emotional Intelligence for Sales Success • Negotiation Skill for Sales Professional • LEAN Selling: Concept & Competencies • Customer Retention Strategies
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Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
% Employee satisfaction
$ Turnover
Finalise project by 31 December
# Clients from referrals
# Employees
% Projects delivered on time and on budget
Quality
% Defect rate
$ Budget
Increase market share to 28%
IDENTIFY THE KPIs
KPI Definition: A measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity. (The KPI Institute)
Understand KPIs 16
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 9
Types of KPI
As per Contribution
Strategic
Operational
Types of KPI
As per Focus
Leading
Lagging
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 10
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
LEADING VS LAGGING KPIs
Source: Institute for Evidence Based Change (2017)
Leading indicators = measure things that address what can create future value
Lagging indicators = look back at past performance
Vs.
KPI Typology 19
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
Task: • Cluster the following examples into leading and lagging KPIs.
LEADING VS LAGGING KPIs
No. KPI examples Leading or lagging?
1 % Employee engagement
2 % Customers from referrals
3 % Customer satisfaction
4 % Market share
5 $ Profit
6 % Returning customers
7 # Service lead time
8 % Staff with competencies at desired level
KPI Typology 20
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 11
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
KPI Alignment
LEADING VS LAGGING KPIs
KPI Typology 21
Types of KPI
Output
Outcome
Impact
As per Result Chain
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 12
Types of KPI
As per measurement
Qualitative Quantitative
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
QUALITATIVE VS QUANTITATIVE KPIs
Source: Public Record Office Victoria, Australia (2010)
Eurostat, European Union (2010)
“Quantitative KPIs are likely to be based on system collected statistics such as number of users whereas qualitative KPIs may be based on more subjective measurements from user interviews and surveys.”
Public Record Office Victoria, Australia (2010)
All KPIs are quantitative, but they can measure different aspects of an objective, such as: •Volume - # Products sold •Quality - % Products error rate, % Customer satisfaction with products bought •Monetary values - $ Sales
KPI Typology 24
“Quality KPIs are statistical measures that give an indication of output quality. However, some quality indicators can also give an indication of process quality.”
ESS Quality Glossary, European Union (2010)
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 13
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
KPI Alignment
Find in the below list the KPIs that reflect quality as perception.
IDENTIFY THE KPIs REFLECTING QUALITY
1. $ Turnover
2. # Production cycle time
3. # Brand image index
4. # Customer satisfaction score
5. % Equipment utilization rate
6. % Error rates
7. % Employee engagement
8. $ Operating costs
9. % Market share
10. # Service quality rating
KPI Typology 25
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
EFFICIENCY VS EFFECTIVENESS KPIS
Desired output/outcome Inputs Processes Outputs Outcomes
Effectiveness
Efficiency
KPI Typology 26
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 14
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
EFFICIENCY VS EFFECTIVENESS KPIS Efficiency = extent to which time, effort or cost are well used for the desired results.
KPI examples:
Cost per call
Time to process requests
Equipment utilization rate
Do things right!
Effectiveness = the extent to which a desired outputs or outcomes is achieved.
KPI examples:
Sales
Customer satisfaction index
Compliance with quality standards
Do the right thing!
KPI Typology 27
As per Function [based on Balanced Scorecard]
Financial
Learning & Growth
Internal Business Process/
Operational
Customer
Types of KPI
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 15
BSC Perspectives
• What must we be great in performing, and how do we train our people to get up to that level?
• What climate and culture nurtures growth? • What do we have to do in developing and training
our people to achieve the other objectives?
Knowledge and Innovation Organizational
Capacity
• In which processes must we be the best to win customers?
• What internal activities do we need to sustain competencies?
Efficiency Internal Process
• What are the financial targets? • What drives these targets? • What kind of profit and revenue to achieve? • In a nonprofit organization, what budget guides you?
Financial Performance
Financial Stewardship
• Who are the customers? • How do you delight them? • What segments do you wish to address? • What goals do you wish to achieve with partners? • What are your goals for the distribution channel?
Satisfaction Customer/ Stakeholder
Key Focuses Key Concept Perspective
Choosing your perspective
•The Four perspective that we mentioned is not mandatory
•Kaplan and Norton themselves suggest that the four perspectives “should be considered a template, not a straitjacket”
•Many organizations have developed perspectives for innovation, research and development, environment, suppliers, leadership, and the community.
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 16
Choosing your perspective • The choice of perspectives for your Balanced Scorecard
should ultimately be based on what is necessary to tell the story of your strategy and create a competitive advantage for your organization.
• For example, a manufacturing firm may rely heavily on suppliers in order to manage its operations to the maximum of efficiency. Adding a perspective devoted to supplier relations could make good business sense for this organization
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
STRATEGY MAP
Source: The KPI Institute (2017)
The World of
KPIs 32
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 17
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
KPI DNA MAP: Example Customer Service (CS) example:
Costs $ Cost per call $ Customer Service costs
Timeliness # Time to solve customer tickets % Customer tickets solved on time
Quality # Errors in processing tickets per agent
% Customer satisfaction with CS
Quantity % Customer tickets solved per hour # Customer tickets solved
KPI Taxonomy 33
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
Scenario: • You are part of the management team in your
organization. Based on the context provided, you have to recreate the KPI taxonomy as per KPI DNA Map
KPI DNA MAP: Exercise
KPI Taxonomy 34
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 18
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
KPI Alignment
KPI DNA MAP
KPI Taxonomy 35
• Production costs seem to have increased by 10% during the last quarter, negatively influencing the cost per item, as well. A possible cause for these financial results is the low production capacity utilization rate and a low productivity in terms of units per man-hour and items produced per hour.
• Furthermore, direct costs for material variance has increased as well to $ 1 million due to changing the main supplier.
• All these events negatively impacted the results for budget variance, although the production output stayed the same.
• A positive trend was noticed in terms of production quality as the defect rate was reduced to 2% and less waste was generated.
• Regarding timeliness, the production cycle and production schedule attainment targets were met.
Production – Performance report for the 4th Q of 2017
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
PRODUCTION
KPI DNA MAP
Timeliness Costs
Quality Quantity
KPI Taxonomy 36
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 19
Program for any Professionals by Rupak Zaidi
• Business Intelligence for Managers • Managerial Competencies Master Class • High Impact Middle Management • Think Like CEO: Organizational Leadership Approach • Managerial Communication Master Class • Business Communication Master Class • Customer Service Master Class • Organizational Leadership Master Class
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Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering KPI Alignment
Area of DNA Map KPI Cost % total cost increase
% Increase cost / item % capacity utilization % increase cost of material
Timeliness # Production cycle time [days] # days to complete production
Quality % reduction of defect rate # reduction of wastage rate
Quantity # unit per man hour # items produced per hour
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 20
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
KPI Alignment
ALLOCATE KPIs FOR EACH OBJECTIVE Financial
Increase profitability
Maintain financial discipline
Customer
Maintain high levels of customer satisfaction
Serve new market segments profitability
Internal Processes
Ensure quality services Improve process management capability
People, Learning & Growth
Nurture engagement, creativity and innovation
Develop workforce skills and competences
Ensure talent availability
No. KPIs list
1 $ Operating expenses
2 % Employees meeting professional development requirements
3 # Complaints from customers
4 % Profitable customers
5 % Budget variance
6 # Innovation ideas
7 # Employee engagement index
8 # Training hours per full time equivalent (FTE)
9 % Market share
10 % Net profit margin
11 # Procedures reviewed
12 $ Net cash flow
13 % On time delivery of orders
14 # Positions filled
15 % Customer satisfaction
16 % Orders error rate
17 % Critical positions with succession plans in place
18 % Processes improved
KPI Selection 39
Program for any Professionals by Rupak Zaidi
• Competitor Analysis for better business • Emotional Intelligence at work • Employee Engagement • Employee Retention • Interpersonal Skills for organizational excellence • Workplace Innovation • The Power of Positive Thinking • Developing GREAT Managers: 10 Power Strategy
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Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 21
Understand KPIs KPI Typology KPI Selection KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
KPI Alignment
Objective KPI
People, Learning & Growth Nurture engagement, creativity and innovation 6, 7 Develop workforce skills and competences 2, 8 Ensure talent availability 14, 17
Financial Increase profitability 1, 10 Maintain financial discipline 5, 12
Customer Maintain high levels of customer satisfaction 3, 15 Serve new market segments profitability 4, 9,
Internal Processes Ensure quality services 13, 16 Improve process management capability 11, 18
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
VALUE FLOW ANALYSIS WHAT?
• Logical model to indicate the value generation from inputs, process outputs and outcomes.
WHY? • Gain insight into how the objective can be measured from different perspectives.
• Provides an overview of the process involved by achieving the objective.
• Enables the selection of the most relevant KPIs for the objective.
1
2
3
KPI Selection 42
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 22
Understand KPIs KPI Typology KPI Selection
KPI Alignment KPI Documentation Working with
Targets The World of
KPIs Data Visualization Course
Review KPI Taxonomy Data Gathering
VALUE FLOW ANALYSIS
Improve customer satisfaction with service levels
% Solved inquiries # Client needs identified
% Customer satisfaction index % Returning customers
INPUTS PROCESSES OUTPUTS OUTCOMES OBJECTIVES
# Customer service representatives
$ Customer engagement budget
# Time to answer an inquiry # Meetings with key customer
KPI Selection 43
Concept of Business
Input Output = Input Output > Input Output <
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 23
Conversion/ Transformation
• Efficiency • Intelligence • Management • Effectiveness • Productivity • Process Reengineering • Strategy
Value proposition
Cost structure Revenue streams
• How might you make $ from this? • What value, other than money, are you hoping
to create?
Customer relationships
Channels
Customer segments
Key activities
Key resources
Key partners
What external partnerships should
you invest in?
• Mentors? • Lawyers? • Distributors? • Suppliers?
How much time and money will be required to do this?
How will customers find out about you?
How will you get products
to them?
Who are your paying customers?
Do you have any non-paying customers?
How large is this group?
Do you have multiple customer segments?
What types of interactions will your customers expect
to have with you?
What will it cost for:
Manufacturing? Intellectual property? Human resources?
What will your business spend the most time doing?
Product development? Sales? Other?
Canvas Model
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 24
Program for Operational Excellence by Rupak Zaidi
• 5 S Office Management to Increase Efficiency & Profitability
• Waste-the silent Killer of Profit: Discover & Eliminate • Job Methods (JM) Training • Job Safety (JS) Training • Office Kaizen for increasing Productivity • Lean Office for Productivity & Profitability • Overall Equipment Effectiveness • Standard Work Procedure
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Business Performance Areas • Business Efficiency/ Financial Efficiency • Production Efficiency • Sales Efficiency • Business Development Efficiency • Fund Management Efficiency • Process Efficiency • Employer Branding/ HR Practice efficiency • Supply Chain Efficiency • Cost Efficiency • Channel Efficiency • Technical/ Technological efficiency
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 25
Business Efficiency/ Financial Efficiency
Cost per 1 taka profit Total Cost/ Net Profit Monthly Investment per 1 taka profit
Total Investment/ Net Profit
Yearly
Net Profit Operating Profit
Production Efficiency
Product Value/ Man Hour Total Sale/ Total Man Hour
worked Monthly
% of Raw Material Cost to Sales
(Total Sale/ Total Raw Material used)%
Quarterly
Wastage Rate Wastage/ Total Raw Material Monthly
Rejection Rate Rejected Unit/ Total Production
or Rejected value/ total sales Monthly
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 26
Business Development Efficiency
No of New Customer in last 3 months
Number Monthly
Cost per lead Total Branding & Promotional
Cost/ No of new customer Yearly
Customer Conversion ratio No of customer generated/ No
of Customer visited Monthly
Customer Retention rate
Total number of old customer ordered this year/ Total number
of customer Yearly
Sales Efficiency % of Salary to Sales (Total Sale/ Total Salary)% Monthly
Cost per Lead Total Branding & Promotional
Cost/ No of new customer Monthly
Gross Profit Margin (Revenue-Cost)/Revenue*100 Yearly % of Credit Sales Credit Sales/Total Sales % Monthly Average Credit Period per Lac
(No of days * Amount )/1 lac Yearly
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 27
Characteristics of KPI based PMS
• Objective oriented Assessment System • Holistic view of Performance • Link with different point of supply chain • Unbiased PMS • Balanced PMS [Balancing with different aspect
of Balanced Scorecard or CEEPP]
What are the benefits of KPI
• Individual Benefit • Supervisor’s Benefit • Organization’s Benefit
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 28
Why KPI for ME
• Clarification of Expectation and Standard • SW analysis • Proper Planning • Self Monitoring • Focus Setting
Why KPI for Department?
Analyze SW of department
Distribute goal among the members impartially
Monitor the overall goal achievement
Smart reporting
Strategic Decision Making
Resource allocation
Ensure performance through LEAD indicator
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 29
Organizational Benefit
• Monitor performance of different processes with the minimum time and effort needed
• Using KPI based PMS for impartial evaluation
• Encourage teamwork • Encourage Performance • Guiding Action Plan
Area of Excellence for KPI Professional
• Area of Excellence (AoE)-1: Business Competency • AoE-2: Process Competency • AoE-3: Result Chain Analysis Competency • AoE-4: Functional Integration Competency • AoE-5: Role Profiling Competency • AoE-6: Project Management Competency • AoE-7: Goal Setting Competency
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 30
(AoE)-1: Business Competency
• Financial Intelligence • Business Value Driver • Business Strategy • Competitor Analysis • Organizational Comprehension • Management Skills • Personal Characteristics • Technical Competencies
Approaches of KPI
•Result based •Output •Outcome •Impact
•Task Based
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 31
Scope/ Level of KPI
•Organizational Level •Departmental / Team Level •Individual Level
Steps of KPI development & implementation program: Standard •Design/ Analyze Organizational Goal/ KPI •Design and analyze Functional/ Departmental Goal/KPI
• Identify and analyze Role or Deliverables of Individual to achieve functional/departmental goal/KPI
•Define the measurement criteria/ KPI of that deliverables
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 32
Steps of KPI development & implementation program: Standard • Design the Action Plan/ Job Description to achieve KPI • Design measurement Tools for measuring KPI
achievement • Design Assessment method and format • Design KPI achievement monitoring tools and SOP • Design method and format for KPI achievement analysis • Link with reward and punishment
Example of organizational KPI
• Profitability • Net Profit • Operating Profit • Number of Customer • Market Share • Financial Ratio • Productivity • Expansion Rate
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 33
KPI Example: Sales Department •Volume of Sales •% of growth •No of Customer •Cost to Sales •Profitability •% of return
KPI Example: Production •Unit of Production •Productivity •Utilization of Manpower •Utilization of Capacity •Cost per unit •Wastage Rate
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 34
Some Advance HR Program by Rupak Zaidi
• HR Accounting Master Class • Business Intelligence for HR Professionals • Financial Intelligence for HR • HR Analytics Maser Class • Competency Mapping Master Class • Talent Management Master Class • Assessment Centre Master Class • TNA-Budget-ROI of Training T
his
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mat
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Format KRA (A)
KPI (B)
Weight (C)
Target (D)
Achievement
(E)
Score (F) If the higher the
better: (E/D)*100 If the lower the
better: (D/E)*100
Final Score F*C
Recruitment
Lead time to
hire
15%
60 day
s
70 days
86 13
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 35
Model of Success Management System
Competency
Engagement
Effort
Performance
Profit
Some Advance HR Program by Rupak Zaidi
• TOT Master Class • Facilitation Skill Master Class • Psychometric Test in Recruitment & Selection • Recruitment & Turnover Cost Management • ROI of HR • Organization Development • Balanced Scorecard Master Class
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Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 36
CEEPP model for Success Management System
Competency
Engagement
Effort
Performance
Profit
CEEPP • Ultimate goal
• Means Achievement
• Means initiative or action and its continuity
• Means attachment both physically and mentally
• Comprised of Knowledge, Skill and Attitude
Waste areas Over-production
Producing more than what the customer needs
Inventory Building and storing extra services the
customer has not ordered
Transportation Moving product from one
place to another
Defects Reprocessing, or correcting
work
Over-processing Adding excess value when the
customer does not require it
Unnecessary Motion Extra physical/mental motion that
doesn’t add value
Intellect Not using employees full intellectual contribution
Waiting Employees waiting for another
equipment, process or information
Waste Waste
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 37
DOWN TIME: Defect, Over Production, Waiting Loss, Not utilized workforce, Transportation, Inventory, Motion, Excessive Process
Some example of KPI
Learning session on “KPI for Business Performance Analysis”
Facilitated by: Rupak Zaidi, KPI, Business & Management Consultant [rmnzaidi@gmail.com] 38
KPI: Salary Competitiveness Ratio (SCR)
SCR (Industry)
Salary offered by your company
Average salary offered in the industry or sector
SCR (Competitor)
Salary offered by your company
Salary offered by your competitor
KPI: Cash Conversion Cycle [CCC]
Cash conversion cycle (also known as cash cycle ) helps to answer the key performance question ‘How well are we doing at managing a healthy cash flow?’ This metric is usually reported annually, but if cash flow is a concern it should be measured quarterly or even monthly.
Cash Conversion Cycle (CCC)
Days Inventory Outstanding (DIO)
Days Sales Outstanding (DSO)
Days Payable Outstanding (DPO)
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Days of Inventory Outstanding [DIO]
•DIO, tells you how many days inventory sits on the shelf on average.
•Lower number is better •But not so low that you don’t have sufficient inventory and are missing potential sales.
Calculation of CCC
• Calculation of DIO [Days of Inventory Outstanding]
• Calculate Cost of sales per day: Cost of Goods Sold/365 • Calculate average inventory figure: (Beginning Inventory +
Ending Inventory )/2 • So, DIO = Average Inventory Figure / Cost of sales per day
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Days Sales Outstanding or DSO
• Days Sales Outstanding or DSO can be described as average Accounts Receivable divided by Revenue per day
• DSO tells you how many days after the sale it takes people to pay you on average.
• A lower number is better • DSO = [(BegAR + EndAR) / 2] / (Revenue / 365)
Calculation of CCC
• Calculate DSO:
• Calculate Net sales per Day [yearly sales/ 365] • Calculate average accounts receivable • So, DSO = Average Account receivable/ net sale per day
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Operating Cycle
• Operating Cycle = DSO + DIO • This is how many days it takes for a company to process raw material
and/or inventory and collect cash from the sale. • Basically the Operating Cycle tells you how many days it takes for
something to go from first being in inventory to receiving the cash after the sale.
• You want this number to be low meaning that merchandise isn’t sitting on shelves too long and customers are paying relatively quickly.
Days of Payables Outstanding [DPO]
• Days of Payables Outstanding tells you how many days the company takes to pay its suppliers.
• Higher is better • DPO = [(BegAP+EndAP) / 2] / (COGS / 365)
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Calculation of CCC
• Calculate DPO:
• Calculate cost of sales per day • Calculate average accounts payable figure • DPO = Average account payable / cost of sales per day • Now: CCC = DIO + DSO – DPO
KPI: Cash flow solvency ratio The key performance question cash flow solvency ratio helps to answer is: ‘How easily are we going to meet our debts?’
Cash flow solvency
ration
Cash flow From Operations
Total Liabilities
If you were to decide to seek funding, this metric would be of particular interest to decision makers at the funding organization because it indicates how easily you can pay your current debts. The higher the ratio, the better as it indicates that there is plenty of money in the pot to pay the debts.
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Developing Customer, Sales and Marketing KPIs
Asking if Your Customers Would Recommend You: Net Promoter Score (NPS)
Developed and trademarked by Fred Reichheld, Bain & Company and Satmetrix, the Net Promoter Score (NPS) is one option. Introduced by Reichheld in his 2003 Harvard Business Review article as the ‘one number you need to grow’ the metric is based on just one simple question: ‘How likely is it that you would recommend xxxx company to a friend or colleague?’
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Asking if Your Customers Would Recommend You (NPS)
NPS is based on the fundamental premise that every company’s customers can be divided into three groups
Promoters: Loyal enthusiastic customers
who will continue to buy from you and recommend you to others. Promoters
fuel growth.
Passives: Satisfied but unenthusiastic customers who may or may not buy from you again. Passives are vulnerable to a well-positioned competitor
offer and don’t necessarily feel any loyalty to you.
Detractors: Unhappy customers who can actively
damage your business through negative word of
mouth. Detractors can impede growth.
Understanding the NPS formula Using a scale of 0 to 10, where 0 indicated ‘not at all likely’ and 10 indicate ‘extremely likely’ customers are asked to answer the question: ‘How likely is it that you would recommend [insert company or product name] to a friend or colleague?’ •✓ Promoters are customers that indicated a score of 9–10 •✓ Passives are customers that indicated a score of 7–8 •✓ Detractors are customers that indicated a score of 0–6 Empirical research has shown that there is a striking correlation
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Measuring NPS in practice
• The key performance question NPS helps to answer is: ‘To what extent are our customers willing to recommend us? The formula for calculating NPS is as follows:
NPS Percentage of
Promoters Percentage of
Detractors
Measuring Customer Lifetime Value (CLV)
• The key performance question Customer Lifetime Value (CLV) helps to answer is: ‘How well do we understand the financial value from our customer relationships?’
Average Value of a Sale
Number of Repeat Transactions
Average Retention Time in Months or Years for a
Typical Customer
CLV
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KPI: Capacity Utilization Rate • The key performance question Capacity Utilization Rate helps to
answer is: To what extent are we leveraging our full production/work potential?
• For example say your production plant could potentially
produces 20,000 units per day but only produces 15,000 units per day.
• The CUR is: 15,000/20,000 × 100 = 75 per cent
CUR
Actual capacity over specified time period x 100
Possible capacity over specified time period
Measuring rework levels in practice
• The key performance question Rework Level helps to answer is: How effectively are we driving waste out of our processes?
Rework Levels rate
Number of defective products requiring rework
over a specific period
Total number of products produced over a specific
period
100
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Contact details
Email: rmnzaidi@gmail.com, FB: f:/zaidirupak
LinkedIn: rmnzaidi@gmail.com Cell:, 01799985299, 01936000036,
01740868520
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