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Friday, March 14, 2008

KEY Performance Indicators

"You cannot manage what you cannot measure".

There are a hundred variations to this quote and close to an equal amount of claims on who said it, but who cares? I agree with it. It simply meant that if you want to manage something, you have to find a way to measure it. A lot of people took this to heart and went to the other extreme of not measuring what they are managing, they measured too much. So my response to this quote is that, you'll find it harder to manage if you have too many and too much to measure. So what do we do?

Limit the number of things we measure. Measure only those which matter the most, the 20% that affects 80% of the results, to borrow from Pareto. Take note of the word KEY in our subject today. KEY Performance Indicators (KPI) are the most important indicators or measures of success (or lack of it) of a particular KEY Result area (KRA). As an example, There are several performance indicators for the Recruitment Key Result Area. Timeliness of delivery, conformance with job specifications, job fit. I'm sure you can find more things to measure within this result area but what you should choose to measure, should be the very key. Other measurables could be just the means to an end and not the end-result that you need to measure. One may argue that we should also measure those so-called means because good performance on those means may lead to good result. Maybe, maybe not. One can execute a wrong strategy really, really well. My opinion is that when we measure performance we should not confuse activities for results. Here are some suggestions on what to measure in the area of Human Resource Management

KRA: Recruitment - KPI: Job fit -
How to Measure: Number of regularized employees Vs. Number of hires

KRA: Training - KPI: Learning Level (2)Evaluation Results (Why not Transfer or ROI Level? Too many other factors to consider but not entirely undoable)
How to measure: Amount of knowledge and Skills demonstrated after the training Vs. prior to the training.

KRA: Performance Management - KPI: Performance Improvement
How to Measure: This period's performance over last period.

There are several other results areas but those too you have to decide if they are key based on your organizational priorities and values.

Lastly, let me say that the Key Result Areas and Key Performance Indicators of staff level employees,especially if there are many, should be a reflection of the broken down KRA's and KPI's of their superiors. For example If the Recruitment Manager's KPI's reflect the Job Fit of all newly hired employees of the company, the recruitment staff's KPI would be the job fit of the employees she placed if there are several recruitment staffs working within that department.

Watch out for my next topic: "Do Competency Models Really Work?


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  2. This Information is very informative and a lot useful for future HR practitioners or even managers. In fact I really agree on your ideas about knowing priorities and values KPI and KRA. Your knowledge on Key performance indicators seems deep and all I can say is I couldn't agree more on Key Training and Management. They're very useful nowadays.

    I'm looking forward to read your next topic post concerning modern competition models/patterns

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  4. Denise9:30 PM

    I find this helpful on what I'm currently doing. Thank you for this, sir Ed. Looking forward to read your other blog posts. :)


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