Laura is the chief surgeon and CMD at a popular cardiac specialty hospital in the US. Twice a week she dedicates herself to overseeing patient health and scheduled surgeries while she focuses the remaining portion of her week in hospital administration. Six months ago, Laura received a host of complaint letters from certain elite group of customers about the poor service delivery at the hospital’s facilities. On further investigation of the service at 20 different counters including patient rooms, Laura came to realize there were deeper problems of accountability than outpatient wait times. The hospital staff were indulging in blame shifting and finger pointing when quizzed about the long queues outside each of the patient rooms. Laura felt she didn’t have a pulse on the hospital’s overall performance and sought to have the department heads turn in to monthly MIS reports. However, the metrics in the reports were left at the discretion of the individual department heads. When the time came for the submission of the reports, the content of these reports appalled Laura: some metrics were not even required and some other crucial metrics were unaccounted for. Above all, the one that worried her the most was this: 10 different reports each with an average of 10 metrics and none of these were linking up to crucial financial or strategic goals of the hospital. Laura sighed: “I’m not going to get any significant sense of my hospital’s status by thumbing through these metrics month-on-month!”
Laura isn’t the only one distressed by the abuse of performance metrics within an organization. Most executives are weary of revisiting performance metrics after seeing the apparent inconsistency and the lack of a “binding factor” between metrics that are owned by business units and functions. A global study conducted by Advanced Performance Institute (API) indicated that out of nearly 1100 organizations only 15% had their performance metrics linked to strategic goals. Nearly 92% of organizations felt that their metrics were neither meaningful nor relevant.
The primary reason for faulty metrical frameworks is a deeply entrenched belief in certain “myths” associated with KPI (Key Performance Indicator), which Insight progressively demystifies for clients as we work with them.
Myth #1: When I see the KPIs I can actually measure performance better.
This one reads like the statement Adam ate the apple. Where does it say so? A KPI is a Key Performance Indicator, not a key performance measure. When we design KPIs we are to refrain from trying to measure the “quantity” or “quality” of the goal being accomplished. We must rather use them to indicate whether goal alignment is happening or not. If you notice KPIs very carefully, they sit in one of the 3 categories: positive, neutral, negative which are usually denoted by traffic lights or flags in 3 distinct colours. The metrics associated with the KPIs themselves don’t lend much information for decision making, it’s these indicatives that aid in the same. Say Laura is managing a KPI such as ‘Outpatient wait times’ and if our goal for the KPI is merely to measure performance, that KPI would read with a value, say, 10 mins. What does that mean? Any executive would ask this implicit question. It doesn’t make sense. But if we place a threshold that any wait time above 9 mins is not acceptable, this KPI starts to make better sense.
Myth #2: When I get MIS reports, I’ll get to see the KPIs as well.
MIS (or Management Information System) reports are managerial reports that help executives get a status check on weekly or monthly operations of each business unit or function. MIS reports can be likened to an update given by a shop floor manager to the operations head about the smooth functioning of the production line, the required supply of raw materials, the on-time delivery of orders and the number of hours put in by each shop floor laborer. KPI dashboards on the other hand are executive reports which help the CxOs get a sense of whether the company is moving in the planned direction, as articulated in the strategic goals. KPI dashboards are then like updates which the operations head obtains from mangers about the orders being processed and the kind of clients who are making orders, the capacity of the production line, etc. which are tightly linked to strategic goals concerning a certain amount of orders to be processed, a certain kind of clients to be targeted, and a constant monitoring of production capacity and its impact on growth. Ideally, department heads and SBU heads are to report MIS reports with the KPI in them, but what ends up happening is often executives just get a glorified operations report. What should have never been a myth ends up becoming one!
The right mix of KPIs can therefore be obtained by careful plotting of strategic objectives against metrics by Tier-1 and Tier-2 leaders, and Insight helps you with it.
Insight helps define KPIs on 5 crucial spokes of the company – People, Process, Systems, Customers, Finance. The Balanced Scorecard approach takes on a 4 perspective model – Customer, Financial, Process, Learning & Growth.
At Insight we go beyond identifying and defining KPIs and also help in building automated dashboards and scorecards using varied technologies. We work at various levels on the 5 critical spokes of the company to build KPIs and automated dashboards and reports. Some of the areas of our expertise on technology and advanced analytics are:-
- Enterprise BI technologies: Sharepoint 2010 customization for enterprises
- SMB collaborative BI and reporting using MSSQL Server and related services
- Microsoft Excel reporting: Real-time, visual and customized reporting using Powerpivot
- Advanced Analytics for whole companies and business units: Using SSAS, SSRS, Dundas
- Mobile reporting: Fast alerts and quick KPI updates on your mobile phone/ gadget
- Website analytics: Google Analytics installation based on customer centric KPIs
We begin where you are and take you full circle, helping you get a complete glimpse of the status of your strategic and operational goals.