Paul Vaughan, CQP FCQI, Quality Manager at Siemens Rail Automation, UK, explains the importance of setting key performance indicators (KPIs) for business.
I had the pleasure of working for an organisation where I was instrumental in developing a three-year quality strategy. Akin to many business strategies, the one I was helping to create was linked to the company’s objectives and action-based. However, let’s just say that the ‘how are we going to measure progress?’ got a ‘little’ over-thought out and we ended up with an excess of 200 KPIs, which, if they were all implemented, would have adversely impacted on achieving the strategy, due to the resource that would go into measuring the KPIs and not enough action to achieve what we said we would do.
KPIs during audits
When you are next shown a KPI during an audit, I would suggest tracing it back to the organisation’s objectives. From my experience, it is not uncommon to find that you end up with the equivalent of an unwearable bracelet, due to the number of links missing. If a KPI does not contribute to demonstrating the performance of an objective, it doesn’t need measuring unless of course it’s a special request from the company’s managing director or equivalent. While you are auditing, you might want to ask the process owner: “How do you know how effective your process is?” as I have found this helps the owner to determine the real KPIs for his/herself. Depending on the quality maturity of your organisation, you might also want to recommend that the KPIs are documented in the process/procedures and that way, the process becomes a step closer to being self audited/measured.
Organisations that are KPI ‘savvy’ are more likely to have digitised and automated both the inputting and retrieving of KPIs. More often, we will see KPIs that are integral to an organisation’s process maps, which give the user a ‘one-click’ insight as to how the process is performing. Sometimes, even then, the organisation will have a hang-up with the process output, where I would argue that the performance measurement focus should be on the input. Some auditors may ask why? This is because you cannot retrospectively address an output that has already occurred. In this instance, capturing and measuring the input at the early stages will allow you to do something about it.
Not every organisation understands ‘KPIs’. Some of them tend to treat KPIs discretely like a ‘ball strike’, while ignoring all the training, tooling and planning that goes into a hole-in-one, match-winning goal or conversion. When I refer to the ‘organisation’, I am not including the quality professional who would have a good understanding of what KPIs are about. Though maybe there is an area of frustration in how the quality professional convinces and wins the hearts and minds on this subject.
In summary, although some KPIs might have complex statistical process control (SPC) origins, the vast majority of them should be borne from a simple and sensible quality/business way of strategic thinking, or in other words: specific, measurable, attainable, relevant and time-bound (SMART).
Attribute to original publisher/ publishing organization: Paul Vaughan, CQP FCQI, Quality Manager at Siemens Rail Automation, UK, https://www.quality.org/knowledge/setting-and-meeting-kpi-targets