The Basics of KPI Template Design - dummies

By Bernard Marr

Part of Key Performance Indicators For Dummies Cheat Sheet

The first four elements of the KPI (Key Performance Indicator) design template address the basics of each KPI and help to put it in context. You need to get a handle on these elements before you do any detailed development work on your KPI.

Strategic objective

It’s always best to clearly specify to which strategic objective the KPI relates, so that everyone looking at the KPI immediately appreciates its relevance.

If appropriate you can also identify the persons or functions responsible for the management and delivery of the strategic objective that the KPI is assessing. This may be an individual executive or employee, or a team of people. Clarifying ownership in this way allows you to know who to call in the future should you need to discuss performance, or fine-tune the KPI.

Audience and access rights

Here you define the primary audience for this KPI – basically, who will see the data and who will have access to it.

Sometimes it is possible to define a primary and a number of secondary audiences. For example, the primary audience for financial information might be the senior leadership team, and secondary audiences might include shareholders, analysts and other functional managers within the business.

Key Performance Question (KPQ)

For each KPI, state the KPQ that the indicator is helping you to answer.

Again this helps to provide context around why this particular indicator is being introduced and on which specific issue it is going to shed more light. It puts the KPI in context and helps keep people engaged in its on-going measurement.

How will and won’t the data be used?

Specify how the KPI will be used; for example, share the decisions the KPI is helping you make. This provides even greater context, so that everyone who uses the KPI or comes across the KPI is clear about how you plan to use the information and evidence it provides.

This is especially important if you are introducing a suite of new KPIs, because it helps to reassure everyone involved that every one of the KPIs has a very specific purpose and is not just added to make the initiator look good!

Another part of this section is to define how the KPI will not be used. Sometimes, people are scared to report on measures because they fear negative results could be used against them. Here, you can say that the KPI won’t be used to determine the performance of individuals and won’t be linked to bonus payments.