KPI AWARENESS SESSION

TOWARDS THE USE OF A RIGOROUS

KPI MEASUREMENT FRAMEWORK

© The KPI Institute 2021

 IN NUMBERS

“Empower the world to achieve performance excellence”

2004 235+ 17+ 100+

YEAR OF research reports years spent on researching staff
ESTABLISHMENT published to date KPI best practice members

The KPI Institute is a leading global 4 OFFICES

research institute specialized in
business performance. It operates Australia Europe
research programs in 12 practice Middle East South East Asia
domains, ranging from strategy and
KPIs to employee performance and
from customer service to innovation
6 CONTINENTS On which we delivered
trainings
performance.
Insights are disseminated through a
variety of publications, subscriptions 36 global partner
organizations 59 countries where we delivered
educational programs 128 countries with
research clients
services and through a knowledge
platform available to registered
members. Support in deploying these 21,262 59,411 104,179 1,471,674
KPI examples Companies Members on our Professionals
insights in practice is offered globally
published registered online communities reached
through training and advisory
services.

© The KPI Institute 2021 2

 OUR CLIENTS

In-house training and advisory services

© The KPI Institute 2021 3

AGENDA

1 The World of KPIs

• Performance Management vs Performance Measurement
• Driving performance through KPIs
• Performance Management Architecture
• Governance of PM Systems

2 Nurturing a Performance Culture

• Communication and Education
• Fostering employee engagement
• Comprehensive Performance Management System
• Compensation and Gamification

© The KPI Institute 2021 4

AGENDA

1 The World of KPIs 1.1 Performance Measurement vs Performance

Management
1.2 Driving performance with KPIs
1.3 Performance Management Architecture
1.4 Governance of PM Systems

Key Learning Points

1. Understand the role of performance measurement systems;
2. Acknowledge the value added by KPIs
3. Explore components of a Performance Management Architecture

© The KPI Institute 2021 5

1.1. PERFORMANCE MEASUREMENT VS
PERFORMANCE MANAGEMENT
Performance Measurement VS Performance Management

Performance Measurement : Performance Management :

Evaluation and assessment Taking action based on the results of
of results. the evaluation to ensure targets
achieved.
1 Sub-process of performance
management 1 The overarching discipline that
deals with performance.

2 Focuses on the:
⬥ Identification of KPIs
2 Reflects the approach one entity
has towards performance.
⬥ Tracking of KPIs
⬥ Communication KPIs results
3 Includes sub-processes such as:
⬥ The formulation of a plan
⬥ Actively monitoring implementation
⬥ Readjusting the plan
⬥ Performance measurement
⬥ Capability development

© The KPI Institute 2021 6

 CHALLENGES IN PERFORMANCE MEASUREMENT

⬥ You are interested in addressing

Which
are the ⬥ Your organization/ team is facing
major
challenges? ⬥ Are relevant to the practice overall

KPI KPI data KPI target KPI KPI KPI data

Selection gathering setting analysis documentation visualization
Which is the
most
challenging 5%
3%
aspect of 14%
working with 19%
KPIs in your 32% 28%
organization?

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1.2. DRIVING PERFORMANCE THROUGH KPIS

IMPROVEMENT

CLARITY Communication FOCUS

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1.2. DRIVING PERFORMANCE THROUGH KPIS
 Provide a detailed numerical view of which are the desired results aimed to be
CLARITY achieved
 Facilitate line of sight by mapping contribution to success across organizational
levels

 Convey what matters

FOCUS  Convey what requires attention

 Objectively evaluate the level of achievement of desired results

IMPROVEMENT  Readily available data which accelerates corrective action initiation

 Lead to a sense of ownership through responsibility and accountability

ENGAGEMENT  Motivate in achieving better results
 Contribute to building a performance culture

 Provide common understanding of the numbers that matter

COMMUNICATION  Enables precise stakeholder communication
 Demonstrate interest and ability to use state of the art management concepts

 Enable comparison of results in time, to reflect trends

LEARNING  Identify opportunities by comparing to others
 Lead to a better understanding of the business

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 IDENTIFY PERFORMANCE MANAGEMENT TOOLS

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 MISSION
Why we exist

VISION
DESTINATION Where we want to be

VALUE STATEMENT
Benefits that influence organizational behavior

VALUE DRIVERS
Characteristic of operational activities that reflect how value is generated for
stakeholders
GOAL
CORE STRATEGY Clustering tool for objectives linked around the same theme

OBJECTIVE
What we need to achieve as part of our journey towards vision attainment

METRIC
Quantifiable expression of something we can measure

KPI
MEASUREMENT Metric reflecting performance

TARGET
Specific level we want to achieve in relation to a KPI

PROGRAM
Clustering tool for projects linked around the same theme

INITIATIVE
ACTION Activity with start/dates and specific outputs to be generated

MILESTONE
Main task/stage within a project

© The KPI Institute 2021 11

1.3. PERFORMANCE MANAGEMENT SYSTEM ARCHITECTURE
Desired State of
Strategy Map Risk Log
Evolution

Buget
Current State
Portfolio of Performance Performance Report
Initiatives Scorecard

Environmental
Initiative Description KPI Description
Scan

Project Status Report KPI Trend Analysis

Mandate

Performance
Dashboard

KPI Description

KPI Trend Analysis

Individual Performance Plans

Source: The KPI Institute (2020)

© The KPI Institute 2021 12

DESIRED STATE OF EVOLUTION
Vision
To play a pivotal role within the organization general setting by nurturing a culture of performance through the development of cost effective and result oriented HR programs.

Desired State
2018 Target
Achievements 100% HR processes optimized 95% On-time delivery of HR service requests 80% Internal customer satisfaction

Relationships Value Added Brand

Projection into the We partner with specialized recruiting and training We contribute to the optimization of We are recognized among the companies
external environment companies to deliver value added services. resources and improved service delivery. that provide excellent working environments.

Key Successful factors / Value Drivers / Internal Capabilities

Our customers Our Services
Responsive to customer needs – We understand and partner with internal Efficiency of processes – We operate reliable, robust services, monitored for quality.
customers to address their needs. Process efficiency – All operational processes are mapped and optimized to be cost
Competitive services – Our effective solutions provide the organization with efficient information systems
good value for money.

Our Shareholders Our People

Value generation – Fiduciary responsibility, dividend generation by unlocking Management / leadership – Management is committed to working on strategy
value and generating savings. implementation and coach / advice / guide.
Sustainable development – Strategic decisions are derived from responses to Individual and team capabilities – Capabilities are built through formal training
changes in the environment and long term thinking aimed to ensure we are programs and mentoring programs.
sustainable and relevant. Organizational culture – Culture of performance

Identity & Purpose

Mission To provide high quality HR services to support organizational value generation.

• Safety: the creation and relentless maintenance of a healthy and safe work environment and safe work practices in everything we do.
• Integrity: do the right things, do things right, say what you do and do what you say.
• Honesty and openness in communication: ethical and honest dealings with all stakeholders and openness in communication on an
Values informed and need-to-know basis with due regard to privacy and confidentiality.
• Customer focus: all applicants and employees are entitled to high quality customer service.
• Excellence: develop and maintain high performance and proficiency standards in all services provided to both employees and applicant.
• Competence: develop a talented and motivated workforce, mastered through education, mentoring, training and experience.
Source: The KPI Institute (2020)

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DESIRED STATE OF EVOLUTION

Source: Emirates Identity Authority

© The KPI Institute 2020 14

STRATEGY MAP
Perspectives Maintain high levels
of internal customer
satisfaction
Customers
Ensure high service
delivery standards
Provide good value
for money to the
organisation
Maintain financial
Financial
rigour in budget Seek efficiencies to
execution minimise cost base

Improve HR service
Internal delivery capability Optimize
Processes
recruitment
and retention

Build an
Maintain high environment
Learning, performing Develop workforce that fosters
Growth & motivated skills and creativity and
Innovation employees Strategic
competences innovation
Objectives

Source: The KPI Institute (2020)

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STRATEGY MAP

Source: Dubai Electricity and Water Authority (2019): https://www.dewa.gov.ae/en/about-dewa/about-us/about-us/corporate-governance-and-strategy

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PERFORMANCE SCORECARD
Standard Previous
Perspective / Goal Current % Target
KPI ID reporting Period Target Results Comments
Strategic Objectives / KPIs Results complete
frequency Results
Customer - 1 Strategic Objectives / 2 KPIs
Maintain high levels of internal customer satisfaction
% Internal customer satisfaction with HR service levels sK2379 Q 85% 75% 90% 83%
# Complaints received sK2038 Q 0 1 0 50%
Financial - 2 Strategic Objectives / 3 KPIs
Seek efficiencies to minimize cost base
$ Cost per hire sK49 M 400.00 534.00 350.00 153%
$ Cost avoidance savings sK262 M 918.00 560.00 500.00 112%

Maintain financial rigor in budget projection and execution

% HR budget variance sK479 M -5% -3% 2% -157%

Internal Processes - 2 Strategic Objectives / 4 KPIs
Optimize recruitment
# Time to fill a vacant position sK688 M 25 19 15 79%
% Employees who leave the organization in the first 3 months sK688 M 15% 12% 10% 83%
Improve HR service delivery capability
% HR projects on time, on budget and according to specifications sk2863 M 62% 87% 80% 109%
% HR processes optimized sk2284 M 84% 46% 60% 77%

People, Learning & Growth - 2 Strategic Objectives / 4 KPIs

Build an environment that fosters creativity and innovation

# HR employee engagement index sK1836 Q 56 76 65 117%

# Ideas for new / improved service from HR employees sK4657 M 14 19 30 63%
Develop workforce skills and competences
# Certifications per HR employee sK4659 Q 2.18 1.35 2.00 68%
# Training hours per HR full time equivalent (FTE) sK7 M 14 8 8 100%

Source: The KPI Institute (2020)

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PERFORMANCE DASHBOARD
Human Resources Performance Dashboard
Period Sep 2020
Recruitment Retention
# Employment brand strength
% Staffing rate Target
Q4 11 87
99%
Q3 11 66 82% 89% 86% 80% 88% 76% # Average time to
Q2 11 64 66% 74% 56%
72%
56% 67% promotion
Q1 11 81
0
0
0 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
0 2016 2017 Q4 11 4
0 50 100 Q3 11 4
Q2 11 3
% Job offer acceptance rate # Applicant ratio Target
Q1 11 2
Q4 11 83% 10 0
Q3 11 65% 8 9 8
6 7 6 7 7 0
Q2 11 91% 4
Q1 11 55% 3 3 0
1
0% 0
0% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
0% 0 2 4 6
0% 2016 2017

0% 50% 100%
Workforce profile
% Accession rate Target % Succession plans for key positions Target
19% 17%
14% 12% 14% 12% 10% 14%
9% 7% 9% 10% 9% 9% 7% 7%
10%
4% 6% 6% 4%
3% 3% 2%
0% 0%
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2016 2016 2017
2017
Source: The KPI Institute (2020)

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PORTFOLIO OF INITIATIVES
Org. Initiative Initiative Start End No within
Perspective / Objective / Initiative Priority Status Budget Comments
initiative no. owner coordinator Date date perspective
Customer
Maintain high levels of internal customer satisfaction
Quarterly evaluations of the HR department's John
Oi1 Anne Smith High Proposed 50000 1
performance with other departmental managers McKinney
Monthly spot survey of staff to assess their
John
satisfaction with the service provided by the HR Oi2 Anne Smith High Approved 20000 2
McKinney
department
Finance
Seek efficiencies to minimize cost base
Award for savings generated by HR employees Oi3 Sally Smith Sally Smith High Proposed 100000 1
Maintain financial rigor in budget projection and
execution
No active initiatives in place
Internal Processes
Optimize recruitment
George John
Employer brand promotion campaigns Oi4 High Approved 60000 1
Douglas McKinney
Improve HR service delivery capability
George John In
Process optimization initiative Oi5 High 80000 2
Douglas McKinney progress
People, Learning & Growth
Build an environment that fosters creativity and
innovation
No active initiatives in place
Develop workforce skills and
competences
George John In
HR certification program Oi6 High 45000 1
Douglas McKinney progress

Source: The KPI Institute (2020)

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PM FRAMEWORK GOVERNANCE

© The
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 REFERENCES
• Franco-Santos, M., Kennerley, M., Micheli, P., Martinez, V., Mason, S., Marr, B., Gray, D. and Neely, A.
(2007), Towards a definition of a business performance measurement system, International Journal of
Operations and Production Management, 27(8): 784-801. Available at:
https://dspace.lib.cranfield.ac.uk/bitstream/1826/2789/1/Towards%20a%20definition%20of%20busines
s%20performance%20measurement%20system.pdf;
• The KPI Institute (2016), The State of KPIs and Performance Improvement Practice Report, available at:
https://marketplace.kpiinstitute.org/state-of-performance-improvement-and-key-performance-
indicator-practice-report-2016.html.

Images:
• The KPI Institute (2017), Human Resources Performance Management Toolkit. Available at:
https://marketplace.kpiinstitute.org/hr-performance-management-system-toolkit.html;
• The KPI Institute (2017), KPI Management Concept Map.

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AGENDA

2.1 Communication and Education

Data Gathering KPI Management
Nurture a 2.2 and Reporting
Fostering employee engagement Enablers
2 Performance
2 2.3 Comprehensive Performance Management System
Culture 2.4 Compensation and Gamification

Key Learning Points

1. Understand the steps to be taken in nurturing a performance culture;
2. Apply widely used tools in the communication process;
3. Analyze examples of bonus systems from public and private sector.

© The KPI Institute 2021 22

2.1. COMMUNICATION AND EDUCATION
COMMUNICATION
INTERNAL EXTERNAL

Be transparent in communicating Communicate performance results to

results and decisions, as well as external stakeholders;
in evaluating performance;

Communicate as much as possible Help stakeholders differentiate

directly with the employees, between perception and reality;
during meetings;

Use emails, newsletters, business Use the website and the blog, the
social media networks and intra- newsletters, brochures and social
net electronic displays to media networks to communicate.
communicate
© The KPI Institute 2021 23
2.1. COMMUNICATION AND EDUCATION
COMMUNICATION TOOLS

White Board Manuals Handbooks Resource Library

Print Newsletters Magazines Flyers Banners

Brochures Roll-ups Infographic Posters

© The KPI Institute 2021 24

2.2. FOSTERING EMPLOYEE ENGAGEMENT
Volkswagen do Brasil: Using a Robot to communicate strategy

Source: Senn, J. F. (2012), Mobilizing for strategy execution

© The KPI Institute 2021 25

2.2. FOSTERING EMPLOYEE ENGAGEMENT

© The KPI Institute 2021 26

2.2. FOSTERING EMPLOYEE ENGAGEMENT
On-going performance
START END
evaluation

Manager and employee meet to:

1. Set performance objectives
Performance
2. Set development goals
Setting
3. Establish resources

Employee
Meeting

Performance Manager and employee meet to:

1. Discuss results to date

Management Mid-year
review
2. Formal feedback
3. Plan improvement opportunities

Cycle
Manager and employee meet to:
1. Discuss past performance
End year 2. Identify potential
Appraisal 3. Discuss career path and
developmental aspects

© The KPI Institute 2021 27

2.3. COMPREHENSIVE PERFORMANCE
MANAGEMENT SYSTEM
Budgets Reports

Discussions Training
Goals Rewards

Forums Targets
Dashboards Scorecards

Communications Technology

A better structure, KPIs Meetings

alignment, integration and
use of what is already in Objectives Performance Reviews
place is the answer to
improve performance Plans Projects
management practices.

© The KPI Institute 2021 28

2.3. COMPREHENSIVE PERFORMANCE
MANAGEMENT SYSTEM
1 3

ASSESS EVALUATE
CASCADE ENGAGE

2 4

Make sure employees Once the PMS becomes Employee performance Make sure employees
understand what is the functional at needs to be are engaged and
role of the PMS and organizational level, it objectively evaluated –
must be cascaded down they actively
identify their base your evaluation contribute to the
to departmental and
difficulties; employee level; mainly on KPIs, and overall performance
then on competencies of the organization
and behaviors

© The KPI Institute 2021 29

2.3. COMPREHENSIVE PERFORMANCE
MANAGEMENT SYSTEM

Strategic

Operational/
Team

Personal Individual

© The KPI Institute 2021 30

 “I can see my value Employee
Corporate How contribution to the Engagement
Strategy organizational success”

Objectives Corporate
Scorecard

What KPIs How

Targets

Action Plans Objectives Business

Unit
Scorecard
What KPIs How
What I Do

Targets
Department
Level Team /
Action Plans Objectives
Individual
Scorecard
What KPIs

Targets
Individual
Level Performance
Improvement Plan

Source: Pc Ow, P. (n.d.), Cascading KPIs throughout the organization

© The KPI Institute 2021 31

KPI ALIGNMENT ACROSS THE ORGANIZATION

ORGANIZATION DEPARTMENT: ANY

People, Learning and Growth

Objective: Stimulate a performance- Objective: Stimulate a performance-

oriented organizational culture oriented organizational culture
% Employees with performance plans in place % Employees with performance plans in place
% Performance discussions within SLA % Performance discussions within SLA

ORGANIZATION DEPARTMENT: CUSTOMER SUPPORT

Customers
Objective: Increase customer satisfaction Objective: Increase customer satisfaction
levels levels
% Customer satisfaction % Complaints resolution rate
# Complaints received # Complaints solved per hour

© The KPI Institute 2021 32

KPI ALIGNMENT ACROSS THE ORGANIZATION

ORGANIZATION DEPARTMENT: FINANCIAL

Internal Processes
Objective: Assure a secure working Objective: Improve payments execution
environment timeliness
# Accidents registered # Time to process payments
# Lost time injury frequency rate # Pending payments

© The KPI Institute 2021 33

 2.4. COMPENSATION AND GAMIFICATION

It is important to Don’t tie Base bonus system Add to the annual

properly reward compensation on a combination performance
employees’ only to individual of individual, team review with
performance performance and company regular, 1 -1
performance meetings

Create mixed Institute Embrace

bonuses systems performance- technology and
related pay allow real time
-------------------
increases access to data
Financial and
Non-financial
Short and long term

© The KPI Institute 2021 34

COMPENSATION

Long term incentives Short term incentives

 Employee Stock Option Plans  Monthly rewards

 Profit Sharing  Sales commissions
 Gain Sharing  Retention Bonus

Source: Ueda, D. (n.d.), Types of bonuses

© The KPI Institute 2021 35

BONUS SYSTEMS IN PRACTICE
The Philippine Government

The Performance-Based Bonus (PBB) is a bonus system which rewards the

performances of the employees working for the Government.
Source: The Philippine Government (2012), Performance based bonus

© The KPI Institute 2021 36

BONUS SYSTEMS IN PRACTICE
The Philippine Government

The system was introduced in 2012, aiming at rewarding employees more

fair.
Source: The Philippine Government (2012), Performance based bonus

© The KPI Institute 2021 37

 2.4. COMPENSATION AND GAMIFICATION
GAMIFICATION

•Applying gaming-like elements into

non-gaming situations;

• Consists in employing point-based

rankings, merit badges or progress
bar;

•Proper implementation engages and

motivates employees.

Source: NICE Systems (2013), Performance management - Gamification infographic

© The KPI Institute 2021 38

 REFERENCES
• BunchBall (n.d.), T-Mobile Success Story. Available at: http://www.bunchball.com/customers/t-mobile-success-story
• BunchBall (n.d.), Ford of Canada Success Story. Available at: http://www.bunchball.com/customers/ford
• Chan, J. (n.d.), Independent agency to pioneer profit sharing to staff. Available at: http://www.marketing-
interactive.com/4as-agencies-losing-grips/
• Chartered Institute of Personnel and Development (2014), Change management. Available at:
http://www.cipd.co.uk/hr-resources/factsheets/change-management.aspx
• Chief Information Officers (2013), How to use gamification to engage employees. Available at:
http://www.cio.com/article/2453330/careers-staffing/how-to-use-gamification-to-engage-employees.html
• Franco-Santos, M. (2008), The impact of performance targets on behaviour: A close look at sales force contexts.
Available at: http://www.som.cranfield.ac.uk/som/dinamic-
content/media/CBP/Publications/CIMA_full%20Report.pdf
• Heathfield,S.M, Salary and Compensation Trends for Forward Thinking Organizations. Available at:
http://humanresources.about.com/cs/compensation/a/aasalarytrends_2.htm
• Inc.com, Employee Reward and Recognition Systems (2014). Available
at http://www.inc.com/encyclopedia/employee-reward-and-recognition-systems.html
• Menke, J.D. (2014), Why you should consider an ESPO. Available at: http://www.menke.com/blog/why-should-you-
consider-an-esop/
• NICE Systems (2013), Performance management - Gamification infographic. Available at:
http://www.nice.com/performance-management-gamification-infographic
• Ueda, D. (n.d.), Types of bonuses. Available at: http://www.salary.com/types-of-bonuses

© The KPI Institute 2021

 REFERENCES
Images:
• NICE Systems (2013), Performance management - Gamification infographic. Available at:
http://www.nice.com/performance-management-gamification-infographic
• Pink, D. (2009), Drive. Available at: https://www.youtube.com/watch?v=u6XAPnuFjJc
• Tesco (2013), Working to make what matters better, together: Tesco PLC annual report and financial
statements. Available at: http://files.the-
group.net/library/tesco/annualreport2013/pdfs/tesco_annual_report_2013.pdf
• The Philippine Government (2012), Performance based bonus available at: http://www.gov.ph/pbb/
• The KPI Institute (2015), Individual Performance Management Toolkit. Available at:
http://store.kpiinstitute.org/individual-performance-management-toolkit.html

© The KPI Institute 2021

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