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KEY PERFORMANCE INDICATOR /KPIs/

GROUP TWO MEMBERS


1.Alemayehu Gebeyehu
2.Birhanu
3.Gebeyehu Tirusew
4.Meseret Asemare
5.Wubale Asmamaw
6.Zelalem Shitie
CONTENT TO BE COVERED
CHAPTER SEVEN
7.1 Meaning of performance indicators
Types of PM
KPI Characteristics
Types of KPIs
Types of KPIs Indicators
Development of KPIs
7.2. Importance of performance indicators
7.3. Steps in designing of performance indicators
7.4. Performance data collection
Meaning of performance indicators
• Performance indicators are performance assessment criterions against
which organizations asses their actual performance.
• performance indicator as something that allows us to identify to what degree
a variable is present.
• Indicators are the input that allows us to assess performance.
• Performance indicators are performance assessment yards that provide us
with the information and evidence that help us
-gain new insights,
-enable us to learn,
-assist us in our decision making and
-allow us to act on it to improve future performance.
Types of PM

• There are three types of performance measures:


1. Key result indicators (KRIs) - tell you how you have
done in a perspective.
2. Performance indicators (PIs) - tell you what to do.
3. Key Performance Indicators (KPIs) - tell you what to
do to increase performance dramatically.
What are KPIs?
• Simply defined, KPIs are measures that a sector or
organization uses to define success and track progress in
meeting its strategic goals.
• Key Performance Indicators (KPIs) are quantitative and
qualitative measures used to review an organization's
progress against its goals.
• KPIs provide a measurement tool
What are KPIs?
• KPIs represent a set of measures focusing on those
aspects of organizational performance that are the most
critical for the current and future success of the
organization.
• KPIs measure performance by showing trends to
demonstrate that improvements are being made over
time.
• KPIs also measure performance by comparing results
against standards or other similar organizations.
KPI Characteristics
KPI characteristics identified in the literature are:
1. Relevant to and consistent with the specific
organization's vision, strategy and objectives.
2. Focused on organization wide strategic value rather
than non-critical local business outcomes.
3. Representative – appropriate to the organization
together with its operational performance.
KPI Characteristics
4. Realistic – fits into the organization ’s constraints and cost
effective;
5. Specific – clear and focused to avoid misinterpretation or
ambiguity;
6. Attainable – requires targets to be set that are observable,
achievable, reasonable and credible under expected
conditions as well as independently validated;
7. Measurable – can be quantified/measured and may be
either quantitative or qualitative;
KPI Characteristics
• Timely – achievable within the given timeframe;
• Understood – individuals and groups know how their
behaviors and activities contribute to overall agency goals;
• Agreed – all contributors agree and share responsibility
within the agency;
• Reported – regular reports are made available to all
stakeholders and contributors;
KPI Characteristics
• Governed – accountability and responsibility is defined
and understood;
• Resourced – the program is cost effective and adequately
resourced throughout its lifetime.
• Assessed – regular assessment to ensure that they remain
relevant.
Characteristics of good KPIs
• People often use the acronym “SMART” to refer to
the characteristics of good performance indicators.
..
Types of KPIs Indicators
• Generic KPIs measure aspects of performance relevant to the
majority of service users and do not target a specific service user
population. For example, the number of service users awaiting
admission from the emergency department for more than six
hours.
• Specific KPIs are related to a specific service user population and
measure particular aspects of care related to those service users.
For example, the percentage of children that have been referred
for speech and language therapy that wait more than three
months from referral to assessment.
Types of Indicators
• KPIs can be classified according to the type of care for
which the measurement process was developed. For
example: preventive, acute or chronic care:
– Preventive care refers to the maintenance of health and
prevention of illness such as in immunization programs.
– Acute care usually refers to care given for a new onset illness
or for a sudden deterioration in chronic conditions and may
involve short term medical care or surgery.
Development of KPIs
• A number of factors should to be considered when developing and evaluating KPIs:
1. Define the audience and use for measurement.
2. Consult with stakeholders and advisory group.
3. Choose the area to measure.
4. Achieve a balance in measurement.
5. Determine selection criteria.
6. Define the indicator
• Identify the target population
• Define the target to be achieved
• Threshold for action
• Action
Define the audience and use for
measurement
• It is important to define the intended audience
-in order to identify and develop a suitable KPI.
• The audience refers to the person or group for whom the KPI will
aid decision-making and can be the service-user, the clinician, the
public, the facility or the healthcare system.
Define the audience and use for
measurement
• It is essential to note that whether the goal of the measurement
is for benchmarking, either internally for quality improvement
purposes or externally against standards or other organizations,
will influence the KPI selection process.
• Before embarking on the performance measurement process, it
is necessary to identify the domains for which the measurement
is intended, which may in turn be dependent on the audience
Consult with stakeholders and advisory group
• There should be consultation with all stakeholders throughout the
data development process.
• Consultation facilitates the identification of the needs of stakeholders
while simultaneously contributes to the acceptance of the selected
KPIs.
Consult with stakeholders and advisory group
• Consultation also facilitates agreement about data elements and
assists in familiarization with the data and standards.
• Consultation with decision-makers can assist in identifying their
information needs and subsequent use for that information.
• Consultation with service providers can also assist in identifying
their information needs, and elicit what data they can provide.
Choose the Area to Measure
• Choosing the area to be measured should be based on the importance
of the problem, service-user safety, potential for improvement and
controllability by health or social care system/professionals
• A healthcare problem is important if it is associated with significant
morbidity and mortality, has high service-user volumes and is costly
to treat.
Importance of performance indicators
• A performance indicator allows us to collect evidence and
information that
1. helps us gain new insights and learning ,
2. supports our decision making and
3. leads to improved organizational
performance.
Vital points of performance indicators
1. A performance indicator does not necessarily mean counting or
quantifying. Evidence and information can also take the forms of
written descriptions, observations and so on.
Example use of mysteries shopping for call center or focus group
discussion with students.
2. A performance indicator has to be relevant to the information
needs of the organization. It therefore has to be linked to the
strategic priorities of the organization and has to be connected to
the important decisions that have to be made in an organization.
Vital points of performance indicators
3. A performance indicator has to be meaningful : this
means organizations have to
-collect the right information,
-from the right source,
-at the right frequency, and
-we have to provide the evidence and
information
to the right people, in the right format, at the right
time.
Steps in designing of performance indicators
• To facilitate the design of more relevant and meaningful performance
indicators, some scholars proposed the following steps for development of
good performance indicators
Step 1: identification of strategic objectives
Any performance indicator has to be linked to our organizational priorities
and strategic objectives.
- Hence, we should clearly identify our strategic objectives before
development of any indicators.
- Indeed, it is strategic objectives that used as a base to develop
performance indicators and the latter serve to asses the achievement in the
former.
Steps in designing of performance indicators
Step 2: Develop KPQ
• A KPQ is a management question that captures exactly
what it is that people want to know when it comes to
performance of each of the strategic objectives.
• The rationale for KPQs is that they provide guidance for
collecting relevant and meaningful PIs and focus our
attention on what actually needs to be discussed when we
review performance.
Example from BDU STRATEGIC PLAN
ONE OF THE Strategic objective: BDU will design and
execute different strategies and programs with the
intention of promoting staff satisfaction.
• HOW performance indicator can be developed for the
above objective?
THE focus here is Formulation of KPQ: what strategies
and programs do BDU design to ensure staff
satisfaction?
Steps in designing of performance indicators
• N.B. The main reason for strategic performance
management is to improve future performance.
Performance improvement is based on learning.
• Deep and significant learning occurs only as a result of
reflection, and reflection is not possible without a question.
KPQs are therefore essential components of good
performance management.
Steps in designing of performance indicators
KPQs can be extremely powerful management tools as they:
• enable us to design meaningful PIs;
• wake us up and focus our attention;
• help us to think clearly, logically and strategically;
• allow us to challenge the status quo;
• build a culture of engagement and accountability;
• lead to reflection, new insights, learning and performance
improvement.
From where we drive KPQ? From strategic objectives to
KPQs to KPIs
Steps in designing of performance indicators
Step 3: developing of possible PIs corresponding to each KPQ.
Example from BDU
ONE OF THE Strategic objective: BDU will design and execute different strategies and programs with the intention of
promoting staff satisfaction.
• HOW performance indicator can be developed for the above objective?
1. Formulate KPQ: what strategies and programs do BDU design to ensure staff satisfaction?
2. Develop possible performance indicators: some of them can be
- Salary increment
- Resident provision
- Well furnished recreation center (cafeteria, gymnasium, bar and restaurant)
- Transportation service
- Health insurance
- Improve social relationship
- Further education opportunity
- Good leadership ( collegial and supportive relation with supervisors at all level)
Steps in designing of performance indicators
Step 4: Analyze each PIs and develop Limited and focused number of performance
indicators
• N.B. analysis criterions here include
1. The extent to which PI answers the KPQ
2. The extent to which we can collect meaningful data for indicators
3. COST consideration: amount of budget required to collect information
4. The extent to which the indicator help us to make a better decision.
• N.B. If no decisions are made on the data, then no improvements will follow, and the
indicators will be pretty worthless.
• Too often do we end up with data that is interesting to know but which is not really
enabling us to make better informed decisions.
Steps in designing of performance indicators
5. The extent to which the indicator invite cheating
• For instance: If we want to improve service delivery and measure call duration as a key
measure that is tracked by the automated system, then this leaves considerable room
for cheating because call center agents could just hang up – the system wouldn’t know
whether the call was handled satisfactorily or not.
- It is worth to note that no indicator will ever be 100% cheat-proof
- However If the indicator makes it too easy to cheat, it would make sense to reflect on
the indicator, redesign it or not to use.
• - N.B. THE ABOVE FIVE CRITERIONS TAKEN BY SOME SCHOLARS AS A
SEPARATE STEPS.
Step 5: collect performance data
Steps in designing of performance indicators
example in case of BDU: develop Limited and focused PIS
- Based on criterion discussed in this chapter, we should redesign or eliminate some of
PIs
- FOR INSTANCE, salary and provision of insurance need to redesign or eliminate on
the ground of cost ( beyond the university internal revenue generation capacity) or
decision factor ( the university has not legal mandate to decide on such issues and hence
no need to collect information on such indicators since the indicators don't help the
university management to make a better decision).
- Similarly, we need to reconsider the use of improving of social relationship on the
ground of availability and meaningfulness of data in this PI.
- finally we deal with Collection of performance data. This can be done through staff
satisfaction survey or focus group discussion
KPI Key Performance Indicator
KPI Advantages
KPI Advantages
KPI Disadvantages
KPI Disadvantages
Performance data collection
A number of different measurement instruments that can be used to collect
performance data. Major once include:
1. Surveys and questionnaires: commonly used by service providers to asses
their performance in relation with satisfaction of customers. For instance
CS organizations service delivery assessment OR internal employee job
satisfaction assessment and so on
• N.B. It is always a good idea to reduce the amount of time and effort
required to collect performance data, not only for your organization, but
also for your customers, employees, suppliers, etc.
Performance data collection
2. In-depth interviews are guided conversations with people, rather
than structured queries such as surveys.
• Interviews can be conducted face-to-face or via telephone or
videoconference.
• In-depth interviews can, for example, be used to assess elements
such as relationship with key customers, suppliers or partners.
Performance data collection
3. Focus groups are facilitated group discussions (5 – 20
participants) in which participants can express and share their
ideas, opinions and experiences.
• Focus groups are good ways of assessing employee- and
customer-related performance indicators such as customer
experience, customer or staff engagement, team-working climate
or trust.
Performance data collection
4. Mystery shopping approaches are the assessment of a service by a ‘ secret
shopper ’ posing as a client or customer.
For example, instead of the ubiquitous and intrusive customer satisfaction
survey, many service providers, such as hotels or banks, now use focus
groups to identify what really matters to their target customers and then
employ professional mystery shoppers to assess service levels according to
the criteria identified.
5. External assessments: External organizations and institutions can provide
independent performance assessments and indicators.
N.B. external assessment is hardily to provide meaningful information in
politicized environment.
Performance data collection
6. Observations allow us to collect information by observing situations or
activities with little or no manipulation of the environment.
• Observation outputs can take the format of score sheets, checklists,
narrative reports and video- or audio taping.
7. Peer-to-peer evaluation is the assessment of performance in which
participants vote or assess each other’s performance.
• This can either be done openly or anonymously and enables people to
learn from each other and to consider their own performance from the
perspective of other people.
• Peer to- peer evaluations have been successfully used to gauge elements
including trust, knowledge and experience, teamwork and relationships.

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