The lifecycle of a Key Performance Indicator (KPI) is a dynamic process involving definition, recalibration, and—sometimes—abandonment. From establishment to practical application and ongoing evolution, KPIs undergo several steps to effectively measure performance, and prioritizing data reliability at every stage is crucial to achieving their intended purpose.
The foundation of reliable data
The first stage of the cycle, KPI selection, may seem simple, but it is a complex process intertwined with various interdependencies and calibrations with the organization’s objectives.
Establishing data reliability should start from this initial step, and involving employees as primary sources for KPI selection is an effective approach. Their valuable knowledge about the data generated from their activities enhances the reliability of the selected KPIs. Additionally, considering data availability and reliability as criteria for the selection further enhances overall data trustworthiness.
KPI documentation plays a pivotal role in ensuring reliability. Adopting a standardized documentation form establishes a solid foundation for rigorous and dependable data collection and reporting. This approach provides clear guidelines for defining KPIs, including unambiguous calculation formulas, ensuring that the collected data accurately reflects the intended purpose of each KPI.
Establishing dependable data collection
During the activation of KPIs, data reliability depends on the meticulous consideration of data sources, robust data-gathering methods, and the establishment of a strong governance structure. It is imperative to utilize trusted and verified data sources that are up-to-date, accurate, and aligned with the KPIs being measured. Accountability for KPI data should be established by clearly designating KPI owners and data custodians. Furthermore, adopting a standardized data collection process that incorporates technology-driven solutions significantly enhances accuracy.
Communicating meaningful insights
The analysis and reporting of KPIs are significant in ensuring the correct organization and communication of data to key stakeholders. Errors in data analysis have the potential to result in misleading insights, which can have negative effects on decision-making. Therefore, correctly identifying relevant KPI content and conveying meaningful insights derived from KPI data to various stakeholder groups within the organization is essential.
Continuous improvement
Finally, data reliability can be enhanced through the process of refreshing KPI documentation. This ongoing effort involves recalibrating KPIs after their initial establishment and customizing them for optimal use.
Attention is given to both the content of the KPIs and the standardization of their format. Standardizing KPI content establishes uniform guidelines and criteria for measurement and reporting, ensuring data reliability and consistency. This step refines the measurement and reporting processes, facilitating accurate and dependable data for decision-making purposes.
Monitoring KPI data reliability: The role of the Data Custodian
The Data Custodian is critical in upholding the reliability of data. They actively participate in the design of performance data collection, receipt and storage, processing, analysis, reporting, dissemination, and even archival or deletion of data. They implement measures to validate and verify the accuracy, consistency, and completeness of the data. This involves conducting regular data audits, resolving discrepancies or anomalies, and implementing data cleansing processes to ensure data integrity.
To evaluate the reliability of KPI data, the Data Custodian can monitor % KPIs with reliable data. This metric measures the number of reported KPIs that contain reliable and trustworthy content out of the total number of KPIs reported, according to smartKPIs.com.
In conclusion, to succeed in a data-driven world, organizations must prioritize data reliability along the KPI lifecycle. By implementing the strategies and practices discussed above, organizations can unlock the true potential of their performance measurement systems and empower stakeholders with reliable insights for better decision-making.
Globally, up to 2.78 million workers die annually from occupational accidents and work-related diseases, while another 347 million suffer from non-fatal occupational accidents, according to the United Nations Global Compact.
Dealing with work-related accidents severely impacts corporate management performance by generating direct and indirect costs and repercussions. Some of these are medical costs, losses due to production downtime, loss of productivity, and low employee morale. A company can also be sanctioned by authorities or suffer from reputation damage, which in turn may result in sales reduction.
Thus, occupational safety and health (OSH) is a priority for businesses. OSH is the practice of protecting the safety and health of employees by identifying workplace hazards and implementing initiatives meant to prevent their occurrence. OSH standards and regulations exist at the international and the national levels, and companies are responsible for adopting them.
To support OSH, the International Labour Organization and the United Nations Global Compact identified business practices to improve workplace safety and health, and one of which encourages companies to “enhance the reporting, recording, and notification of occupational injuries and diseases to improve data collection.” Through the improved recording of workplace mortality and morbidity, companies and authorities can evaluate the performance of internal OSH systems, prioritize OSH initiatives, and enhance corrective actions and prevention efforts.
The performance of such initiatives can be tracked with the help of health and safety key performance indicators (KPIs), such as # Lost Time Injury (LTI), # Lost Time Injury Frequency Rate (LTIFR), % Health and safety (H&S) incident type breakdown, % Health, security, and safety training completed, % Compliance OSH regulations, and % Lost day rate.
The healthcare manufacturing industry is a high-risk industry when it comes to occupational safety and health due to the nature of the products and the operating environment. The OSH problems faced by workers in this industry include exposure to chemical and biological substances, exposure to physical hazards, ergonomic affections, and hazardous processes using heavy machinery.
Medtronic and Johnson & Johnson are renowned corporations in the industry and have established a strong presence in the market. Both companies stated their strong commitment to ensuring the well-being of their employees and have implemented comprehensive OSH systems.
Medtronic, a global leader in medical technology, services, and solutions, strongly focuses on health and safety, implementing enterprise-wide standards to reduce hazards and risks and prevent workplace accidents. Their Environmental, Health, and Safety Performance System monitors the recordable incident rate, employee training, and auditing while providing employees with tools to reduce risks and employ safe behaviors.
As revealed by the KPIs’ results for the last four years, Medtronic’s EHS system achieved notable progress in enhancing workplace safety. Three of the indicators have shown a decreasing trend compared to previous years. Only the % Employee injury incident rate has slightly raised due to an increase in slips, trips, and falls, as stated in the company’s ESG Report.
To address the issue, the company launched a comprehensive awareness campaign across all its sites and took measures to improve outdoor walking surfaces and lighting where deficiencies were detected.
As part of the ongoing initiatives that supported continuous improvement, Medtronic implemented a companywide hazard reporting tool, which allows employees to report potential risks and near-miss incidents. This enables the company to take timely mitigating measures and reduce the likelihood of incidents.Johnson & Johnson, a popular healthcare company that produces a wide range of medical devices, pharmaceuticals, and consumer packaged goods, has implemented thorough safety programs, risk assessments, and training for its employees.
Johnson & Johnson’s OSH system incorporates a global data management system with digital tools, predictive analytics, and visualization tools to track the OSH KPIs, gain deeper insights into their performance, and identify potential risks early.
Using leading indicators facilitates a proactive avoidance of workplace injuries. Examples of leading KPIs the company uses include # Corrective and Preventive Actions (CAPA) resulting from program evaluations, internal audits, and # Near misses.
The company’s recent focus was to prioritize resources and risk mitigation efforts to prevent those incidents that could lead to life-threatening or life-altering outcomes. By following the hierarchy of controls, with an emphasis on eliminating, substituting, or engineering controls rather than relying on administrative controls, the company was able to reduce indicators of fatalities and serious injuries.
Despite this, the other two KPIs showed a slight increase in 2021, contrary to the downward trend seen in previous years.
KPIs drive occupational safety and health performance
There is no one correct formula for employee safety. Starting from the authorities’ standards and recommendations, companies should develop OSH systems tailored to their needs. Business practices focused on employees’ participation in risk identification, periodic audits, OSH training, safe behavior stimulation, and awareness activities could help create a preventive and safety culture.
As shown by the examples of Medtronic and Johnson & Johnson, top-tier companies operating in a high-risk sector, regardless of the chosen initiatives, effective systems enhance the recording and reporting of OSH KPIs.
Monitoring the leading indicators to proactively identify potential risks and implement mitigation measures and lagging indicators to understand the current deficiencies and apply corrective actions can determine the success of an OSH system in creating a safer, healthier, and more efficient workplace.
People have been working from home even before the pandemic, but their number significantly increased when the health crisis led to lockdowns and travel restrictions. Companies were forced to send their employees home to work remotely to comply with social distancing measures and keep the workforce healthy. Statista shows that before the pandemic, only 17% of US employees worked remotely for five days or more weekly. However, the number grew to 44% during the outbreak in 2020.
When the pandemic subsided and governments eased travel restrictions, some companies asked their workforce to return to the office while others offered the hybrid set-up. However, most employees still prefer remote work.
A poll conducted by Pew Research Center with 5,889 workers in America in January 2022 found that 61% of those who work from home said they avoid going to work by choice and 38% claim their office is closed. It represents a shift from October 2020, when 64% of people worked from home because their office was closed and 36% did so voluntarily.
In spite of that, 50% of leaders in information worker roles want to pursue getting employees back to the office full-time next year, based on Microsoft’s Work Trend Index 2022 report. Still, 52% of respondents say they highly consider becoming remote or hybrid in the year ahead and 80% claim that since remote or hybrid work arrangements were implemented, their productivity has increased.
How Remote Workers Can Be More Productive
According to the popular job site Flexjobs, one of the benefits of working from home is it increases “productivity and performance” as employees encounter fewer interruptions, have a quieter work environment, and have increased workplace comfort, resulting in more focused time.
In a research conducted in Latin America, they explored the relationship between remote work, work stress, and work-life during pandemic times. Researchers found out that by having flexible work schedules, the employees’ engagement and productivity levels increased because they could work at their most productive time. Privacy also plays a big role in employees’ efficiency. However, the productivity level is negatively affected when the worker is constantly interrupted by children or adults that need assistance.
A case study published in the Journal of Occupational and Environmental Medicine investigated the impact of family-work conflict, social isolation, distracting environment, job autonomy, and self-leadership on employees’ productiveness, work engagement, and stress experienced when working from home during the pandemic. The authors discovered that excellent self-leadership skills and autonomy positively impact the time assessment in a WFH scenario.
Results from a qualitative study by Danielle Tinneveld of Radboud University also show that productivity tracking facilitates the identification of process bottlenecks. The affected staff gets less anxious and annoyed when these difficulties are resolved, and overall production efficiency improves.
How Employees Can Track Their Productivity at Home
On a remote workday, people have to manage work and non-work-related tasks. To be productive, they have to master the art of time planning. Effective time management involves planning each activity in a time frame, considering priorities such as urgent work tasks and eating breaks. Individuals should fit their activities into 16 hours to get 8 hours of sleep each day to achieve great productivity. By monitoring the duration of their tasks, they can observe which actions can be improved.
To see if their time management strategy is effective, remote workers can use key performance indicators (KPIs). Some KPIs they can consider are:
By monitoring the percentage of tasks performed as planned, individuals can see if they reached their target or not. By knowing the percentage of time spent working, people have insights into the free time left for non-work-related tasks, such as going on a walk, relaxing, cooking, eating, and other housework activities (washing clothes and dishes, drying clothes, cleaning floors).
It’s a different story for employees whose companies have return-to-office schemes. Their organizations should rethink their performance management system to consider the new ways of working that employees gained during the pandemic. Evaluating the relevance of KPIs has become important now more than ever. To better understand KPIs, its nature, characteristics, and implementation, enroll now to The KPI Institute’s Certified KPI Professional and Practitioner course.
When implementing a Performance Management System (PMS) based on Key Performance Indicators (KPIs), the organization needs to create a favorable context to plan, organize, coordinate, communicate, and control performance. Such endeavor implies multiple initiatives, resources, and most of all, employee engagement. However, challenges are inevitable. These challenges often arise from the mechanisms and relations by which the KPI Measurement Framework and KPI-related processes are controlled and directed.
As such, unclear definitions and overlap of roles and responsibilities and lack of ownership, commitment, or clarity in terms of target achievement accountability are some of the most common challenges that may endanger the achievement of strategic business objectives and goals. The root cause of these dysfunctions is that KPI governance structure has never been clearly defined or described.
KPI governance structure
There are multiple parties involved in governing and managing KPI-related processes, and all play a specific role in promoting, supporting, designing, implementing, and maintaining the KPI measurement framework. A typical KPI governance structure includes the following components:
Performance Manager – Responsible for supervising the entire process
PMO specialists – Support the persons involved in the process, analyze data and check it for accuracy
KPI owner – Responsible for KPI target achievement
Data custodian – Responsible for KPI results collection/ data collection
KPI owners and data custodians have two of the most operational KPI governance roles within the organization. While the data custodians are responsible for ensuring that high-quality KPI data is gathered and communicated to all interested stakeholders, the KPI owners are mainly responsible for the KPIs under their management, making sure that they are viable and measurable.
KPI owners’ role and responsibilities
Within a standard Data Governance Framework, a data owner is in charge of ensuring that processes are followed to guarantee the collection, security, and quality of data. Frequently in a senior or high-level leadership position, a data owner has a role in planning the data, supervising access to it, ensuring data security, and defining a repository to contextualize the data.
Similarly, a KPI owner is responsible for overseeing the process, function, or initiative that the KPI is monitoring. That person has access to the data, knowledge of how that domain functions, and, most of all, is empowered to make decisions on improving operations.
In a nutshell, the KPI owner is responsible for reaching KPI targets through the following actions:
Monitoring (looking at) the measure over time
Interpreting its trends and patterns and seeking causes for them
Communicating this information to people affected by that performance area
Initiating action to improve performance in that area
Following up to be sure that actions have the desired effect on performance
Data custodians’ role and responsibilities
Within a KPI governance framework, data custodians are involved in the design of performance data collection, receipt and storage, process, analysis, reporting, publication, dissemination, and archival or deletion of data. The daily processing and management of performance data are therefore under the control of appointed data custodians. The person assigned with such a role must demonstrate high levels of data literacy as well as skills in data management software systems and tools.
Other required competencies for a data custodian are as follows:
The ability to intuitively identify and recognize any variance from the data quality dimensions
Focused on the improvement and automation of the process
Can competently apply the behaviors and skills of managing change
Uses change as an opportunity to advance business objectives
Works to minimize complexities, contradictions, and paradoxes or reduce their impact
Unifies leadership support for direction and smoothens the process of change
We may say that the data custodians are the guarantors of a sound performance data gathering process. Because of that, the profile of such an individual should also cover an analytical mind, experience in measuring and reporting metrics/ KPIs, information technology skills (basic Microsoft Excel or more advanced data analysis tools, depending on the data architecture`s level of automation), and a strong sense of integrity and ethics.
While some companies may hire specialized professionals, such as data analysts, other organizations may assign the data custodian roles to the existing employees.
Conclusion
Building a strong KPI governance team is a key part of the KPI-related processes and functionalities and of successfully overcoming the inherent challenges of implementing a PMS. Once the right people are on board, they need to be guided towards making the right decisions and focusing on the correct issues, ultimately making sure that information is being governed for a purpose that aligns with business objectives.
“If you aim at nothing, you will hit it every time.” — Zig Ziglar
When the cost of managing and measuring your performance is less than the tragic risk of hitting nothing, it pays to get your KPIs right.
KPIs, or key performance indicators, can prove that success is a result of not just one huge undertaking but a series of actions. These actions are taken by decision-makers that consistently rely on data rather than guesswork.
In this guide, you will learn the basics and benefits of KPIs and beyond. Explore the top articles, webinars, reports, and other materials produced by The KPI Institute, a leading global research institute specializing in business performance and KPI research for over 17 years.
Topics include:
What Is a Key Performance Indicator?
Why Companies Should Use KPIs
KPI Examples
Applying the KPI Best Practices
The KPI Measurement Framework
What Is a Key Performance Indicator?
The definition of a KPI, according to The KPI Institute, is “a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity.”
“If a decision support system is put in place, users need the right data granularity and the guidelines or context for making the right decisions. All of these reasons have an underlying story, and top-performing organizations are able to clearly communicate that story to their employees.”
“As performance management & measurement is shaping up as a fundamental capability for organizations across the globe, there are still multiple challenges to be overcome.”
“Nowadays, the challenge is not about accessing information, as most companies are managing large volumes of data. The challenge is to decide which data is the most important for decision making.”
“What have been some of the changes that the Performance Management field has experienced over time? What are some one-size-fits-all style KPIs that any company can employ?”
Discover the role of KPIs in designing a rigorous Performance Management System (PMS) to ensure an optimized implementation across all organizational levels.
Compare KPIs and other performance evaluation criteria, identify the common KPI pitfalls, and discover how to use KPIs to create synergies between departments.
“In many cases, the key performance indicators (KPIs) monitored do not seem relevant as they are not connected to the strategy. To better understand how this problem can be addressed, we must first identify its possible causes.”
“What are the most important guidelines to follow when selecting KPIs for strategic objectives? What are the most efficient KPI Selection techniques, most recommended KPI selection environments, and some Value Flow Analysis technique examples?”
“A KPI implementation project plan provides a structure for the implementation of an organization’s performance management system. Once the project plan is set, all types of activities would have a clear deadline and designated responsibilities.”
“When formalizing and implementing a performance management system (PMS) based on key performance indicators (KPIs), there are multiple activities to be considered and many stakeholders to be engaged in the process. Therefore, you’ll need a project plan to make performance management an ongoing process within your organization.”
“An important component of performance measurement is represented by the data collection capability. However, when applied in the organizational context, this process is neither easy nor lacking obstacles, as practitioners often discover.”
“KPI selection is a process which seems simple, yet is inherently complex, due to the interdependencies involved. Here are 15 things to consider before embarking on this journey.”
“Just reporting performance data will not ensure the improvement of results. Improvement is only possible when decisions are made based on the insights provided by data.”
KPIs are not just about understanding and working with numbers. Using KPIs requires stakeholders to fulfill a vision and commit to ensuring success across all levels of their organization. If you would like to learn how to select the right KPIs for your organization, sign up for The KPI Institute’s Certified KPI Professional and Practitioner live online course today.
