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Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs, 2nd Edition

ISBN: 978-0-470-59320-2
320 pages
January 2010
Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs, 2nd Edition (0470593202) cover image


An in-depth look at how to create and use key performance indicators (KPIs), from the King of KPIs – now updated and expanded!

By exploring measures that have transformed businesses, David Parmenter has developed a methodology that is breathtaking in its simplicity and yet profound in its impact. Now in an updated and expanded Second Edition, Key Performance Indicators is a proactive guide representing a significant shift in the way KPIs are developed and used, with an abundance of implementation tools, including:
  • The four foundation stones that lead the development and use of KPIs
  • A 12-step model for developing and using KPIs with guidelines
  • A KPI resource kit including worksheets, workshop programs, and questionnaires
  • A new and pragmatic approach to finding critical success factors
  • Over 300 performance measures
  • Implementation variations for small to medium enterprises and not-for-profit organizations
  • New implementation short cuts
  • How to brainstorm performance measures
  • Templates for reporting performance measures
  • A resource kit for a consultant who is acting as a coach / facilitator to the in-house project team

Now including a discussion of critical success factors, as well as new chapters that focus on implementations issues and 'how to sections' on finding your CSFs and brainstorming the performance measures that report progress within the CSFs, Key Performance Indicators, Second Edition will help you identify and track your organization's KPIs to ensure continued and increased success.

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Table of Contents

Preface ix

Acknowledgments xix

CHAPTER 1 Introduction 1

Key Result Indicators 2

Performance and Result Indicators 3

Key Performance Indicators 4

Management Models that Have a Profound Impact on KPIs 16

Definitions 24

Notes 27

CHAPTER 2 Foundation Stones for Implementing Key Performance Indicators 29

Four Foundation Stones Guiding the Development and Use of KPIs 29

Defining Vision, Mission, and Strategy 37

Note 39

CHAPTER 3 Developing and Using KPIs: A 12-Step Model 41

Step 1: Senior Management Team Commitment 41

Step 2: Establishing a Winning KPI Project Team 51

Step 3: Establishing a “Just Do It” Culture and Process 55

Step 4: Setting Up a Holistic KPI Development Strategy 62

Step 5: Marketing the KPI System to All Employees 67

Step 6: Identifying Organization-Wide Critical Success Factors 74

Step 7: Recording Performance Measures in a Database 74

Step 8: Selecting Team-Level Performance Measures 77

Step 9: Selecting Organizational Winning KPIs 86

Step 10: Developing the Reporting Framework at All Levels 88

Step 11: Facilitating the Use of Winning KPIs 96

Step 12: Refining KPIs to Maintain Their Relevance 101

Notes 105

CHAPTER 4 KPI Team Resource Kit 107

Using This Resource Kit 107

Step 1 Worksheet: Senior Management Team Commitment 108

Step 2 Worksheet: Establishing a Winning KPI Team 115

Step 3 Worksheet: Establish a “Just Do It” Culture and Process for This Project 119

Step 4 Worksheet: Setting Up a Holistic KPI Development Strategy 122

Step 5 Worksheet: Marketing the KPI System to All Employees 125

Step 6 Worksheet: Identifying Organization-wide CSFs 132

Step 7 Worksheet: Comprehensive Recording of Measures within the Database 132

Step 8 Worksheet: Selecting Team Performance Measures 133

Step 9 Worksheet: Selecting Organization-wide Winning KPIs 141

Step 10 Worksheet: Developing Display, Reporting, and Review Frameworks at All Levels 143

Step 11 Worksheet: Facilitating the Use of KPIs 146

Step 12 Worksheet: Refining KPIs to Maintain Their Relevance 146

CHAPTER 5 Templates for Reporting Performance Measures 155

Reporting Key Result Indicators in a Dashboard to the Board 155

Reporting Performance Measures to Management 163

Reporting Performance Measures to Staff 169

Graph Format Examples 172

Notes 184

CHAPTER 6 Facilitator’s Resource Kit 185

Remember the Fundamentals 185

KPI Typical Questions and Answers 187

CHAPTER 7 Critical Success Factors Kit 199

Benefits of Understanding Your Organization’s CSFs 200

Relevant Success Factors 204

Step 6: Identifying Organization-wide Critical Success Factors 205

Finding the CSFs through a Relationship Mapping Process 212

How I Organize the Critical Success Factor Workshop 213

Note 222

Appendix 7A: Where to Look for Your Success Factors 222

Appendix 7B: Letter Invite from the CEO 224

Appendix 7C: Success Factors Workshop Planning Checklist 225

Appendix 7D: Workshop Instructions 227

Appendix 7E: Success Factor Matrix 233

CHAPTER 8 Brainstorming Performance Measures 241

CHAPTER 9 Implementation Variations for Small-to-Medium Enterprises and Not-for-Profit Organizations 243

Small-to-Medium Enterprises 243

Not-for-Profit Organizations 246

CHAPTER 10 Implementation Lessons 253

How to Implement Winning KPIs in 16 Weeks 253

Notes 265

Epilogue: Electronic Media Available to You 267

Appendix: Performance Measures Database 269

Index 295

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Author Information

David Parmenter is an international presenter who is known for his thought-provoking and lively sessions, which have led to substantial change in many organizations. He is a leading expert in the development of winning KPIs, replacing the annual planning process with quarterly rolling planning, quick month-end processes, and converting reporting to a decision-based tool. Parmenter's work on KPIs is recognized internationally as a breakthrough in understanding how to make performance measures work. He has delivered workshops to thousands of attendees in many cities around the world including Sydney, Melbourne, Kuala Lumpur, Singapore, Tehran, Johannesburg, Dublin, London, Manchester, Edinburgh, and Prague. Parmenter has worked for Ernst & Young, BP Oil Ltd, Arthur Andersen, and PricewaterhouseCoopers, and is a fellow of the Institute of Chartered Accountants in England and Wales. He is a regular writer for professional and business journals. He is also the author of Pareto's 80/20 Rule for Corporate Accountants (Wiley). David can be contacted via parmenter@waymark.co.nz. His website www.davidparmenter.com contains many white papers, articles, and freeware that will be useful to the reader.
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"The book makes an important distinction that separates performance indicators from results indicators (like profits, market share percentages, or customer satisfaction numbers), and gives an intriguing list of characteristics for identifying a KPI in the wild. All in all, it's a very handy reference for making sense of something people think they already know - but don't." (Accounting Today, Aug 16-Sept 12, 2010)

"(Parmenter)...draws on his previous research and experience to compile a series of 'how-to' guide-lines for performance improvement implementation for senior managers." (Accountancy Ireland, August 2010)

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