Overview

Key performance indicators or KPIs are used to track the performance of a business process. However, organizations today are tracking too many superfluous KPIs. KPIs are only valuable if they give a clear direction on action that needs to be taken to improve performance. Therefore, if organizations today are going to gain value from their KPIs, they need to restrict them to those that provide relevant and important information. This means they need to select KPIs that relate to the business.

Once the proper KPIs are identified, they need to be measured regularly and consistently. The KPIs should be analyzed and compared to internal and external benchmark levels. They should be continuously monitored to insure that any significant trend or change in the KPI is noticed. The trend should then be analyzed to understand why the changes have taken place and why the KPIs are trending up or down. The organization can then take action to remedy any undesirable results.

For the KPIs to be successful, they need to be well understood throughout the plant and communicated clearly to all employees. KPIs should also be hierarchically driven, which means that departmental KPIs need to be able to link to corporate KPIs. Therefore, for executive management to pay attention to departmental KPIs, the maintenance manager needs to be able to explain how departmental KPIs impact corporate KPIs. This will usually involve translating functional performance indicators into financial performance indicators. If this can be accomplished, the KPIs system will typically be...