Key performance indicators (KPIs) share insight into how well things are going in an area that you have deemed to be critical for business success. Every KPI must be fine-tuned for the occasion. That means the KPIs that other people choose to use should probably have no bearing on how you operate. In a post at his blog, Joe the IT Guy further discusses how to properly use and understand KPIs.
Context and the KPI
Joe begins by noting the differences between KPIs and critical success factors (CSFs). Basically, CSFs are things that must be achieved in order to reach goals, and KPIs are what measure how well progress toward those goals is progressing. So CSFs come first, then the KPIs. And when talking with customers, the CSFs should actually take precedence, with the KPIs being a supplementary point.
Trying to use “best practice KPIs,” where certain KPIs are selected just because they are generally “better” than others, is dangerous. It is dangerous because generally better KPIs do not exist. Joe gives the example of “reduction in the number of failed changes” as an alleged best practice KPI to examine. He explains how using it as a KPI could go wrong:
Imagine an organization where the change management process is not working very well… The organization decides to re-launch the change management process, so they train and motivate staff, appoint a new Change Advisory Board (CAB), and start to do a really good job of reviewing changes. The new process works well and the number of change requests goes up from 10 per week to 100 per week. At the same time the number of failed changes goes up from zero (only very safe changes were previously being logged) to 10 per week. This is clearly a good thing, but the KPI has gone in the wrong direction.
Thus, as usual, context is everything. Do not get lax with your imagination when building KPIs. You can view the original post here: http://www.joetheitguy.com/2016/11/02/dont-use-peoples-kpis/