10. KPIs formulation and selection


The saying “What gets measured gets done” illustrates the importance of the right things being measured and inappropriate things being left out. The choice of indicators will have a major impact on the operation and direction of the organization, and knowledge of the factors driving behaviour and influencing performance becomes crucial.

An organization tackling the task of developing a suite of performance indicators needs to address a couple of questions like:

  • What topics should the indicators focus on? and
  • What aspects should be measured?


Focus on the right topics

Performance indicators should focus on aspects that are important for the organization. This means that the organization should be at all time clear about what is seeking to achieve – its core objectives- and how is going to achieve them. Performance indicators should focus on the actions and services provided at each level in the organization to achieve its objectives. High level indicators will address corporate issues while lower level indicators will look at operational and day to day matters.  Also an important rule is that organizations should be careful to avoid the common pitfall of measuring that which is easily measured, rather than that which should be measured.


Focus on the right measures

It is important to develop a balanced set of indicators that reflect all the aspects of the service. There are several different frameworks that can be used to do this.

  • The 3Es framework: use the three dimensions of economy, efficiency and effectiveness
  • The Balanced Scorecard: suggests that four perspectives are needed in an indicator set to present a comprehensive view of the performance of the organization (service, user perspective; internal management perspective; learning perspective and financial perspective)
  • Best Value Performance indicators
  • The NHS Wales Performance Management Framework, etc


Focus on KPIs formulation

The formulation of the right KPIs should follow certain specific steps.

First of all, avoid reinventing the wheel. The World Wide Web gives access to a vast range of indicators and may therefore be great help in a first orientation.

Secondly, attempts to formulate a complete indicator straight away seldom results in good quality indicators. Therefore, based on the characteristics of SMART indicators (Specific, Measurable, Achievable, Relevant, Time-bound) during the formulation of indicators, the following questions need to be asked:

  • What? (brainstorm on the variables, which may provide means to measure change in the objectives or phenomena)
  • How much? (to define the magnitude of the change we want to achieve)
  • Who? (in order to clarify who belongs to the target group)
  • Where? (specific information on the intervention area)
  • When? (definition of the time frame)

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