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How can you use KPIs to identify areas for process improvement?

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Process improvement is a key goal for any business that wants to increase efficiency, quality, and customer satisfaction. But how do you know which processes need improvement and how to measure the results? That's where key performance indicators (KPIs) come in handy. KPIs are measurable values that show how well a process is performing in relation to a specific objective. In this article, you'll learn how to use KPIs to identify areas for process improvement and some examples of KPIs for different types of processes.

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Dr. Michael Thiemann

Elite Business Strategist & Organizational Transformation Leader with Fortune 100 Companies | HBR Advisory Council &…
Alaa Hariri, PROSCI?, C-BSC, C-KPIP, PMP?, PMI-RMP?

Consulting Manager | Change Mgmt, Project Mgmt, Strategy & Transformation | ex - PwC

1 What are KPIs and why are they important?

KPIs are metrics that track the progress and outcomes of a process. They help you evaluate the performance of a process against a predefined target, such as a benchmark, a goal, or a standard. KPIs are important because they provide you with data and feedback that can help you identify strengths and weaknesses, spot trends and patterns, and make informed decisions. KPIs can also motivate and align your team around a common vision and direction.

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Alaa Hariri, PROSCI?, C-BSC, C-KPIP, PMP?, PMI-RMP?

Consulting Manager | Change Mgmt, Project Mgmt, Strategy & Transformation | ex - PwC
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Key Performance Indicators, or KPIs, are measurable metrics that organizations use to evaluate their success in reaching specific objectives. KPIs are quantifiable, providing a clear and objective measure of performance. They are often tied to organizational goals and help in assessing progress over time.

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2 How to choose KPIs for process improvement?

Choosing the right KPIs for process improvement depends on several factors, such as the purpose, scope, and complexity of the process, the stakeholders involved, and the data available. However, it’s important to select KPIs that are relevant and meaningful to your strategic objectives and customer expectations. They should also be specific, measurable, achievable, realistic, and time-bound (SMART). Additionally, you should choose balanced KPIs that cover both qualitative and quantitative aspects of the process, such as efficiency, effectiveness, quality, and satisfaction. Lastly, the KPIs should be actionable - meaning they can be influenced by your actions and interventions - in order to trigger corrective or preventive measures if needed.

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Graziele Barros

Family Office |Real Estate |Shopping Center |Novos Negócios | Consultor associado |Gest?o |Análise de Negócios |Negocia??o |Conselho Consultivo - Certificada
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KPI é como meta: se estabelecido algo muito básico n?o há estímulo real para melhoria, se colocado algo inalcan?ável ou sem possibilidade de interven??o, caímos no desanimo e/ou descrédito. Como aferir? Evolu??o de dados do mercado x evolu??o de dados da empresa considerando ambiente macro e similaridades e tendo o cuidado para n?o tomar como referência resultados obtidos por fatos an?malos ou que n?o estejam no core da empresa. Recentemente acompanhamos uma empresa listada cujo o resultado foi extraordinário, só n?o ficou claro que decorreu da venda de um ativo que nada tinha a ver com o negócio.

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3 How to measure and monitor KPIs for process improvement?

Once you have selected your KPIs for process improvement, you need to measure and monitor them regularly and consistently. This requires defining data sources, methods, and frequency of data collection and analysis. Establishing baseline, target, and threshold values for each KPI, as well as the reporting format and frequency is also necessary. To communicate the KPIs and their results to your team and other stakeholders, you can use dashboards, reports, or visualizations. Additionally, you should review the KPIs and their results periodically, comparing them with the baseline and target values to identify any gaps or deviations. Finally, take action based on the KPI results - such as adjusting the process, implementing improvements, or celebrating successes.

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4 How to use KPIs to identify areas for process improvement?

Using KPIs to identify areas for process improvement involves analyzing the data and feedback from the KPIs and looking for opportunities to enhance the process. Ask yourself which KPIs are not meeting or exceeding target or threshold values, which are showing significant changes over time, which are correlated with other factors or variables, which are indicating customer dissatisfaction, and which are highlighting waste, inefficiency, or errors. By answering these questions, you can determine the areas of the process that need improvement and prioritize them according to their impact, urgency, and feasibility.

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5 What are some examples of KPIs for process improvement?

The KPIs used to measure process improvement vary depending on the type, nature, and purpose of the process. For production processes, cycle time, throughput, yield, defect rate, or downtime can be used as KPIs. When measuring service processes, response time, resolution time, first contact resolution, customer satisfaction, or net promoter score are some options. Project processes can be monitored with KPIs such as scope, schedule, budget, quality, or stakeholder satisfaction. Lastly, ideation rate, conversion rate, time to market, return on investment, or customer feedback are some examples of KPIs for innovation processes.

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Jené Lee LSSBB, PMP

PROFIT/LOSS CONSULTANT Helping LARGE COMPANIES to SUPERCHARGE their EMPLOYEES to become ORGANIZATIONAL LEADERS that drive PROCESS IMPROVEMENT and INNOVATION to INCREASE company PROFITS EXPONENTIALLY ??????
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Takt time, error rate, effectiveness, cost effectiveness, profitability, capacity indicators, competitiveness indicators, and timeliness are other samples of KPI's used in process improvement. Make sure you choose KPI's to measure time, resource allocation, and money spent because those are the most important for business.

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Arindam Nag

Product Manager @ TCS? CSPO? ? B2B2C ? Product Strategy ?Ex-Ericsson | British Telecom | Allscripts Immediate Joiner
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TTM KPI is the key to reduce time and increase throughput for a project. Other than that stakeholder and customer satisfaction score is also a good contributor in process improvement.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Dr. Michael Thiemann

Elite Business Strategist & Organizational Transformation Leader with Fortune 100 Companies | HBR Advisory Council & Forbes Contributor | Author | C-Suite Coach | Keynote Speaker | Driving Sustainable Business Innovation
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Integrate OKRs into your strategic planning. Use them to set ambitious goals (Objectives) and employ KPIs as measurable outcomes (Key Results). This integration ensures that your team is focused on achieving targets and fulfilling broader business objectives.

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Kamaru Shittu ACA, CFIT, MBA, MNIMN, MIBF, MPSN

Lead Consultant CEO / SiBCONSULT
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Critical Success Factors are the second leg of KPIs. For every KPI, its critical success factors have to be identified. These factors determine the performance of the process. If the indicators are not satisfactory, we look in the direction of the success factors. This points out areas that need improvement as we go along with the process. As tracking the KPIs is important, so is knowing the buttons (success factors) to press when it looks like the expectations will not be met at the end.

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Mostafa Isa

Project & Design Lead | Managing Complex Large-scale Projects Focusing on Teamwork, Communication, and Results
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While KPIs are valuable for tracking progress, they can inadvertently become the sole focus, overshadowing the project's original purpose. It's essential to strike a balance — leveraging KPIs to monitor progress while ensuring the primary goal of delivering real value to clients and society remains at the forefront of our efforts. Ultimately, KPIs should serve as guiding metrics, not overshadow the true mission.

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How can you use KPIs to identify areas for process improvement?

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1 What are KPIs and why are they important?

2 How to choose KPIs for process improvement?

3 How to measure and monitor KPIs for process improvement?

4 How to use KPIs to identify areas for process improvement?

5 What are some examples of KPIs for process improvement?

6 Here’s what else to consider

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How can you use KPIs to identify areas for process improvement?

1

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3

4

5

6

1 What are KPIs and why are they important?

2 How to choose KPIs for process improvement?

3 How to measure and monitor KPIs for process improvement?

4 How to use KPIs to identify areas for process improvement?

5 What are some examples of KPIs for process improvement?

6 Here’s what else to consider

Business Management

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