Many business processes are measurable. That does not make them key to the company's success. In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organization reaching its objectives and it is also essential to keep the number of Key Performance Indicators small just to keep manager's focused on the right indicators.
The main characteristics of good KPIs include alignment to the organisation perspectives, measurement of its main actions and connect different processes. Too many managers fail to use poor KPIs. KPIs must drive performance. In addition to goal setting, KPIs are the most important support available for a positive organizational performance. Be aware, however, that even poor KPIs drive performance to poor results.
In our experience, poor KPIs are the ones that have no connection with the true drivers of processes taken into consideration.
Once you have good Key Performance Indicators defined, ones that reflect your organization's target, one that you can measure, what do you do with them?
You use Key Performance Indicators as a performance management enabler, but also as a messenger.
KPIs give everyone in the organization a fresh picture of what is important, of what has to be done. You use that to manage performance. You make sure that everything the people in your organization do is focused on meeting or exceeding those Key Performance Indicators.
You also use KPIs as a messenger. Post KPIs everywhere: on the corporate portal, on the walls of the coffee break room, even on the web site for some of them. Show the path toward that target for each of them. People will be motivated to reach those targets more than any other less visible goal.