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Key Performance
Indicators
Key Performance
Indicators
Developing, Implementing,
and Using Winning KPIs
Second Edition
DAVID PARMENTER
For general information on our other products and services or for technical
support, please contact our Customer Care Department within the United States at
(800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley also publishes its books in a variety of electronic formats. Some content
that appears in print may not be available in electronic books. For more
information about Wiley products, visit our web site at www.wiley.com.
Parmenter, David.
Key performance indicators : developing, implementing, and using winning
KPIs / David Parmenter.
p. cm.
Includes index.
ISBN 978-0-470-54515-7 (cloth)
1. Performance technology. 2. Performance standards. 3. Organizational
effectiveness. I. Title.
HF5549.5.P37P37 2010
658.4 013–dc22
2009035911
10 9 8 7 6 5 4 3 2 1
Contents
Preface ix
Acknowledgments xix
CHAPTER 1 Introduction 1
v
Contents
vi
Contents
vii
Contents
Index 295
viii
Preface
ix
Preface
x
Preface
xi
David Parmenter
Writer, Speaker, Facilitator
Helping organizations measure, report, and
improve performance
PO Box 10686, Wellington, New Zealand (+ 64 4) 499 0007
parmenter@waymark.co.nz www.davidparmenter.com
January 31, 2010
Dear CEO,
Invitation to put winning KPIs in your organization
I would like to introduce you to a process that will have a pro-
found impact on your organization. It will link you to the key activities
in the organization that have the most impact on the bottom line. If im-
plemented successfully, it will have a profound impact, enabling you to
leave a major legacy.
I would like to wager that you have not carried out an exercise to
distinguish those critical success factors (CSFs) from the many success
factors you and your senior management team talk about on a regular
basis. I would also point out that much of the reporting you receive,
whether it is financial or on performance measures, does not aid your
daily decision-making process. I know this because much of the informa-
tion you receive is monthly data received well after the horse has bolted.
Whereas this book is principally an implementation guide and thus is
suitable for advisors, facilitators, and implementation staff, I recommend
that you read these sections:
Chapter 1, which explains the background to this breakthrough
Chapter 2, which emphasizes the four foundation stones you need
to put in place and ensure they are not compromised at any time
Chapter 7, on finding your critical success factors
Armed with this information, I trust that you will support the winning
KPI project with commitment and enthusiasm.
By the time you read it, this work will have received international
acceptance. The first edition of this book is a best seller in performance
measurement.
I ask that you spare 45 minutes of your time and listen to my we-
bcast “An Introduction to Winning KPIs” on www.bettermanagement.
com.
I am hopeful that this book, with the support material available on
my Web site, www.davidparmenter.com, will help you and your organi-
zation achieve a significant performance improvement. I look forward to
hearing about your progress.
Kind regards,
David Parmenter
parmenter@waymark.co.nz
xii
Preface
xiii
Preface
xiv
Preface
xv
Preface
xvi
Preface
KPI
Project
CEO Team,
& External Team Co-
Overview Board SMT Facilitator ordinators
Chapter 1 Introduction.
Chapter 2 The foundation stones
for implementing
KPIs.
Chapter 3 Developing and using
KPIs: A 12-step
model.
Chapter 4 KPI team resource kit.
Chapter 5 Templates for
reporting
performance
measures.
Chapter 6 Facilitator’s
resource kit.
Chapter 7 Critical Success
Factors Kit.
Chapter 8 Brainstorming
Performance
Measures.
Chapter 9 Implementation
Variations for
Small-to-Medium
Enterprises and
Not-for-Profit
Organizations.
Chapter 10 Implementation
Lessons.
Appendix List of performance
measures (including
KRIs, RIs, PIs, and
KPIs) to assist with
the short-listing of
likely performance
measures.
xvii
Acknowledgments
xix
CHAPTER 1
Introduction
1. Key result indicators (KRIs) tell you how you have done in
a perspective or critical success factor.
2. Result indicators (RIs) tell you what you have done.
3. Performance indicators (PIs) tell you what to do.
4. KPIs tell you what to do to increase performance dramati-
cally.
1
Key Performance Indicators
KRIs
RIs and
PIs
Peel to the core to find the KPIs
KPIs
Customer satisfaction
Net profit before tax
Profitability of customers
Employee satisfaction
Return on capital employed
2
Introduction
3
Another Random Scribd Document
with Unrelated Content
“Miss Frink, it’s all absurd,” he said. “I don’t need a nurse any
more than a toad needs a tail. I can take care of myself perfectly. I
have my right hand. If you’ll just send up some chow once in a while
—”
“Chow,” interrupted Miss Frink thoughtfully. “You were in the war,
of course.”
“Of course,” said Hugh, smiling at her tone, but with teeth set
owing to an assortment of twinges.
“You must have been wonderful!”
“Oh, I was. Ask Pershing. Say, Miss Frink, I don’t like to be all this
unnecessary expense to you.”
Miss Frink continued to look down at him reflectively. As John
Ogden had said, she liked prosperous folk and had little patience
with derelicts. Had she seen Hugh a few days ago shuffling along on
his way to his job, unshaven, shabby, and careless, she certainly
would not have looked at him twice, or if she had done so would
have dilated disgusted nostrils at the odor of his cigarette; but John
Ogden had sent his protégé forth from the hands of a good tailor
and barber; and, had he known the disaster which befell that fine
new suit, would have rubbed his hands in triumph.
“Don’t fret about expense,” said Miss Frink. “If it were not for you,
I shouldn’t sign any more checks; and, speaking of checks, where is
yours for your trunk? We must send for it.”
“It’s there in my pocketbook with my letter of introduction.”
Miss Frink, taking this as permission, found the pocketbook. She
looked at the marking thereon. “Hugh Stanwood,” she read aloud.
“That is odd,” she said. “Stanwood is one of our family names.” She
looked toward the bed with a little twitch of her lips. “Perhaps we
are related.”
“Who knows?” returned Hugh, who was longing for a cigarette.
“May I read this letter of introduction?”
“It is yours,” he answered.
Miss Frink read it attentively. “John Ogden,” she said aloud as she
reached the signature. “I congratulate you on your friend. I respect
John Ogden very much.”
“So he does you,” returned Hugh feebly, turning his bandaged
head with a weary movement that his hostess was quick to notice.
He was wishing he had never seen John Ogden, and that he was
back, a free Bolshevist without the headache, packing boxes with
both hands in a basement, to pay for his hall bedroom and hot dogs.
Miss Frink, who had sent the nurse out of the room when she
entered, went back to the bedside, and opened a package she had
brought in with her. Hugh’s one violet eye rolled toward her listlessly.
It suddenly brightened. Miss Frink had never looked so shame-faced
in her life.
“You see, I went out and bought them myself, and not having the
least idea what you liked I told the man to give me a variety.” The
handsome box she opened held a number of packages of cigarettes,
all of a different brand, and the lover-like smile Hugh gave her as his
eager right hand shot out made color come up in the guilty face.
“Perhaps the nurse won’t let you, I don’t know,” she said hurriedly
—“here, let me strike the match for you, it is awful to have only one
hand!”
The cigarette was lighted, Miss Frink called the nurse, and fled to
the study where her secretary was busily sorting papers at his desk.
He was a smooth-shaven man in his late thirties, immaculate in
appearance, his retreating hair giving him a very high forehead, and
his small mouth with its full lips seeming an appropriate gateway for
his voice and speech which were unfortunately effeminate.
“Grim,” said Miss Frink upon her sudden entrance, “Mr. Stanwood
has been put in the White Room and the nurse is with him—Hello,
Adèle, I didn’t see you.”
Mrs. Lumbard rose from the floor where she had been sitting
Turkish fashion near the book-shelves.
“I was looking for that ‘Life of Mozart,’ Aunt Susanna. I thought
the ‘Lives of the Musicians’ were on this lowest shelf.”
“No, upper. Take the ladder. Grim, I want you to go up to Mr.
Stanwood’s room and get his suit of clothes, and pack them in a box
and send them to his tailor with an order to duplicate the suit at
once. Explain that he has been in an accident, and that the clothes
and bill are to be sent to me. Here’s his trunk check. Get that, too.
Adèle, why are you here? You know I wanted you to go back to the
festivities.”
“I did, Aunt Susanna,” said the young woman with conscious
rectitude. “I listened to the speeches and applauded, and answered
a thousand questions about you. Why, you’re perfectly wonderful,
Aunt Susanna. Any other woman would be lying in bed in a
darkened room with a bandage around her head.”
“One bandage in the family is sufficient,” said Miss Frink, with a
little excited laugh. “That poor boy upstairs looks as if he had been
through the wars. And he did”—she turned acutely toward her
secretary—“he did go through the war.”
Grimshaw lifted his high forehead in an injured manner. “If that is
aimed at me, Miss Frink, I will remind you once again of my helpless
mother and sister.”
“Oh, yes, yes,” said Miss Frink impatiently, “I know. Scuttle along,
Grim, and do the errand. I believe I’ll jump into your car and just
show myself at the supper at the City Hall.”
“Oh, you’re wonderful, Aunt Susanna!” exclaimed Mrs. Lumbard,
clasping her pretty hands. “If you want me to, I’ll—”
“I don’t. I know how it would bore you. I’ll see that coachman
first. I must get rid of him. I knew the checks weren’t right.”
She swept out of the room as suddenly as she had entered it, and
the two left standing there looked at each other, their expressions
changing from the solicitude they had worn to gravity.
“If the gods hadn’t intervened,” said Adèle softly, “to-night we
should have been—”
“Sh!” warned the secretary.
“Of course, there would be some charities,” she went on, her
brown eyes shining, “but you and I, you and I—”
“Hush!” warned the secretary again. “We can’t be thankful enough
that dear Miss Frink’s life was saved.”
Mrs. Lumbard laughed low. “You’ve said it, Leonard. I don’t think
we can.”
“Adèle!”
“Yes, I know.” She still laughed softly.
CHAPTER IV
A BOBBED HEAD
As her secretary had said, it was Miss Frink’s policy to keep away
from the White Room. Experts, the doctor and the nurse, had charge
of it. Why should she hover about like a fussy old hen, getting in the
way and causing confusion? She had her business to attend to, and
there was no reason why her life should not go on as systematically
as before.
So she argued. Nevertheless, this was more easily said than done.
She had been shocked out of her rut, and so long as that stalwart
figure in bed in the White Room remained recumbent, she knew she
could not really settle into her usual state of mind.
Miss Damon, the nurse, came to her three times a day with
reports, and they were the interesting moments of the day to her.
This noon she awaited the visit with unusual eagerness; and she
hailed the young woman with a cheerful greeting.
“Dr. Morton says Mr. Stanwood may go for a drive this afternoon,”
she said.
“Yes; he is sitting up by the window now, Miss Frink. I thought
perhaps you would like to come in and visit him. He is rather low-
spirited, you see.”
“Is he? Is he?” responded Miss Frink tensely. “What do you think
he wants?”
“Oh, just to get well, I suppose. Convalescence is the hardest part
after such a fever as he has had.”
“Well, I’ll come,” said Miss Frink, straightening herself valiantly,
and she followed to the White Room, where in an armchair by the
window sat a young man with long, pensive eyes. He was wearing,
besides a gloomy expression, a small mustache and short beard
carefully trimmed. A soft blanket was folded about his shoulders and
another spread over the feet that rested on a cushioned stool.
Miss Frink’s startled eyes drew from the nurse the explanation that
Dr. Morton had not wished the patient to be shaved as yet, and
there was no change of expression in the pale, handsome face as
Hugh looked up at her approach.
“Are you willing to shake hands with the old thing that got you
into this mess?” inquired the visitor, and Hugh took her offered
hand.
“I see they let you look out of both eyes now.” She seated herself
near him.
“Yes, that scratch is all right,” he responded.
“Miss Damon thought I would be a cheerful visitor; but I suppose
I’ll never look cheerful to you. Now I just want to know if there is
anything more we can do for you than is being done.” Miss Frink’s
emphatic tone had its usual businesslike ring. “Don’t you want to
smoke?”
At this Hugh’s mustache did curve upward a little, showing a line
of gleaming teeth.
“You don’t like it,” he returned.
“Who said so? Anyway, you’ll teach me.”
Hugh’s smile widened. “She is a good old sport,” he reflected.
“I don’t want that now,” he said, grave again.
“Well, is there anything on your mind?” pursued Miss Frink. The
nurse had left the room. Her taciturn patient had never said an
unnecessary word to her. Perhaps his hostess would have more
success.
“Now, your Aunt Sukey,” went on Miss Frink in a gentler tone than
could have been expected from her. “Don’t be surprised that we
know about your Aunt Sukey; for you called for her incessantly in
your delirium, and I assure you if you would like to see her it will
give me all the pleasure in the world to send for her and have her
stay as long as you like.”
The effect of this offer astonished the speaker. Color slowly flowed
up all over the pale face, and Hugh grinned.
“Did I really call for her? Priceless! No, no, Miss Frink. You’re a
trump, but I don’t want her sent for.”
“Not on good terms, then, I judge from the way you take it.”
“No, we’re not. You’ve hit the nail on the head. I imagine that’s
your way.” Still coloring, he met the solicitous eyes bent upon him as
Miss Frink grimaced her glasses off.
“Perhaps she is opposing a love affair. Don’t mind an old woman’s
plain speaking; but, of course, we saw the sweet face in your
photograph, and it doesn’t seem as if there could be anything wrong
with that girl. I like the quaint way she does her hair. I’m a lady of
the old school, and it’s refreshing to see a coiffure like that in this
day of bobbed idiots. Did Aunt Sukey oppose her?”
“With tooth and nail,” replied Hugh. “You are a mind reader.”
“Well—dear boy”—Miss Frink hesitated—“I want to do anything in
this world I can for you. Are you sure I can’t do anything in this
matter?”
“It’s a little late,” said Hugh.
“Never too late to mend,” returned Miss Frink stoutly and
hopefully. She regarded the beauty of her companion, considering
him in the rôle of a lover. “You look just as if you were ready to sing
‘Faust,’” she said. “I shall call her Marguerite until you tell me all
about it.”
Miss Frink little suspected that she had set fire to a train of
thought which hardened her companion against her, and accented
the repugnance to the part he was playing; a repugnance which had
dominated him ever since the breaking of his fever.
Many times he had definitely made up his mind that, the minute
sufficient strength returned, he would disappear from Farrandale and
repay John Ogden every cent of his investment if it took years to
accomplish it. Two things deterred him: one, his last interview with
Ogden in which the latter reminded him of his lack of initiative and
self-control—in other words, his spinelessness. That stung his pride.
“Remember,” said John Ogden, “of the unspoken word you are
master. The spoken word is master of you.” The other incentive to
continuing the rôle in which he had made such a triumphant début
was Miss Frink’s secretary. Hugh was a youth of intense likes and
dislikes very quickly formed. In spite of himself he liked his brusque,
angular hostess. To be sure, saving any one’s life creates an interest
in the rescued, but it was not only that. Hugh liked the sporting
quality of his great-aunt. He liked the way she had done her duty by
him and not fussed around the sick-room. She was a good fellow,
and he didn’t like her to be under the influence, perhaps domination,
of the spectacled cockatoo who was also, in his own estimation, cock
of the walk. If Miss Frink had kept away from the White Room,
Leonard Grimshaw had not done so. He came in frequently with a
masterful air and the seriousness with which he took himself, and his
patronizing manner to patient and nurse grated on the convalescent.
“I’ll be darned if I’ll leave Aunt Sukey to him,” was the conclusion
Hugh invariably reached after one of his visits.
“There is something on my mind, Miss Frink,” said Hugh, now,
“and that is Mr. Ogden. I’m sure he is wondering why he doesn’t
hear from me.”
“I’ll write him at once,” said Miss Frink. “It shall go out this
afternoon. We’ll mail it together.”
The patient’s long eyes rolled toward her listlessly.
“Yes. You’re going for a drive with me. Dr. Morton says you may.”
“H’m,” returned Hugh. “Not until I get a little more starch in my
legs, I guess. I can barely get to this chair from the bed.”
“Oh, of course the butler and the coachman will carry you over
the stairs.”
“Thanks, no. I prefer not to be handled like a rag doll.”
“What have you got that blanket on for?” demanded Miss Frink,
suddenly becoming conscious of the patient’s garb.
“Why—” John Ogden in his preparations for his protégé had not
had the foresight to prepare for inaction on his part. “I—I haven’t
any bathrobe with me.”
Here the door opened and Leonard Grimshaw walked in. It
entertained Hugh to note the abasement of the uplifted crest as the
secretary saw his employer.
“I beg pardon. I didn’t know you were here, Miss Frink.”
“Whether you knew it or not, you might have knocked,” she
retorted. “Look here, Grim, Mr. Stanwood doesn’t wish to drive to-
day, so I am going now instead of later.”
“Now, Miss Frink?” deferentially. “Luncheon will be served in
fifteen minutes.”
“Now,” repeated Miss Frink. “There is an errand I wish to do.
Order the horses at once, please.”
The secretary bowed in silence and withdrew.
“Bully for you, old girl. You know your own mind,” thought Hugh,
and at that moment the nurse appeared with a tempting tray. The
patient regarded it with a little less apathy than usual. The last few
minutes had been an appetizer.
Miss Frink rose. “Eat all you can, my boy. I shall let you see my
letter to Mr. Ogden before I mail it.”
“Do you know his address?”
“Certainly; Ross Graham buys of him. To tell the truth, I should
have written him long before this if it hadn’t been I was ashamed to
have him know the reception I gave his friend.”
Hugh smiled faintly. Age must have ripened Aunt Sukey. She was
certainly a good sort. Grimshaw couldn’t put it over her whatever Mr.
Ogden might think. Hugh still smiled as he thought of the depressed
crest, and the deference of that voice so full of unction.
The secretary shook his head as he departed on his errand. To
postpone luncheon—why, it was nearly as unheard of as to connive
at cigarettes!
“She’s breaking—breaking,” he reflected. “It’s the beginning of the
end.”