KPI System Management Guidelines

As I stated earlier, the fundamental objective of managing a business is to transform the business entity in question into a happy organization. And to keep it that way.

By definition, a happy organization is the one that satisfies to the maximum possible extent (and definitely better than its competition) aggregate needs – financial, functional, emotional and spiritual - of its internal and external stakeholders – owners, clients, employees, partners, etc. In other words, creates the maximum amount of aggregate value for its stakeholders.

To accomplish this objective, your company must maximize its aggregate performance measured by corporate key performance indicators (KPI). Therefore, your company must develop and maintain a truly comprehensive, well-structured and easy-to-use KPI system.

There are two complimentary ways to structure this system – and you will need to use both. The first one is built around the comprehensive system of corporate objects visualized and structured by the Key Business Management Diagram (KBMD); the second one is represented by a system of KPI trees (decomposition of composite KPI).

In both cases, KPI values must be measured, analyzed and maximized using the corresponding Object KPI Scorecards (KPIS). KPIS must contain (1) historic KPI values – benchmark, planned and actual; (2) name and title of KPI manager as each KPI must have one and only one manager responsible for optimizing value of the KPI in question; (3) ACRC section for a dynamic KPI management – analysis, conclusions, recommendations and comments; KPI values optimization plan – financial and operational; and links to all documents and queries related to the KPI in question.