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Creating, Monitoring and Analyzing Key Performance Indicators

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Author: Jaime Menor
In order to measure the organization’s performance with key performance indicators, you first need to know what actually is/are your goal. You should specifically identify the results you are expecting. You should establish clear goals that reflect various areas of the company: revenue and profit, spending, safety procedure, asset management, human resources services, client/costumers services and so forth. Key performance indicators are not limited to income; focus on a variety of areas. in Philippine Government they have clustered it into three category they called it Major Final Output (MFO) the Support to Operations (STO) and General Administration and Support Services (GASS). Review the company’s business goals, and apply these to the desired results. It is, after all, difficult to establish a rate of success without an expectation for success.

Create a matrix -Establish or create a matrix with an extensive set of parameters on every PERFORMANCE INDICATORS in a different areas of the organization, specify the correct numbers or specific time of the delivery of services that the company are rendering in order to reach its goals. This step goes beyond in identifying the output/result, it also gives shape to those result/output with actual numbers that represent objectives. Ask yourself how much profit the organization needs to make, how can you expand your market share, how many new customers it needs to add, how much money it needs to save and so forth. A company or an organization that makes 1 billion a year might have a goal of making 2 billion a year. That 2 billion is a specific, clear goal more than just a goal of “increasing profits.”

Monitoring – monitor the progress that has occurred so far. Key performance indicators work alongside at every specific activity, and developing indicators for future activities requires an understanding of what has already occurred or is in the process of occurring. If the company has a goal of making 1 billion a year and is currently making $1.5 billion a year, the company is approximately 75 percent of the way toward its goal. Establish the frequency of reviewing all target indicators. Looking at key performance indicators should not occur just once but should be a process that occurs at stated intervals over time. And each area of an organization monitoring required a different set of frequency. Profits can be reviewed monthly or quarterly, but safety issues should be reviewed regularly. Established a standard frequency based on the nature of the activity of each sector in the organization.

Analysis – analyze the percentage of change that has occurred within each area of review. In other words, take a closer look at the current numbers–not focusing right now on the future numbers–and consider what has happened in the past. Doing this process will enable you to create more effective goals for the future. Look at the percentage of change on different scales: the change in profits from one month to the next, or the number of services effectively delivered between one month and the next. Analysis is crucial for continual improvement of every process that required immediate change.

References:
INTER-AGENCY TASK FORCE ON THE HARMONIZATION OF NATIONAL GOVERNMENT PERFORMANCE MONITORING, INFORMATION AND REPORTING SYSTEMS (Administrative Order No. 25 s. 2011) MEMORANDUM CIRCULAR NO. 2013-01

Organizational Performance Indicator Framework A Guide to Results-Based Budgeting in the Philippines

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