Alignment of KPIs in Quality Management
After the goals are defined, the next major tasks will require the management team’s full engagement. Key performance indicators (KPIs) have been used for a long time to measure the performance of the company, departments, processes, and individuals. Creating a KPI is not difficult. If you want to measure something there is typically always data available which you can measure. As a consequence, many KPI’s are ones that are easy to measure, but are they the right ones to support your goals?
Why Key Performance Indicators?
Let’s look at the purpose of KPI’s. KPI’s are indicators, like a little compass, which provide you the feedback that you are on track or off track to your goal. Leading indicators are great KPI’s because they respond quickly to any actions you take. Since you are also going to have lagging indicators, some of them will be critical KPI’s, it is critical to understand the correlation and the lag time.
In order to make KPI’s work well, the KPI needs to be aligned with the KPI owner’s area of responsibility. This owner needs to have the authority to perform the necessary adjustments when he/she sees that the KPI is drifting off. Otherwise, you have created a system with a ‘powerless KPI’ where people are watching but nobody is driving actions.
How KPI’s are developed is a indicator of the leadership style. Should every department owner define their own KPI’s? This definitely would lead to having a disconnected and misaligned KPI system. So what is the better approach? It is designing your KPI system in alignment with your established company goals. Therefore the task for every department owner is to find the KPI’s which support the corporate goals and can be reasonably controlled by the department or process owner.
Without this alignment, there can be perfectly managed KPI’s, but the company remains stuck in the status quo and not moving forward. On the other hand, a well aligned KPI system will focus each individually measured indicator toward the company goals and elevate the organization’s performance by removing friction points, waste and noise.