Top 5 KPIs
How do you know if you are Winning or Losing at the game of work? Key Performance Indicators! KPIs should be the first and last thing you think about as you pass that underused Ping Pong table on the way to and from your office.
Not to be too obvious but key word here is “key”. There are a lot of things you could measure. In fact I did a sweet little video on Leading and Lagging indicators that you can check out here. This is helpful in deciding which metrics are going to help you take action and improve… not just track what already happened. But if you need a place to start here are the TOP 5 KPIs that apply to nearly every industry (manufacturing, healthcare, services) and should be highly visible in your company.
Cedro’s TOP 5 KPIs
- Employee Engagement
You always start with Safety because you care about and respect your team (and patients and customers) so they deserve a safe work environment. And at $39,000 per injury according to NSC.org this just makes good business sense.
Quality is next because if you aren’t producing good quality products and services you won’t have any customers, or at least as many as you would like, which negates the need to track other metrics like throughput, a lagging indicator of quality.
Once you have those 2 nailed then you can work on the next 3 KPIs in parallel.
Throughput. Crank up part production, patient throughput, or delivery time your service. Throughput like all of these TOP 5 KPIs is a lagging indicator with a lot of leading process metrics like quality (which can slow down throughput and increase costs), inventory availability, equipment uptime, and so on. But just because it’s lagging doesn’t mean you shouldn’t track it. Get an hourly throughput board on your wall (or use the KPI Fire app).
Costs can be broken down into labor and materials. Materials costs can be broken into purchasing, freight, processing, storing, …whew! Materials are expensive! Much more than just the purchase price of the goods so be careful that when you track material costs you take everything into account. Normalizing your cost KPI to a Cost per Unit is a good way to show trend data consistently.
Employee Engagement – “Engaged in what?” you ask. Engaged in JOB 1 and JOB 2, doing their work and improving their work. “Can you measure it?” Yes. In KPI Fire you can track
- the number of continuous improvement projects each person and team has completed
- and the money each of those projects saved.
This is a strong LEADING indicator because you can achieve so many great results by improving this 1 thing. Engaged employees solve problems which improves quality which improves throughput which lowers costs which increases customer satisfaction. See how that works? Powerful stuff.
“BUT WAIT! What about all those other important metrics your forgot like CUSTOMER SATISFACTION!”
Yes I agree. That is the most important KPI. But it is also the most laggy of all lagging indicators. If you nail the TOP 5 KPIs… customer satisfaction will come. So track it, but only after you have real time data on the TOP 5.
How many of the top 5 can you see a RED YELLOW GREEN indicator for right now from your computer or by a quick walk to your huddle board?
5 – Congrats! You’re a world class leader with good KPI management systems.
1 to 4 – Nicely done. Let’s tie off those loose ends.
0 – Sadly you’re not alone. Start right now by putting at least 1 metric with data on the wall by the Ping Pong table. Better yet just put the chart right on the table and start a conversation with your team about how to improve visibility to your KPIs.
Need help? Call me. I help companies implement KPI Tracking and Lean Management systems so they can know if they are Winning or Losing… and WIN!