HR PERSPECTIVE by Jerico Buñing

TUA NEEDS KPIs


In basketball, a team does not simply win a game by scoring the most number of points but through other statistical contributions such as the number of rebounds, assists, blocked shots, steals, etc. Just like Trinity University of Asia, I believe that more than financial revenues and student enrollment, there are other factors that can gauge the university's development and progress. In the Performance Management System, these measures of progress or regress are called Key Performance Indicators (KPIs). KPIs help an organization define and measure progress toward organizational goals.

Once an organization has analyzed its mission, identified all its stakeholders, and defines its goals, it needs a way to measure progress toward those goals. Key Performance Indicators are those measurements.

What are Key Performance Indicators (KPIs)?

Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. They will differ depending on the organization. A business may have as one of its Key Performance Indicators the percentage of its income that comes from return customers. A school may focus its Key Performance Indicators on graduation rates of its students.

A Customer Service Department may have as one of its Key Performance Indicators, in line with overall company KPIs, percentage of customer calls answered in the first minute. A Key Performance Indicators for a social service organization might be client assisted during the year.

Whatever Key Performance Indicators are selected, they must reflect the organization's goals, they must be key to its success, and they must be quantifiable (measurable). Key Performance Indicators usually are long-term considerations. The definition of what they are and how they are measured do not change often. The goals for a particular Key Performance Indicator may change as the organization's goals change, or as it gets closer to achieving a goal.

Key Performance Indicators Reflect the Organization Goals

An organization that has as one of its goals "to be the most profitable company in our industry" will have Key Performance Indicators that measure profit and related fiscal measures. "Pre-tax Profit" and "Shareholder Equity" will be among them. However, "Percent of Profit Contributed to Community Causes" probably will not be one of its Key Performance Indicators. On the other hand, a school is not concerned with making a profit, so its Key Performance Indicators will be different. KPIs like "Graduation Rate" and "Success in Finding Employment After Graduation", though different, accurately reflect the school's mission and goals.

Key Performance Indicators Must Be Measurable

If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. "Generate More Repeat Customers" is useless as a KPI without some way to distinguish between new and repeat customers. "Be The Most Popular Company" won't work as a KPI because there is no way to measure the company's popularity or compare it to others.

You also need to set targets for each Key Performance Indicator. A company goal to be the employer of choice might include a KPI of "Turnover Rate". After a Key Performance Indicator has been defined as "the number of voluntary and terminations for performance, divided by the total number of employees at the beginning of the period" and a way to measure it has been set up by collecting the information in a HRIS (Human Resource Information System), the target has to be established. "Reduced turnover by five percent per year" is a clear target that everyone will understand and be able to take specific action to accomplish.

Key Performance Indicators Must be Key To Organizational Success

Many things are measurable. That does not make them key to the organization's success. In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organization reaching its goals. It is also important to keep the number of Key Performance Indicators small just to keep everyone's attention focused on achieving the same KPIs.

That is not to say, for instance, that a company will have only three or four KPIs in total. Rather, there will be three or four Key Performance Indicators for the company and all the units within it will have three, four, or five KPIs that support the overall company goals and can be "rolled up" into them.

If a company Key Performance Indicator is "Increased Customer Satisfaction", that KPI will be focused differently in different departments.

The Building Administration and Maintenance (BAM) Department may have a KPI of "Number of Units Repaired", while the Registrar's Office will have a KPI of "Number of Telephone Inquiries on TUA Offered Courses Received". Success by the BAM and Registrar Departments in meeting their respective departmental Key Performance Indicators will help the company meet its overall KPI.

What Do I Do With Key Performance Indicators?

Once you have good Key Performance Indicators defined, the ones that reflect organization's goals, the one that you can measure, what do you do with them? You use Key Performance Indicators as a performance management tool, but also as a carrot. KPIs give everyone in the organization a clear picture of what is important, of what they need to make happen. You use that to manage performance. You make sure that everything the people in your organization do is focus on meeting or exceeding those Key Performance Indicators. You also use the KPIs as a carrot. Post the KPIs everywhere: in the lunchroom, on the walls of every conference room, on the company intranet, even on the company website for some of them show what the target for each KPI is and what process to be utilized to reach them. The KPIs can also serve as an objective and fair basis for the employee's performance evaluation. People will be motivated to reach their respective KPI targets.

The responsibility of establishing the KPIs does not lie on the manager's hands alone rather, it should be a collaborative effort on the whole team or department. By doing this, you reap success or accept failure as a team. Thus, Everyone is made accountable for their department's performance and productivity.

I hope that by this school year, KPIs will be established and implemented in TUA.

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