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Key Performance Indicators

Taking Measure of What's Important: Choosing Performance Indicators

Nov 11, 2016 3:30:00 PM

Key Performance Indicators, or KPIs, evaluate the success of an organization or of a particular activity in which it engages. All businesses share categories of KPIs - profitability, depreciation, operating costs - but need to measure them with an eye towards how their particular industry operates. No one would expect a restaurant and a hospital to use the same KPIs to measure the success of their operations, nor would a resort casino and a non-profit agency place value on the same kinds of data sets. This is why it’s so important to carefully lay the groundwork for your operational study to ensure it will meet the needs of your audience. 


When designing an operational study, KPIs should reflect an industry's core activities. Asking membership for the information they most value, and then formulating questions to measure member experiences will ensure that a study uncovers the most valuable data. It can be difficult to design survey questions that get to the heart of the issues most relevant to your industry. Oftentimes, relying on benchmarking specialists can help industry experts find the key questions that will allow them to collect the most meaningful information.


As you determine what factors your membership wants to measure, you need to understand HOW to measure those factors. Customizing your KPIs to your audience’s unique industry will achieve the most relevant measures.  KPIs vary greatly from sector to sector and it’s important that your study be tailored to the unique needs of your specific audience. 

To illustrate, some of the differences across industries seeking better understanding of their operational performance include:


Manufacturers may want to measure which products or services are the most ‘successful’ for their industry, but do they measure that success by sales volume or profitability? Productivity might be measured in net sales per square foot of operation, or in number of customers served per time period. Quality control might be better understood by learning the percentage of defective parts produced that ship to customers, or the on-time delivery rate, or a correlation of the two. 


Universities seeking to discover their productivity might measure students per classroom, costs per student, costs per employee, department level costs, number of students per major or participation in other programs. Is understanding quality control in higher education better measured by graduation rate or the number of students employed post-graduation?


When medical facilities want to measure productivity, should they measure that by patient outcomes or the number of patients per room per day? Quality control might include post-surgical infection rates, recovery times, and patient experience.

Determining how you’ll evaluate achievement levels for different operational areas is as important as determining what factors you’ll measure. By designing your operational survey with careful planning and insight, you will be able to create a survey that your members find user-friendly, with questions they can easily answer, that aggregates important data leading to meaningful reports and actionable information.