ISO metrics make your objectives quantitative. When we start to setting these objectives we want to measure and show measurable results that would really gain consumer confidence and more business. This by itself lets into issue moving into measuring stage.
As the somewhat controversial quote by Peter Drucker goes, “What gets measured gets done.” I say at least what gets measured ‘shows what needs to be done.’ When we set KPIs (Key Performance Indicators) we have a yardstick to see where we are and where we want to be. Measuring determines the gap.
Key Performance Indicator (KPI) Definition
A Key Performance Indicator is a value that can be measured to gauge the performance of a particular action or set of actions. Organizations use KPIs to determine success at reaching their goals. High-level KPIs are often those that pertain to the big picture performance of business, and low-level KPIs commonly measure the particular moving parts of the business such as:
Business Financial KPIs
- Cost Of Goods Sold
- Accounts Receivables
- Expenses Vs. Budget
- Customer Lifetime Value (CLV)
- Customer Acquisition Cost (CAC)
- Customer Satisfaction & Retention
- Net Promoter Score (NPS)
- Number Of Customers
- Customer Support Tickets
- Percentage Of Product Returns
- Efficiency Measure
Personnel ISO Metrics
- Employee Turnover Rate (ETR)
- Percentage Of Response To Open Positions
- Employee Satisfaction
What needs to be measured should be decided from the following criteria:
1) How does it add value to have this objective measured in long term?
2) How critical is it for the Business?
3) Does it make sense to measure it in order to help with internal or external customer?
4) Does it reflect clearly the objective of measurement?
5) How difficult would it be to come to the stage of measurement?
Because an objective is difficult to measure does not mean to neglect the action.
Management and supervisors have to be very patient to explain the very need, criteria, impact of the measurements to each personnel responsible with data collection. Often this stage is not taken into account as part of Quality Management System training. Very useful information can come to forefront when brainstorming ISO metrics. Discuss and determine what to measure and for short and long term goals.
Determining relevant KPIs, how to compare them, learning interpret the data, and how they relate to each other and what weight to give the data, is all part of the process. Mastering data driven results takes time and some trial and error. KPIs for one business might not be the best KPIs for different company.
Establish which KPIs are standard in your industry. Then determine your goals and incorporate the measurements in each area of your business. KPIs need to fit with your unique strategies and goals to give you the best results.
Any KPI is only as valuable as how you use the information. Many businesses adopt industry standard KPIs or use what another company is using. This frequently leads to gathering useless or inaccurate data that does not reflect the specific business and no positive conclusions are reached.
The best KPIs are how your business talks to you. You must understand why you are collecting the data and what it means. If you don not interpret the data correctly you cannot reach solid conclusions or make sound decisions. Your data should be clear and easy to understand.
When developing a strategy for creating your ISO metrics, let your team know the objectives, how you the data will help, and who can respond or act on the information and what course of action will be taken. In time, you will know which business processes to measure and how to use the information.