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Ken Koenemann

Management

Transform Strategic Plans Into Metrics That Matter With KPIs

Understand what’s important from frontline employees through middle management

Published: Tuesday, November 25, 2014 - 16:40

During annual strategic planning meetings, the temptation is always to spend most of the time working on the business, discussing the big-picture strategic plans and breakthrough developments that are critical to the future of the company. But just looking at long-term plans ignores a critical part of the planning process: defining the annual goals and key performance indicators (KPIs) that will be relevant in the day-to-day running of the business for turning those high-level goals into reality.

This exercise may seem too detailed to make it a big part of your annual strategy meeting, but it requires just as much focus and attention as your big-picture plans. Too often when business leaders present the annual goals, they simply send them down the line as blanket targets that they will use to evaluate the progress of every department. When they check back after the first quarter to see if everything is on track, it’s usually not and no one can explain why.

This traditional approach misses the whole point of defining and tracking KPIs. For KPIs to be meaningful and effective, they must be part of a robust “goal deployment” process that does much more than communicate the high-level goals of the company. Your goal deployment system must include a detailed road map of your organizations’ operational plan in a way that transforms those high-level goals into something meaningful at each level of the business, from frontline employees, supervisors, and team leaders up through middle management.

For example, it’s perfectly fine to set a corporate goal of a 5-percent reduction in costs, but that goal needs to be translated into a daily KPI that matters to a line supervisor responsible for one manufacturing cell in your organization. Without that translation, an overall target of 5-percent cost reduction does little to communicate to that supervisor what he or she needs to do to drive the company toward its objective.

Cascading high-level corporate goals down into meaningful KPIs is not an easy process. It takes time and can can often require changing your whole approach to goal setting and tracking KPIs. 

First published Oct. 8, 2014, on the TBM Consulting Group blog.

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About The Author

Ken Koenemann’s picture

Ken Koenemann

Ken Koenemann is vice president of business development and marketing at TBM Consulting Group, which specializes in maximizing clients’ enterprise value and growth potential through operational excellence. Koenemann developed and launched TBM’s Lean Value Chain practice, and he coaches executives on growth-focused improvements. Before joining TBM, Koenemann was director delta at American Greetings and led internal strategy and consulting for transformational projects, and he led the redesign of its seasonal card business. He also served as director at Bearing Point and at KPMG Consulting, and as general manager of the Toyota Production System at Toyota Gosei North American.

Comments

Managing KPIs for the Rest of the Year

Setting and updating KPIs on an annual basis is an important part of any operations team's activities. But what happens with those KPIs in between? Many companies rely on manual data capture or Excel spreadsheets to track performance, resulting in lengthy delays in generating reports and difficulties in correlating KPI shortfalls to root causes.IntraStage customers can drill down into all aspects of manufacturing data, including FPY, retests, rework, lot, and RMA information, to connect manufacturing results to root causes in real time. Imagine if you could quickly see the cause of last week's 5% yield drop, or which supplier changed significant process parameters last week (before their parts reach your docks), all during your weekly operations meeting - or in your email in the morning.