Key Performance Indicators (KPI) is a wonderful tool when they are used properly. I have used them throughout my career to monitor vital portions of a process. Additionally, I shared them with the team so everyone knew the situation. Eventually, with the help of these KPI’s, great improvements were achieved.
Effective Use of KPIs
First, KPI’s need to monitor an outcome and not a task. I’m not sure how monitoring a task helps improve any situation. For example, does a doctor care how many times a day you measure your blood pressure (task) or does he care what your blood pressure is (outcome)? But they do like you to monitor your blood pressure once a day if you are having issues. And the same holds true with KPIs. Monitor those KPIs once a day helps monitor the situation.
Additionally, as time goes on, the doctor will monitor your blood pressure trend. And you can do the same with your KPIs. It is important to monitor and analyze the trend. Is what you’re monitor getting better, worse, or staying the same?
For example, a company has a contract to scan pages for a publishing company. The publishing company pays a per-page price. As the Director of the scanning area, I worked with accounting to understand the cost of labor, burden, and gross margin the company was striving for. Using all that information, it was determined that we required 1,800 good images per operator. We could have monitored scans per day per operator but that is monitoring a task. The outcome was 1,800 good images per operator per day. So, the number of good images were monitored and charted, and shared with everyone involved. Monitoring the outcome and sharing it with the team promotes team involvement to achieve a team/company goal.
Be careful not to be caught up monitoring the revenue of a process. That is monitoring the overall performance and only accentuates the problem. It doesn’t get you any closer to the problem to implement preventative action. And most importantly, it doesn’t promote teamwork and empowerment. Make the KPI something everyone understands and they have the ability to make positive changes. For example, monitoring the dollars of scrap produced from a machine isn’t a good KPI. Yes, management is very interested in that number but it doesn’t promote teamwork. However, monitoring the number of scrap pieces generated is much more meaningful. The team can work together to reduce that number. And the byproduct of that KPI lowers the scrap cost.
Where to Implement KPIs
As previously stated, KPIs need to monitor an outcome. What is it that you are trying to achieve? Lately, I have been involved with Clinical Documentation Integrity (CDI). Apparently, there is an issue with the number of denials for payment. What I found interesting is that CDI departments are tracking a lot of tasks, yet no KPI for the number of denials on a daily basis, which is the outcome they want to improve. Again, don’t track the dollars lost by denial, but the number of denials. Lowering the number of denials will automatically lower the dollars lost by denials.
Collecting the correct data is very helpful. It’s hard to argue with data. Take your time to determine where you want to implement a KPI. When you are sick and go to the doctor, he checks your vitals and makes a prognosis. The same holds true within a process. Analyze the vitals of the process and determine what you need to monitor to ensure the desired outcome.