Chapter'7:'Genera>ng'

Key'Performance'
Indicators
Brandon'Lock,'Ph.D.
Baruch'College,'CUNY
Where'we'are'now
2.'Data'
1.'Data' 3.'Modeling' 4.'
Prepara>on'
Analy>cs and'Evalua>on Visualiza>on
and'Cleaning

7.'Key' 8.'Financial'
5.'The'Modern' 6.'Audit'
Performance' Statement'
Audit Analy>cs
Indicators Analy>cs
Learning'Objec>ves
1.'Evaluate'management'requirements'and'iden>fy'useful'KPIs
2.'Evaluate'underlying'data'quality'used'for'genera>ng'KPIs'
3.'Create'a'dashboard'using'KPIs
Accoun>ng'informa>on'can'be'used'to'
determine'how'closely'an'organiza>on'is'
mee>ng'its'strategic'objec>ves.'
'
We'can'use'data'analy>cs'to'measure'firm'
performance'and'compare'it'to'targeted'
goals'to'assess'how'well'a'company'is'
working'toward'a'goal
What'are'KPIs'and'
dashboards?
Key'performance'indicators'(KPIs)'
are'specific,'cri>cal'(key)'metrics'or'
indicators'used'to'measure'
performance'at'a'company.'
 A'digital'dashboard'
is'an'interac>ve'
report'showing'the'
most'important'
metrics'to'help'
users'understand'
how$a$company$or$
an$organiza/on$is$
performing.'
Exhibit'7a2'Walton'College'Digital'Dashboard
Q.'How'might'digital'dashboards'for'
KPIs'be'an'effec>ve'tool'to'address'
and'refine'results,'communicate'
insights,'and'track'outcomes?'
The'Balanced'
Scorecard'
iden>fies'
important'
metrics'to'
measure'and'
create'goals'for'
comparison.'
Exhibit'7a3'Components'of'the'Balanced'Scorecard
Components'of'the'Balanced'Scorecard
Financial'–'how'the'company'generates'value

Customer'–'how'the'company'interacts'with'customers

Internal'process'–'how'efficiently'the'company'is'opera>ng

Organiza>onal'capacity'–'how'the'company'is'training'employees
Ac>vity:'Create'a'list'of'KPIs'for'
managers'to'evaluate'performance'
for'the'following'categories:'
financial'performance,'customer'
performance,'and'employee'
performance
 KPIs'that'managers'may'use'to'assess'performance.
Financial'Performance Customers Marke>ng
• Net'Profit' • Return'on'Assets'(ROA) • Net'Promoter' • Market'Growth'Rate'
• Net'Profit'Margin' • Return'on'Equity'(ROE) Score'(NPS) • Market'Share'
• Gross'Profit'Margin'' • DebtatoaEquity'(D/E)'Ra>o'' • Customer' • Brand'Equity'''
• Opera>ng'Profit'Margin • Cash'Conversion'Cycle'(CCC) Reten>on'Rate'' • Cost'per'Lead'''
• EBITDA'' • Working'Capital'Ra>o • Customer' • Conversion'Rate''
• Revenue'Growth'Rate'' • Opera>ng'Expense'Ra>o' Sa>sfac>on'Index'' • Search'Engine'
• Total'Shareholder'Return' (OER)' • Customer' Rankings'Clicka
(TSR) • CAPEX'to'Sales'Ra>o' Profitability'Score Through'Rate'
• Economic'Value'Added' • PriceatoaEarnings'Ra>o'(P/E' • Customer'Life>me' • Page'Views'
(EVA)' Ra>o)' Value' • Online'Engagement'
• Return'on'Investment' • Customer'Turnover' Level'
(ROI) Rate'' • Online'Share'of'
• Return'on'Capital' • Customer' Voice'Social'
Employed'(ROCE) Engagement Networking'
• Customer' Footprint''
Complaints' • Klout'Score'
Opera>ons Employee'Performance Sustainability
• Six'Sigma'Level'' • Earned'Value'(EV)' • Human'Capital' • Average' • Carbon'Footprint''
• Capacity' Metric''' Value'Added' Employee' • Water'Footprint'''
U>liza>on'Rate' • Innova>on'Pipeline' (HCVA)' Tenure' • Energy'
(CUR) Strength'(IPS) • Revenue'per' • Absenteeism' Consump>on'''
• Process'Waste' • Return'on' Employee''' Bradford'Factor''' • Saving'Levels'Due'to'
Level''' Innova>on' • Employee' • 360aDegree' Conserva>on'and'
• Order'Fulfilment' Investment'(ROI2)' Sa>sfac>on'Index''' Feedback'Score''' Improvement'
Cycle'Time''' • Time'to'Market''' • Employee' • Salary' Efforts'''
• Delivery'in'Full,' • FirstaPass'Yield' Engagement'Level''' Compe>>veness' • Supply'Chain'Miles'''
on'Time'(DIFOT)' (FPY)' • Staff'Advocacy' Ra>o'(SCR)' • Waste'Reduc>on'
Rate''' • Rework'Level''' Score''' • Time'to'Hire''' Rate'''
• Inventory' Quality'Index''' • Employee'Churn' • Training'Return' • Waste'Recycling'
Shrinkage'Rate' • Overall'Equipment' Rate''' on'Investment' Rate'''
(ISR)' Effec>veness'(OEE)' • Product'Recycling'
• Project'Schedule' • Process'or' Rate
Variance'(PSV)' Machine'
• Project'Cost' Down>me'Level'''
Variance'(PCV)' • First'Contact'
Resolu>on'(FCR)
How'do'you'evaluate'
KPI'data'quality?
Master'the'data
Iden>fy'and'evaluate'the'data'needed'to'calculate'the'KPIs.

Considera>ons'when'evalua>ng'data'quality'of'KPIs
1.'How'oken'will'the'data'be'updated'in'our'system?

2.'How'oken'will'you'need'to'use'the'KPIs?
Perform'the'test'plan
Use'a'data'visualiza>on'tool'to'implement'the'rela>onships'and'ra>os'into'
a'digital'dashboard.

Build'out'the'objec>ves,'measures,'targets,'and'ini>a>ves.

1. Objec>ves'–'Strategic'goals'of'the'organiza>on
2. Measures'–'KPIs'that'show'how'well'the'company'is'mee>ng'its'
objec>ves
3. Targets'–'Measurable'and'achievable'goals'of'the'organiza>on
4. Ini>a>ves'–'Ac>ons'that'the'organiza>on'could'take'to'achieve'its'
targets'or'goals
How'do'you'create'and'
refine'dashboards?
Address'and'Refine'Results
As'you'refine'your'models,'Consider'these'ques>ons:
• Which'metric'are'you'using'most'frequently'to'help'you'make'decisions?'
Can'adding'these'metrics'to'a'dashboard'save'you'>me?
• Which'metrics'can'you'provide'to'others'that'can'help'them'make'
beler'decisions?
• Be'parsimonious.'Are'there'any'metrics'that'are'redundant'or'really'not'
that'helpful?
• How'could'we'customize'the'dashboard'to'support'different'users.
Communicate'Insights'and'Track'
Outcomes
The'key'to'the'success'of'the'dashboard'is'to'con>nually'
improve'the'dashboard'and'ensure'that'all'appropriate'
stakeholders'con>nue'to'be'involved'in'using'the'
dashboard.
Summary
• Digital'dashboards'should'be'simple'and'only'include'data'that'is'relevant'and'
necessary''
• The'u>lity'of'digital'dashboards'is'maximized'when'the'metrics'affect'decision'
making'and'ac>on.
• The'Balanced'Scorecard'helps'companies'turn'strategic'goals'into'ac>on'by'
iden>fying'the'most'important'metrics'to'measure,'as'well'as'iden>fying'target'goals'
to'compare'metrics'against.'
• Four'Components:'financial,'customer,'internal'process,'and'organiza>onal'
capacity''
• For'each'component,'describe'the'objec>ves,'measures,'targets,'and'ini>a>ves'
• As'you'refine'your'dashboard,'consider'which'metrics'you'and'other'use'most'
frequently'to'make'decisions'and'work'with'users'to'con>nually'improve'the'
dashboard.