Strategic Advice: Performance Measurement
The examples contained within Benchmarking could be the basis for setting key performance indicators (KPI's) in establishing a performance measurement regime. This is important to develop the parameters for contracts based on risk/reward and further benchmarking of the performance for continuous improvement.
KPI's are quantifiable criteria developed as datums from which performance levels are measured. They must be realistic and reflect the areas of service delivery that are most important to the business operation. More importantly the agreed KPI's must be quantifiable as they are of little value if they cannot be measured.
In developing key performance indicators, factors such as compliance with H&S and risks to business continuity would be major considerations. Once set the KPI's will provide the benchmark for which the service provider must adhere to as a minimum as well as providing the datum point for the introduction of Risk/Reward contracts and Service Level Agreements (SLA's).
The KPI would be set in relation to a pre-determined number of operational tasks. These tasks relate directly to an acceptable percentage of operational performance. For example a KPI set at 95% signifies an acceptable level of 5% failure. A risk/reward mechanism would be measured against this KPI.
All KPI's would be developed in conjunction with the client to establish the areas that are most important to the client. The establishing of KPI's coupled with any deficiencies highlighted in the benchmarking process ill input into a strategy for change.
The strategy will reflect the recommendations made by GTFM for improvements to managing in-house delivery and outsourced delivery through procurement of contracts that will deliver a measurable service that best meets the organisational objectives.