Key Performance Indicators and critical success factors

KPI’s measure the realized performance of the organization while CSFs are the performance drivers (that which can boost the performance). Furthermore, KPIs are linked together and among the four perspectives of the Balanced scorecard. At the end of the chain of linkages there is for example the objective to improve revenue growth (financial). This can be backtracked to the objective of increasing market share (customer).

In order to accomplish this, higher customer retention is required. Having a good customer satisfaction rating helps toward this goal and can have a positive effect on cross selling rations (internal).

To improve customer satisfaction, we probably need to spend more time talking and listening to our customers. More face to face time with our customers starts the whole process. It is even thinkable that the quality of face to face communication is increased by better employee satisfaction and soft communication skills (learning/innovation).

Four perspectives of a Balanced scorecard

Each objective can be associated with one of the four perspectives a BSC-model consists of. Every perspective has its own characteristics and merits its optimal symbol or representation. The financial perspective has to do with the flow of money and hence a currency sign is more important here than for the other perspectives.

The innovation/learning perspective is related to objectives that want to achieve a higher degree of usable knowledge. Each of the perspectives can be represented by a metaphor that gives a clue about the meaning of the perspective. Financial: money, customer: people, internal: process and innovation/learning: knowledge.

Mission, strategy and objectives

The mission of an organization is of outstanding importance to be able to properly manage the organization. If an organization has no mission, no strategic management can be performed. A mission can be translated to particular strategies which can in turn be sub divided into concrete objectives such as improve returns, broaden revenue mix or minimize operational problems. Those elements of the model cannot be converted to concrete figures as is the case with key performance indicators or measures.

However, it can be made quantifiable by weighting all of the children of the parent in the 1:n relation. If quantification can take place, these text-elements can be displayed in a red or green color if they are successively better or worse respectively. Those elements cannot be depicted as tables with figures or graphs but a metaphor or icon that represents the element’s state will be appropriate.

Steering Models And Management Information

Management Information is required in order to make decisions. To manage the organization and to make proper decisions the senior manager needs aggregated, current and reliable information. This information is analyzed and modeled during the phase of information analysis for example by establishing interviews and end-user sessions. The information requested by end-users is in our business often recorded in multi-dimensional- and/or Balanced Scorecard-models.