Home » Business » Human Resources

Non Financial Measures - Making Them Meaningful

Aug 17, 2007
We recently had a query from a major accounting firm asking for some examples of non financial Key Performance Indicators (KPIs) that might be suitable for their senior managers. This coincided with a discussion with a client who also wanted some assistance in this area. This is quite a common issue for people who wish to measure results.

"What gets measured gets done" said Tom Peters and it makes sense. Measures such as dollars, dates and percentages are relatively easy but when it comes to results that don't lend themselves to these measures, it becomes a little more difficult.

The overall question to keep in mind is "how will we know the result has been achieved?" The measure should be just enough to answer this, any more detail than is necessary can become burdensome.

Below we have listed a few common areas where measures, other than financials are often required.

An agreed plan
A simple model that can be used for measuring the delivery of some non financial results is:
-Prepare a plan
-Agree the plan with stakeholders
-Deliver against the plan

With this model the job holder has to develop a plan for what that is going to be implemented and the test of the quality of this plan will be that it is agreed with all relevant stakeholders. These may include his or her manager, internal and external customers and suppliers. If all the stakeholders agree to it then it has passed the first test.

The plan should include measures for delivery which may include costs and dates. This measure can be simply written as "has developed a plan within agreed timeframe, agreed with stakeholders and delivered according to plan".

It can apply to implementing IT systems, management systems, marketing plans, development programs and other areas that may have a budget and time lines but require more than just those measures.

It can also apply to smaller tasks with a shorter time frame. "Reports are accurate and written to the agreed format and delivered at agreed time."

Clerical tasks, often difficult to measure, can be "completed within the time and format agreed."

Customer service
Customer service is central to many organizations' mission and yet is not always measured. While customer surveys can be cumbersome and time consuming to complete they do offer a good measure if designed properly.

More simple measures may be the "rate of return business", "number of queries relating to further additional product lines" or even "numbers of compliments or complaints." More quantifiable and commonly used measures which are key to customer service are "deliveries in full" and "deliveries on time."

Meetings
Meetings often take up a large part of some jobs. Measuring how well this aspect is carried out is often difficult. Possible measures are: "attendance" (actually turning up helps!), "contribution to discussions relevant to the job holder's area of expertise", "sharing of relevant information" and "delivering against agreed action points."

People development
A measure for developing people is that of having them "achieve their objectives." If the employees' objectives are linked to the corporate plan and they are achieved, this should be an effective measure of managing and developing them.

Another shorter term measure relating to people may be "no delays or shortages due to lack or quality of people, behaviours or levels of staff."

Reporting
The sharing of information by reports is important for many jobs and often not quantified. A simple measure which conveys what is required could be "Reports are provided by the 5th working day of the month being reported on and any deviation from plan is notified in time to take corrective action and is accompanied by the appropriate recommendations."

Professional standards
An effective shortcut for some positions is to refer to "normal professional standards". This works well for positions such as accountants, lawyers and other professions where there is an accepted quality level that is documented and should be known.

An organization's operations manuals can also be referred to as a quality check where the measures may be quite numerous and detailed.

New ideas
The area of innovation or creativity is important for some and measures are difficult in terms of dollars. However, ideas that are "accepted by the various stakeholders" is a good first step as it shows us that a certain number of ideas were generated and they at least reached the first hurdle of being seen as viable. "Successful implementation" of a target number may be a second measure and then possible financial returns could be added after this.

Using the above measures in conjunction with the more quantifiable financials, dates and percentage changes can give a fairly comprehensive set of measures that can answer the question "how do we know the result has been achieved?" The debate should be about how to achieve results rather than if it has been achieved!
About the Author
Paul Phillips is a Director of Horizon Management Group; a specialist human resource management consulting firm. He has over 30 years experience in HR and, while based in Australia, has worked in a number of overseas locations. www.horizonmg.com
Rating:
Please Rate:
(Average: Not rated)
Views: 112
Print Email Report Share
Article Categories