25 need-to-know key performance indicators

225 Pages·2014·2.973 MB·English

by  Marr, Bernard

14.8mm
22 KPIs are a critical management tool,
55
allowing managers to set goals and
N
E
Includes 10 handy do’s E continually improve performance.
D
and don’ts of using KPIs K TO
N 25 Need-to-Know Key Performance
O
W Indicators gives you the most useful
• Want to measure the performance 2255 tools you need to fully understand:

of your people and your business? •
Your customers and your market
• Need a quick overview of the most KE • Your financial performance
BERNARD MARR is a leading useful KPIs and how to use them? Y • Your internal processes
global authority on strategy, business P • Your employees’ performance
•
performance and analytics. He is CEO Only want what you need to know, E
R
of the Advanced Performance Institute rather than reams of theory? F With quick sections on why each KPI
O
and has advised organisations including NEED KNOW matters and how you can measure it,
R TO
Accenture, AstraZeneca, Barclays, Mars With the critical Key Performance M you’ll be putting them into action and
and the NHS. He has held positions Indicators required to understand A seeing results in no time.
your employees, financials and
at the University of Cambridge and N
customers, this book tells
Cranfield School of Management and is C These 25 KPIs have been carefully
you what you need to E
an acclaimed keynote speaker. know, fast. selected from the bestselling
I
N Key Performance Indicators: The 75
He is acknowledged by the CEO Journal D Measures Every Manager Needs to
as one of today’s leading business brains IC Know (Pearson, 2012).
and by LinkedIn as a global top 100 A
T
Business Influ encer. O
R
‘This book does a fantastic job of narrowing down the best KPIs KEY
S
Bernard is the author of the bestselling for you and your team. It’s short, sharp and incredibly useful.’
Key Performance Indicators: The 75 THOMAS H. DAVENPORT, Distinguished Professor
B
Measures Every Manager Needs to at Babson College and author of Big Data@Work E PERFORMANCE
R
N
Know (Pearson, 2012).
A
£14.99
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D
BUSINESS INDICATORS
Connect with Bernard on LinkedIn
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(where he writes a regular blog), Twitter (cid:12)(cid:14)(cid:11)(cid:13)(cid:1)(cid:10)(cid:8)(cid:9)(cid:2)(cid:4)(cid:2)(cid:5)(cid:10)(cid:5)(cid:2)(cid:3)(cid:4)(cid:7)(cid:6)(cid:8)(cid:2)(cid:6) A
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(@bernardmarr) or through his website: Design by Two Associates R
www.ap-institute.com.
Visit our website at
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www.pearson-books.com BERNARD MARR
Visit our website at
www.pearson-books.com
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25 need-to-know key
performance indicators
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25 need-to-know
key performance
indicators
Bernard Marr
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Pearson Education Limited
Edinburgh Gate
Harlow CM20 2JE
United Kingdom
Tel: [phone]
Web: www.pearson.com/uk
First published 2014 (print and electronic)
© Bernard Marr 2014 (print and electronic)
The right of Bernard Marr to be identified as author of this work has been asserted by
him in accordance with the Copyright, Designs and Patents Act 1988.
Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978–1–292–01647–4 (print)
978–1–292–01649–8 (PDF)
978–1–292–01650–4 (ePub)
978–1–292–01648–1 (eText)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
Marr, Bernard.
25 need-to-know key performance indicators / Bernard Marr.
pages cm
Includes index.
ISBN 978-1-292-01647-4 (pbk.)
1. Benchmarking (Management) 2. Management--Statistical methods. 3.
Business planning. 4. Performance. I. Title. II. Title: Twenty five need-to-know key
performance indicators.
HD62.15.M3743 2014
658.4’013--dc23
2014020020
The print publication is protected by copyright. Prior to any prohibited
reproduction, storage in a retrieval system, distribution or transmission in any form
or by any means, electronic, mechanical, recording or otherwise, permission should
be obtained from the publisher or, where applicable, a licence permitting restricted
copying in the United Kingdom should be obtained from the Copyright Licensing
Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS.
The ePublication is protected by copyright and must not be copied, reproduced,
transferred, distributed, leased, licensed or publicly performed or used in any way
except as specifically permitted in writing by the publishers, as allowed under the
terms and conditions under which it was purchased, or as strictly permitted by
applicable copyright law. Any unauthorised distribution or use of this text may be a
direct infringement of the author’s and the publishers’ rights and those responsible
may be liable in law accordingly.
All trademarks used herein are the property of their respective owners. The use of
any trademark in this text does not vest in the author or publisher any trademark
ownership rights in such trademarks, nor does the use of such trademarks imply any
affiliation with or endorsement of this book by such owners.
10 9 8 7 6 5 4 3 2 1
18 17 16 15 14
Cover design: Two Associates
Print edition typeset in 9pt Stone Serif by 30
Print edition printed and bound in Great Britain by Henry Ling Ltd., at the Dorset
Press, Dorchester, Dorset
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION
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To the people who have and will give me meaning and happiness
beyond measure:
My wife Claire and our three children Sophia, James and Oliver
as well as my parents, my brother Marc, Julie and Alan and all
my friends.
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Contents
About the author ⁄ ix
Publisher’s acknowledgements ⁄ xi
Introduction ⁄ xiii
Top 10 do’s and don’ts of using key performance indicators ⁄ xvii
part 1 Measuring and understanding your customers ⁄ 1
1 Net promoter score (NPS) ⁄ 3
2 Customer profitability score ⁄ 11
3 Customer retention rate ⁄ 19
4 Conversion rate ⁄ 27
5 Relative market share ⁄ 35
part 2 Measuring and understanding your financial
performance ⁄ 43
6 Revenue growth rate ⁄ 45
7 Net profit ⁄ 51
8 Net profit margin ⁄ 59
9 Gross profit margin ⁄ 65
10 Operating profit margin ⁄ 71
11 Return on investment (ROI) ⁄ 77
12 Cash conversion cycle (CCC) ⁄ 85
part 3 Measuring and understanding your internal
processes ⁄ 93
13 Capacity utilisation rate (CUR) ⁄ 95
14 Project schedule variance (PSV) ⁄ 101
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viii Contents
15 Project cost variance (PCV) ⁄ 107
16 Earned value (EV) metric ⁄ 113
17 Order fulfilment cycle time (OFCT) ⁄ 119
18 Delivery in full, on time (DIFOT) rate ⁄ 125
19 Quality index ⁄ 131
20 Process downtime level ⁄ 137
part 4 Measuring and understanding your employees ⁄ 143
21 Staff advocacy score ⁄ 145
22 Employee engagement level ⁄ 151
23 Absenteeism Bradford Factor ⁄ 159
24 Human capital value added (HCVA) ⁄ 167
25 360-degree feedback score ⁄ 173
10 useful books to read next ⁄ 181
Glossary of terms ⁄ 185
Index⁄ 195
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About the author
Bernard Marr is a best-selling business author, keynote speaker
and consultant in strategy management, performance manage-
ment, analytics, KPIs and Big Data. He helps companies manage,
measure and improve performance. His leading-edge work
with major companies, organisations and governments across
the world makes him a globally acclaimed and award-winning
researcher, consultant and teacher.
Bernard Marr is acknowledged by the CEO Journal as one of
today’s leading business brains and LinkedIn nominated him as
one of the world’s top 100 business influencers. He has written a
number of seminal books and over 200 high profile reports and
articles on business performance. These include ‘The Intelligent
Company’, ‘Managing and Delivering Performance’, ‘Strategic
Performance Management’, and ‘Doing More with Less’.
He has worked with and advised many of the world’s best-known
organisations including Accenture, AstraZeneca, the Bank of
England, Barclays, BP, DHL, Fujitsu, Gartner, HSBC, Mars, the
Ministry of Defence, Microsoft, Oracle, the Home Office, NHS,
Orange, Tetley, T-Mobile, Toyota, the Royal Air Force, SAP and
Shell, among many others.
Bernard Marr is the founder and CEO of the Advanced
Performance Institute, where you can contact him at: www.
ap-institute.com or via email at: [email protected]
You can also follow @bernardmarr on Twitter, where he often
shares his ideas or connect with him on LinkedIn, where he writes
a regular blog.
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