Posts Tagged ‘How to’

How to Develop KPI

November 2, 2008

KPI or key performance indicator is a set of targets to be achieved in certain period of time by the Organisation, Department, Division, and employees. This article is about to develop KPI for a department.

1. Formulate Department’s Objectives

A manager of the department must formulate the objectives of his department. The department’s objective should be in line with the organisation’s vision, missions, strategies and objectives. The KPIs for the department are the normally the KPIs for the manager.

2. Component of KPI

The manager should now the components of KPI. KPI is comprised four components. There are (i) Objective, (ii) measurement, (iii) target, and (iv) initiative.

(a) “Objective” tells what the department want to achieve. Example: to increase deposit, to increase customer satisfaction, to increase profits, to send staff for training, to reduce expenses and to improve loan processing.
(b) “Measurement” is what measurement we use. Example: Percentage, number of days, dollars, and kilometer.
(c) “Target” is what to achieve and “when”. Example: increase deposit growth 20% this year; and to reduce customer waiting time from 5 minutes to 3 minutes within 2 months.
(d) “Initiative” is a set of actions to achieve the target. Examples: (i) Improve customer service (ii) Increase promotion (iii) reduce lending rate (iv) to increase staff training.

3. Cascade the KPIs

The Manager should cascade his KPIs to his subordinates. Let say, if the manager’s KPI is to achieve $20 million value of loan, how does his KPI be translated to 5 marketing assistants? In this example, KPI for each marketing assistant is $4 million! So, the achievement of the manager’s KPI is the achievement of his subordinates’ KPIs. The only different is the function. The function of the manager is to lead his subordinates whereas the function of his subordinates is to meet customers.

4. Monitor the KPI

The KPI should be monitored regularly, say weekly or monthly. Normally a tracking system is develop to monitor the achievement of KPIs of the department (directly the manager) and his subordinates.

Achievement of KPI can be rated into scales. This is an example:

5=outstanding
4=exceed requirement
3=meet requirement
2=does not meet requirement
1=unsatisfactory.

Use of KPI

Achievement of KPI is used by a manager to give reward to his subordinates such as bonus, letter of recognition, send staff to oversea trip, and yearly increment and promotion.

How to Make a Decision

November 2, 2008

As a manager, we do make decisions everyday. There are many methods or ways how we make a decision. In 1970’s, when I was a young executive in a bank, I was given a training on ‘Systematic Managerial Analysis’. The course’s leader was from Manila, the Philippenes. This is a good and simple concept, and practical. I would like to share with you on how to make a decision based on this concept.

1. Systematic Decision Analysis

A decision is made based on the criteria you set. Under the “systematic managerial analysis”, a decision is made based on the ‘must criteria’ and ‘want criteria’.

2. Set Must Criteria

‘Must criteria’ are criterias that you must fill first and it cannot be compromised. Let say you want to buy a hand phone. You set a budget $500 as a must criteria. It means you will buy a hand phone which the cost is below $500.

3. Want Criteria3

‘Want criteria’ are additional conditions that will help you to make a better choice. Let say you have identify a list of hand phones which its cost are below $500. Say, the hand phones are Nokia, Samsung and Sony. In order to choose one of them, you set these criterias: built in camera, MP3 tools and data storage capacity.

 4. Evaluate the Criteria

You assign points from scale one to ten for each criteria. One is the lowest point (lowest priority) and 10 is the highest point (highest priority). Next, you evaluate and give your points to Nokia, Samsung and Sony. You sum up points by each camera. The camera which has the highest point should be the first choice. Let say Nokia is the highest point and you should buy Nokia brand.

5. Potetial Problem Anaysis

Even though you choose Nokia, you must study the potential problem analysis if you buy Nokia. It is a risk analysis. In other words, what can go wrong if you buy Nokia. Let say, if you find problems when buying Nokia (example: difficult to get back-up service), you may review your decision to buy Nokia. Instead, you buy the hand phone which have the second highest points, say Sony.

From my experience , this is a simple and practical concept on how we make a desion.

How to Impress Your Boss With One Page

November 2, 2008

One of my function is prepare papers for our boss, management or the board. These people are busy and may have enough time to read papers when attending a meeting. Some papers may have 20-30 pages and we don’t expect they will read all the pages. Normally, I will write an executive summary. An executive should be simple and interesting to read. The main issues and recommendations should be in the executive summary.

1. TITTLE OF THE PAPER

You should write the tittle at the top. You should use capital letters for the key words.
Example: How to Write a Good Report.

Suggestion: One or two sentences.

2. OBJECTIVE

You should state what you want your boss to do with your paper when he read it? For example the paper needs decisions or just for information.

Suggestion: One paragraph with one or two sentences with not more than 5 lines.

3. ISSUE

You should write clearly what are issues that he should know. The most important issue should be written first, follow by the second most important issue…and so on.

Suggestion: 5-7 lines.

4. EVALUATION

You should analyse for each issue. The main issue should be analysed first, follow by the second issue, and so on…

Suggestion: 10-15 lines.

5. RECOMMENDATION

Write your recommendations. Each line is for one recommendation. Put a number for each recommendation.

Suggestion: not more than 5-6 lines.

6. CONCLUSION

You should conclude the benefits the company will get from the recommendations.
For example, it would save company’s money; increase customer base; and make employees are happy.

Suggestion: 2-3 lines.