Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs [Hardcover]

David Parmenter is a Chartered Accountant (New Zealand as well as England and Wales) and a leading expert and presenter on performance measures. This book had been on my "to read" list for some time, and recently when considering the applicability of Kaplan and Norton's "Balanced Scorecard" (see, e.g.Balanced Scorecard, The: Translating Strategy into Action) approach for a particular organisation I decided to make the investment; luckily, my delay means I have purchased the recently published second edition (2010).

This book stands out as different from the Preface; over just nine pages the author tells you exactly how to use the book to implement a successful KPI project, refers you to additional material on two other websites (most of which is free of charge), gives you a model letter to write to the CEO to explain his or her involvement if a project is to be successful, and provides an overview of each chapter and a table to specify who - e.g. CEO, KPI Project Team, User Team Co-ordinators - needs to read and apply which. It's pretty clear from this that this is not an academic discourse on performance metrics, rather it's a practical and prescriptive handbook about how to do it - or, indeed, not to do it: in several places, Parmenter tells you, in effect - if you haven't got that level of commitment, or preparation, or time - forget it! postpone or cancel the project.

He doesn't just refer to the Balanced Scorecard, his methods are based squarely on Kaplan and Norton's work, and he takes the idea to new level. He proposes, for example, six "perspectives", adding Employee Satisfaction and Environment/Community to the original four (financial, customer focus, internal process and learning and growth). He makes definitions more rigorous, e.g. for Critical Success Factors and of the types of performance measure that help an organisation achieve them - Key Result Indicators, Result Indicators, Performance Indicators and finally Key Performance Indicators - the latter being those (relatively few, always less than 10)things that tell you what to do to "increase the performance of an organisation dramatically". He's critical of the imprecise use of KPI to describe less critical measures, and he illustrates what a real KPI should look like with a few examples. One that he uses throughout the book is that of a "senior BA official" (whom I think he eventually identifies as John King, later Lord King) who adopted "late planes" as the primary KPI for the airline and in so doing turned the airline around. By getting the planes to leave on time, everything else fell into place, and to get that to happen the CEO picked up the phone to the unfortunate manager responsible every time a plane was reported as late. Parmenter is also keen on the business dashboard concept, giving a number of examples.

This book is a detailed and prescriptive action plan for deciding what an organisation's CSFs, KPIs and other performance measures should be and how such measures should be implemented. It's written primarily for large corporates, but he provides some additional guidance for those applying his approach in smaller companies and not-for-profit organisations. Occasionally the level of detail seems a little over the top - e.g. "pack power cable for laptop"!

Applying Parmenter's methodology is "non-trivial" to say the least, and I suspect that he would be unapologetic - if you want it to work well, you have to invest the time and to get as many people in the organisation involved in the project as possible. There are other ways of implementing KPIs that are less onerous, and I know that these can work well in small organisations. Even if the full implementation methodology goes beyond what you feel you need for your organisation, however, you'll get a great many ideas from this book. There is a list of more than 300 performance measures in an Annex at the back of the book, to help you select what your KPIs and other measures should be. This book is highly recommended to anyone trying to manage an organisation better or trying to measure how well it's performing.

A really practical, easy to read, common-sense book about Key Perfromance Indicators (KPIs). It offers an excellent introduction to KPIs and basis for introducing and implementing them within an organisation, and is followed by resource kits and templates. The only problem is that the words 'resource kits' and 'templates' suggest I am free to use them but both the copyright and the format (a book) prevent this. A reprint in a manual format in line with other publishers would serve to protect those parts which the author wishes to protect and make available those resources and templates intended for wide use.

Exciting isn't the sort of word you associate with a business book, but this one really sets you thinking.

Highly recommended - in case you hadn't worked that out! I'm an MBA implementing IT systems to address many senior executives' concerns in this area.

This book is excellent at dispelling some of the myths about measuring business performance, and should be compulsory reading for any Directors of a business, and for the entire Finance function of any business.

The book does offer ways to address common mistakes with advice such as "KPI's should not be financial" as a good example.

There's additional material available on line from links in the book, and the author has a good blog too with updated thoughts.