BSBMGT515A - Manage Operational Plan

Element 1: Develop Operational Plan

Key Performance Indicators allow you to ensure that you are reaching your overall business goals and objectives.

Your Performance indicators need to be an accurate reflection of your organisational mission and vision. Without this alignment, you may find that you are unable to conclusively show that you plan is actually working in the interests of the organisation as a whole. KPIs are generally medium to long term in nature – as projects are difficult to show as being successful in the long term – and they definitely need to be measurable and have an element of being time-based so you know when an achievement should be reached. Let’s take some time to look at each of these statements in a little more detail.

Organisational Goals Think about overall performance goals carefully. If your organisation has an overall goal of being a socially equitable organisation you may have measures that examine charitable contributions reaching 5% of profit or environmental performance measures. An organisation whose key focus is on being highly profitable will need measures of after tax profit, and shareholder equity.

A non-profit will have different goals and indicators than for a profit organisation. The indicators must be relevant to the work the organisation is undertaking

Measurable As well as your key indicators being focussed on goals, they actually must be able to be measured. The value in any indicator is their ability to show you where you are working well and where problems exist. This can only be done by ensuring that each measure that you provide is actually able to be measured in some way.

Measures must be quantified to allow them to actually be measured. Saying that you want to be the most popular organisation in Australia is a lofty goal, but one which is not able to be easily quantified. Adding an actual measure such as “To have 95% of people in Australia being able to recognise our logo” is a goal that can be measured through survey methods.

Consistency KPI must also be consistent. You can not change the way you define profit from “before tax profit” to “after tax profit” on a whim as this will make a huge difference when it comes to comparing your results from year to year. KPIs should change as little as possible from one period to the next. This change should be minor; if you are continually moving the bar the organisation will have difficulty in actually reaching it, as all the plans behind the KPI will have to change to met the new goals.

Let’s now consider a couple of examples of KPI and look at whether they are useful or not. Each KPI that you write should be structured along these lines – with a simple title, a definition of what you are measuring, the actual measure itself and the target you are trying to attain.

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Trainer Manual BSBMGT515A Manage Operational Plan © Precision Group (Australia) Pty Ltd