ByMansour Baker, SHRM-CP Posted 15 May 2019 | Revised 26 May 2021
A start-up company strategic objectives are to successfully implement strategy, build a strong human capital and design effective organization and operations which are then translated to CEO Key Performance Indicators (KPIs).
Successfully Implement Strategy
Agreed overall KPIs
Return on Investment vs. overall benchmark return
Adherence to budget
Total cost ratio
Return on Investment greater than overall benchmark return over 3 years
Actual portfolio always within bands agreed by board
Remain within 5% of overall budget agreed by board
Build Strong Human Capital
Agreed overall KPIs
People development (based on CEO's upward feedback and the upward feedback scores across the organization)
Measure team contribution, not only individual performance
Longer-term: KPIs will need to evolve as the organization matures. KPIs will need to change with objectives
Priority shift from setup to continuous improvement
Launching internal management will shift some priorities + require KPI focus in new areas
Other priorities may emerge – e.g., in-house talent capabilities/cost focus required
The questionnaire is designed to draw out each individual board member’s judgment on the issues that are key to the CEO’s success.
Did the company achieve its financial targets for the year?
Do you expect the company to perform better financially in the next year?
Are you comfortable that the company’s financial statements are accurate?
Does the company have an annual budget planning process in place which is monitored and reported to the Board throughout the year?
Are you comfortable with the financial controls, systems and information processes currently in place?
The company has in place a business plan approved by the Board?
There is a process in place for communicating, identifying and measuring progress of the business plan.
The CEO has built a capable team of senior managers.
The CEO motivates and inspires employees to realize the company’s goals and visions.
There is an appropriate level of staff turnover.
CEO Performance Focus
How to define, measure and report a key performance indictor?
Introduction Once an organization has analyzed its vision & mission, identified all its stakeholders, and defined its goals & objectives, it needs a way to measure progress toward those goals & objectives. Key Performance Indicators are those measurements. Key Performance Indicators, also known as KPIs or Key Success Indicators (KSIs), help an organization define and measure progress toward organizational goals & objectives. Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. They will differ depending on the organization. In any Organization there may be dozens of KPIs to track performance. Which ones are significant for any firm at any time depends on what the business is planning to achieve and what current situation states is. What is a goal? Goals are long-term aims that you want to accomplish or statements you make about the future for your business. What is an objective? Objectives are more specific and easier to measure than goals. They are written without emotion, and they are typically specific, measurable, achievable and quantifiable. They also are realistic and have an associated timeline. What is SMART? SMART (specific - measurable - achievable - realistic - time related) is an acronym used in setting objectives. What is a Key Performance Indicator (KPI)? KPI is a way of measuring (performance) how well we as individuals or how well entire companies or business units are performing. A KPI should help us understand how well a company, business unit or individual is performing compared to their goals and objectives.
Goal versus Objective
Goals are broad; Objectivesare narrow
Goals are general; Objectives are specific
Goals are long term; Objectives are short term
Goals cannot be measured; Objectives are measurable
Objectives map onto goals and once met, objectives contribute to the achievement of goals.
What are the reasons for objectives?
Objectives helps the organization stay focus
Objectives involves people on the same page
Objectives defines what done looks like
Objective versus KPI For example, your objective might be “preferred leader in market segment A by 4th quarter of 2019." The KPI might be "number of accounts converted to key accounts per quarter in segment A".
How to define, measure and report a KPI?
Ask yourself how are you going to measure (KPI) your activities towards objective achievement and keep it simple.
Define the unit of measurement ($, %, #, etc.). What unit of measurement will be used to measure a KPI.
Where the data source of the measurement will come from (internal/external documents, budget, marketing campaigns, databases, reports, programs, transactions, project schedule, etc.)?
How frequent will you report (monthly/quarterly/bi-annually/annually) on the selected KPI.