The following steps are necessary to effectively implement new performance indicators:
1. Recognize the need for enhanced performance indicators by identifying new critical success factors .
2. Ensure top management support and commitment by underlining the need for change and by involving top management in steering committees to oversee the new system’s development and refinement.
3. Create an implementation team to develop a common understanding of the firm’s strategies, goals, and objectives; identify obstacles to implementation; and structure the approach. Input from all functions and levels of the firm as well as customers is helpful.
4. Develop a business performance model that can put the goals, strategies, objectives, critical success factors, and performance indicators into context by viewing the firm as one stage in a value chain of suppliers, the firm, markets, and customers.
5. Understand the firm’s goals and strategies by subdividing them into environment, markets and customers, products and lines, technology, operations, finance, and organization or management issues.
6. Define the firm’s critical success factors.
7. Assess the current performance indicators measurement system relative to current needs, the business model, and the firm’s goals, strategies, and critical success factors.
8. Determine which current measures should be eliminated: those that are redundant or overlapping and those that do not support the critical success factors.
9. Develop the performance indicators structure by consulting with different levels of management to determine what information should be tracked, how it should be tracked, how often it should be tracked, and how it will be used.
10. Establish the underlying technology necessary for the performance indicators system. Consider the information that is to be provided, its degree of detail, its frequency, its source, and the amount of data manipulation to occur.
11. Reevaluate the performance indicators and reward systems to ensure that they are consistent with the new measurement system.
12. Ensure continual improvement by updating the system to reflect changes in the firm and in its external environment.