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Key Performance Indexes

I just read in a recent edition of Forbes that Amazon has approximately 500 KPI's.  In addition, 80% of those KPI's related to customers.

How many KPI's do you use?  Do you find 500 excessive?  Can you think of what 500 KPI's might be?

Answers

Topic Expert
Mike Caruana
Title: Director of Financial Services
Company: Diamond Resorts International
(Director of Financial Services, Diamond Resorts International) |

I'm inclined to think they may be loosely defining data points as KPI's, but Jeff Bezos doesn't strike me as a guy who doesn't know the vernacular. I think 500 is high, but some conglomerates probably eclipse that. You've piqued my interest so I'm going to read the article.

Mark Woollgar
Title: Partner
Company: Adams Woollgar Financial Services LLC
(Partner, Adams Woollgar Financial Services LLC) |

500 KPI's by one person would be too many but the reality is that those are spread throughout a management team. The CEO would have his 9 KPI's but his direct reports (VP's, COO, CFO) would have their 9 KPI's that break out out their specific area of responsibility into more detail. Their 9 would probably only impact 1 or 2 of the CEO's KPI's. Likewise the directors & managers reporting to their VP would have theirs focussing on the levers that they are in control of (or can respond to). So in essence once you add all these up, 500 KPI's in a company the size of Amazon would be remakably focused.

Topic Expert
Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

Another possibility is repetitive KPIs - where you could have 10 KPIs that are measured uniquely by retail sector or target market.

Tony Lego
Title: President
Company: ERC
(President, ERC) |

Wayne,

Mark W. is probably right on.. In setting up this kind of KPI's flowdown for Goodyear we had more like 5-7 for each function/department. The real key here is that they all should link to the strategic objectives that the cross functional executive team has agreed to. Specific functional - department (secondary/tertiary) KPI's that monitor departmental performance are also required to make sure processes are in control and meeting both external and internal customer requirements.

The hard part is building a way to continuously measure/trend them and creating a culture of accountability across the middle management.

Sales and Operations Planning (S&OP) can help keep high level metrics being review at the executive levels.

Todd Stoffel
Title: CFO/VP of Ops
Company: MHS Companies
(CFO/VP of Ops, MHS Companies) |

I would add that within any given scorecard of KPIs, that certain KPIs carry a heavier weight than others in the calculation of a total score. This holds true at the department level, and then as these departmental scores roll up into an executive scorecard, and then into a total organizational KPI.

Great to see such a high focus on the customer and the ability to properly serve the customer.

Topic Expert
Henry Schumann
Title: Manager FP&A
Company: Allscripts
(Manager FP&A, Allscripts) |

Amazon is a great company and I would never speak poorly of them. But if the article is factually true, then what's the point of the K if there are 500 of them? In my view, they would be 500 PIs. The point of having KPIs is to narrow the metrics down to a list that is both most important and manageable. I've never worked in the retailing industry, but I have to think there is serious overlap, redundancy, or autocorrelation in the list of 500 metrics.

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

The KPI's are very likely "tiered", by line of business and operating or organizational unit. I seriously doubt they use all 500 "corporately. The trick in "tiered" KPIs is to promote the "top" KPIs and avoid optimizing low level metrics at the expense of orporate performance.

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