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An important part of analysisng business processes is covered by RACI analysis, which concerns the determination of who is Responsible, Accountable, Consulted and Informed (RACI) for each business process. Assuming you’ve got the Identifying, Documenting and Analysing Business Processes e-Book, you will fully understand RACI analysis and how effective it can be in analysing business processes. To help you apply RACI analysis, I’ve prepared a RACI cheat sheet. It’s a two-page PDF file which you can download and print.

Print the RACI cheat sheet and put it on your desk; you’ll find it an effective reminder of the RACI section in Identifying, Documenting and Analysing Business Processes.

Assuming you’ve got the Generating & Selecting KPI Sets e-Book, you already have a good idea of how to construct good candidate KPIs and how to select between those candidate KPIs to form effective KPI sets, you’re all set to go. But can you recall all of the key steps in the process?

As an aide memoire, I’ve created a KPI cheat sheet. It’s a one-page PDF file which you can download and print, to guide you
through the creation of KPIs and KPI sets.
It leads you through all of the key principles of selecting KPIs and KPI sets, including Kaplan & norton “Balanced Scorecard” reminders, as well as KPI system rollout steps.

Print the KPI cheat sheet and put it on your desk; you’ll be surpised how effective a remider of the principles of Generating & Selecting KPI Sets it is.

Service Level Agreements are agreements for a scheduled set of services to be delivered at an agreed quality for an agreed cost. In this sense, a service level agreement is, formally, just a contract. However, service level agreements are a rather special type of contract; they represent a highly cooperative agreement between two willing participants. Service level agreements spell out the expectations of both the parties; they can be internal (e.g. a SLA constructed between the IT department and the operational department of an organisation) or purely external (e.g. a business continuity service level agreement between your organisation and Hewlett Packard). The most common SLAs currently in use are IT service level agreements, especially for telecommunication and support services.

The formalisation of a service level agreement tends to take the emotive content out of service provision; by clear, concise agreement on the scope of services to be delivered, the quality of those services and the compensation for provision of those services, each party to the SLA is relieved of the emotional baggage of service provision and freed to concentrate on the efficient provision and consumption of those services. Of course, a service level agreement is no panacea for problems arising in the provision of services. However, when tribulations do arise, they can be dealt with within the framework of the service level agreement, even when this means that the agreement needs to be varied.

Service which are suitable for management by Service Level Agreement include:

• well understood, established services
• services which are delivered in small lots, fequently
• repeatable, definable services
• relatively stable demand for the services
• existence of a capable labour pool to fulfill the service level agreement.

This is not to say that service level agreements cannot be constructed for larger, more complex services or that the realm of service level agreements ios limited to blue collar labour, but it does mean they are unlikely to be a good fit for original intellectual property deliver, e.g. a service level agreement for the delivery of poetry is likely to yield doggerel rather than consistently high quality verse.

To find further information about implementing service level agreements, look at our e-book at: e-Book – Implementation Guide for Service Level Agreements. This e-book includes a complete template for the construction of SLAs, enabling you to get a well-constructed agreement in place in minimum time.

RACI aide memoire

Before discussing RACI variants, let’s recall the basic RACI model; RACI is a technique used within BPM to clarify responsibilities
and accountabilities for processes. The term RACI is an acronym for “Responsible”, “Accountable”, “Consulted” and “Informed”, and the
technique of RACI is to determine, for each and every process, who is Responsible for the execution of the process, who is Accountable for the outcomes of the
process, who is Consulted in the execution of the process and who is Informed by the process. These four characteristics of people involved with managing business
processes describe each of the key player’s degree of involvement in and liability for the process.

There are a number of models which vary or extend the RACI model. These variants exist partly due to a slight initial awkwardness in distinguishing between the “Accountable” and “Responsible” roles
in the traditional RACI model.

Our purpose in discussing the variants here is to enable you to identify and understand them; we do not suggest that you adopt any of these variants as the benefits of the variants do not, in our view, outweigh the downside
of using a non-standard model. We believe that standard RACI has the necessary and sufficient role identifications to support process-based management.

RACI-VS

RACI-VS adds two roles, viz:

• “Verifies” – the party that checks that a product or service matches its established standards and
• “Signs-off” – the party who approves the verification step and authorises the release of the product or service

This variant adds minor roles and potentially introduces confusion between the two roles it introduces. Additionally, it is quite common for verification processes to be separate processes from the main processes which generate
the product or service to be verified and thus these roles may only exist in the verification process, again inviting some confusion between the verification role and the verification process.

CAIRO

CAIRO adds the “Omitted” role (or, as our American friends might prefer, “Out of the Loop”). This extension is potentially useful in identifying specific cases where an organisational role, which might be thought to be involved in a
process, is specifically not Accountable, Responsible, Consulted or Informed. On the negative side, it should be noted that most organisational roles are not involved in most processes, so this extension runs the risk
that numerous positions need to be identified as “Omitted” for each process.

RASCI

The RASCI extension adds the “Support” role to the basic model, allowing for people who are co-opted to support the “Responsible” role in performing the task. There is a subtle distinction
between the “Consulted” and “Support” roles, as the latter may be tasked with performing part of the work of the “Responsible” party.
Again, the value of the extension seems limited relative to the cost of non-standard terminology.

RACI (Alternate mapping)

The one variant of RACI which addresses the most common RACI difficulty is the alternate mapping where:

• “Responsible” is the person responsible for the performance of the task; this is roughly equivalent to the standard meaning for “Accountable” and
• “Assists” is the party who assists the “Responsible” party in performance of the work and may perform the bulk of the work

This variant appears, at first sight, to resolve the difficulty in standard RACI of understanding the relative accountabilities and responsibilities of the “Accountable” and “Responsible” roles but, in our view, only weakens the
proper understanding of the roles. The notion of someone whose role is purely to “Assist” weakens accountability and, consequentially, makes process-based management more difficult to drive through.

This article is an extract from the “Teal Book” (Identifying, Documenting & Analysing Business Processes) available for on-line purchase at e-books.

Key Performance Indicators (KPIs) are quantitative and qualitative measures used to measure an organisation’s performance. These are established as targets in a hierarchy, e.g. by departments and individuals. The achievement of these targets is reviewed regularly.

KPIs are used to monitor the performance of a company, department, process or even an individual machine or business process. They also help to establish and shape the culture of the organisation, i.e. KPIs aid in modifying individual and organisational behaviour.

KPIs need to adapt to the changing goals of the organisation, i.e. the KPIs need to be established in the context of the organisation’s goals. Goals change as the organisation changes in reaction to external factors or as it improves or worsens in relation to achievement of its goals.

KPIs are cascaded down from the organisation’s goals to departmental KPIs and down to individual KPIs, and need to reflect the organisation’s culture and values, by indicating the behaviours
and performances that the organisation will recognise as ‘successful’ and reward employees for.

KPIs need to be measurable and reflect a balance between operational and people-orientated measures.

KPIs are a fundamental component of sustaining a change process and maintaining a performance management culture. KPIs should be aligned with the organisation’s vision and direction and this is achieved by cascading the KPI sets down from the organisation’s goals.

When performance is measured, and the results are made visible, organisations can act to improve.

S.M.A.R.T. KPIs

The acronym S.M.A.R.T. is often used to describe well-formed KPIs. The elements of S.M.A.R.T. KPIs are Specific, Measurable, Achievable, Relevant and Timely.

specific

KPIs need to be specific to the individual job and if possible expressed as statements of actual on-the-job behaviours.

For example, a KPI should:

• explain clearly to the employee how to perform to be successful
• have an impact on successful job performance, i.e. distinguish between effective and ineffective performance
• focus on the behaviour itself, rather than personality attributes such as ‘attitude to customers’.

Terms such as ‘work quality’, and ‘job knowledge’ are too vague to be of much use in and of themselves; KPIs should establish specific, quantifiable and measurable targets for ‘work quality’ and ‘job knowledge’.

measurable

KPIs must be measurable, that is based on behaviour that can be observed and documented, and which is job-related. They should also provide employees with continuous feedback on their standard of performance.

achievable

Performance management needs to be an open, two-way communication process. KPIs must be seen as achievable by all parties to the KPI. The KPI must be realistically achievable. If it is set too high for the circumstances (such as an ambitious production target) it will ensure failure.

relevant

It is essential that employees clearly understand the KPIs, and that they have the same meaning to both parties. Joint development of KPIs is more likely to result in relevant and valid standards than top-down edicts.

timely

KPIs should measure performance against an agreed time frame.

It should be possible to collect the relevant information either immediately or shortly thereafter and disseminate iit quickly, otherwise it will lose its relevance.

HR-related functions, including training and development, recruitment and selection, rewards and recognition, career planning etc. must be aligned with the KPIs and must act in a manner supportive of the KPIs. Thus the tangible reward system should directly reward KPI-based performance.

business aspects that require KPIs

KPIs should cover all aspects of the business. The selected KPI sets should cover a balanced-scorecard of KPIs. Examples are:

• customer satisfaction
• employee satisfaction
• staff turnover
• absenteeism
• departmental & divisional specific measures
• triple bottom line: financial, environmental and social responsibility
• finance including revenue and costs
• OHS reporting including incidents and related costs
• equipment usage and OEE
• maintenance costs and effectiveness
• new product development & innovation
• lead times and down times
• quality.

KPI components

KPIs should identify the required outcomes, for example:

• the minimum acceptable performance e.g. daily break-even point
• target performance e.g. desired daily output.

KPIs should be communicated to all staff so that they are aware of how they are to be measured and how their KPIs impact on the organisation as a whole. KPIs should also be aligned with the vision and direction of the organisation and have relevant reward and recognition criteria linked to each KPI.

When implementing new KPIs, having baseline data to measure improvements is very important. Progress on KPIs should be communicated at regular times to highlight emerging trends. As these trends emerge, corrective action can be implemented in a timely fashion. KPIs need to be communicated via multiple media.

The measures that are selected must be carefully specified to ensure they do not cause unintended behaviours. There needs to be a a balance of qualitative and quantitative factors to encourage the correct behaviours.

Listed below are some examples of the behaviours and outcomes that ill-considered KPIs can cause.

creating KPIs

This section addresses the practical matter of how to generate candidate KPIs; in other words, given a set of business processes, how can we go about generating a good set of candidate KPIs for those processes. We will examine several useful aids for generating KPIs and then describe the “in practice” process of generation.

cascading corporate goals down

Many ways of generating KPIs for a department or sector of an organisation can be used, but since at some point in the process the KPIs will need to be assessed for their contribution to corporate goals, one approach which can shortcut some work is to determine the department’s goals by cascading the corporate goals down to the department level.

A department’s goals should contribute to the corporate goals in the appropriate manner for the department’s nature. For example, given a corporate goal of “Differentiate top-tier products by market-leading quality”, the Purchasing Department’s goals might include “Seek alternate suppliers with higher quality components at competitive rates and supply conditions”, i.e. the departmental role contributes to the corporate role within the limitations of the department’s raison d’etre.

Once the department’s goals are known and agreed, there is a basis for designing metrics. KPIs can be chosen which not only satisfy the fundamental properties of KPIs (key indicators of process performance) but which also can be directly understood in light of the department’s goals. This approach significantly facilitates generating KPIs.

KPI examples

We provide over 500 common KPIs for your consideration at:
modulus KPIs.
This note has been a high-level summary of the question of what is a KPI. For a much more detailed analysis of KPIs, and especially of choosing KPI sets, consider our e-book Generating and Selecting KPI Sets”