Friday, April 17, 2009

Will Najib's KPIs Work?

I was quoted in the following The Sun article published yesterday.

PETALING JAYA: Prime Minister Datuk Seri Najib Abdul Razak’s call for ministries to implement comprehensive key performance indicators (KPIs) should include a requirement to use proper standards and benchmarks, said PJ Utara DAP MP and economist Tony Pua.

“Typically, KPIs are used in corporate organisations. They are not just measures of performance, they also assess the consequences of performing above expectations,
meeting expectations or a complete failure to meet expectations. Without a set of clear-cut assessment guidelines, it is going to fail,” he said.

Pua said he was “not confident” that the government could follow through with the consequences when ministries failed to meet the required standards.

“I doubt the government can pull it off because it does not seem to have the necessary political will to carry out some of the required consequences of under-performance. Do you think it can remove somebody without having to consider
the political consequences?”

“[The Ministries] Setting their own criteria for KPI assessment guidelines is another problem. KPIs should be set by civil societies or the public because if the Home Ministry were to judge its performance based on the ISA detainees held as a KPI, they could go out and do it (arrest people). It needs to be done by the end recipients. I cannot see it without public participation,” Pua said.

He criticised the criteria set as vague and not covering the qualitative performance of ministries.

“They are vague and possibly intentionally so. You can set KPIs for all ministries and ministers, but you have to deal with the qualitative aspects. “For example, you can set a KPI for the Education Ministry based on how many new schools were built or how many teachers were hired. But it does not cover the quality of education delivered,” Pua said, calling for results from KPIs to be made public.

“If you are going to have a KPI, why should you be ashamed of your performance. Is this the change that the PM talks about? Are they going to be accountable to the public at all? Is this the right period for ‘People First, Performance Now’?”

He said the DAP would monitor the measures implemented by each ministry.

Deloitte Malaysia’s human capital services group director Andrew Lee said KPIs, which have been used by the private sector for decades, were “report cards” to track, measure and report progress.

“For KPIs to be effective, firstly, there is a need to define the objectives. KPIs would then measure the fulfi lment of the objectives. Secondly, indicators that measure the fulfilment of the objectives need to be developed,” he said.

“There are seven tests used to check any KPI. If any test fails, the KPI should be rejected immediately. Any KPI should be measurable, controllable, simple, actionable, integrated and credible. Finally, it should be linked back to the objectives,” Lee said, also pointing out several ways in which a KPI can fail.

“Implementation can fail when too few or too many KPIs are defined. Not everything is important to measure. A KPI can fail one of the seven tests, or it isn’t measurable as data is not available. The culture of the organisation must also be considered. Are the staff ready for KPIs? It takes a high degree of discipline and staff don’t like to be tracked all the time."
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