It??™s important to understand that KPIs that are healthy might have negative
trends, as in the case with the employee turnover rate. KPIs that are unhealthy
may nonetheless have positive trends, meaning that while the situation is bad, it is
improving. The trend may be as simple as whether or not the current value is better
than the previous value, or a complex calculation can be employed that helps factor
in a longer time period. If sales decline for six straight months and in month seven
are $1 higher than month six, should the trend suddenly appear as positive, or should
a more complex calculation be used, such as a weighted moving average?
Trend indicators, like the health indicators, can vary, but they are usually arrows
which can point up, down, or towards the middle. For each KPI, the designer of
the scorecard must identify what constitutes a positive trend: an increasing value, a
decreasing value, or staying within a certain range. For sales, an increasing value is
clearly good. For expenses, a decreasing value should show a positive, or up, trend.
For other measures, such as medical laboratory results, values might need to be in a
particular range, such as between 5.2 and 8.3. Anything above or below that range is
considered abnormal and therefore has a negative trend.
C h a p t e r 4 : S c o r e c a r d s a n d K e y P e r f o r m a n c e I n d i c a t o r s 65
Deciding What KPIs to Track
Deciding on the KPIs to track can be a bit tricky because end users often get locked
into a certain way of thinking.
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