Why KPIs are Different in Aviation Risk Management
Key performance indicators (KPIs) in aviation risk management are different than KPIs from most other industries. The difference both benefit and hurt safety management’s ability to choose the right KPIs for their organization. The important differences between aviation ems KPIs and other industries are that:
- KPIs in aviation need to cover a broader spectrum of performance (quality, safety, compliance) than most industries;
- Aviation is one of the highest risk industries, both financially and in terms of safety;
- Oversight agencies provide more oversight and guidance than most other industries; and
- “Performance” in aviation safety has several different meanings.
All of these points have two important implications:
- On the one hand, choosing KPIs in aviation SMS programs is absolutely critical (lives depend upon it), and can be a stressful experience; but
- Fortunately, there are many resources and sources of guidance.
Any KPI will be one of the following types of data indicator:
- Leading indicators: represent underlying factors that drive performance; and
- Lagging indicators: represent historical performance measurements.
A quality list of KPIs should include both lagging and leading indicators. These points in mind, here is how to choose KPIs in aviation SMS programs in 6 steps.
1 – List Core Safety Goals and Business Goals
Every organization will have different KPIs, because every organization will have different goals and objectives. In order for your organization to choose KPIs, you need to have your objectives clearly listed out.
These objectives should:
- Encompass every level of the organization (front line, management, upper management, investors);
- Encompass short, medium, and long term goals;
- Create a “manifesto” of the most important aspirations/needs of the company;
- Include safety and quality goals;
- Should be described and justified.
Chosen KPIs will be grounded in these aims, so the listed objectives should be chosen with great care, and described in great detail. What makes this creating this list slightly difficult is the fact that the list of goals should include objectives that are short term ( < 1 year), medium-long term (1 – 3 years), and long term ( 3+ years).
KPIs should never be chosen without a list of carefully considered goals and objectives.
2 – Gather List of Safety Data Metrics
A great way to brainstorm KPIs is to gather a large list of safety data metrics. These metrics can:
- Already exist in your company;
- Be provided by your aviation safety management system software;
- Come from other, similar aviation service providers; and
- Be provided by oversight agencies.
The larger the initial list, the better. For example, our list of 40 leading indicators would be one such resource of data metrics to include in your list. The point of having this list is two-fold:
- Generate ideas for custom metrics; and
- Provide a list of potential candidates to use in the next few steps.
3 – Metrics to Avoid Using For KPIs
The first thing you will want to do next is cross out or delete certain types of data points from the list of data in order to narrow potential KPIs. Some KPIs that should be obvious enough to delete are:
- Not attainable to quantify;
- Cookie cutter metrics – i.e., “standard” data metrics that many other organizations are probably using as well;
- Don’t relate to goals; and
- “Simple” or “general” metrics – KPIs should be very specific.
This step in the process should remove a majority of the list. As the saying goes:
- Eliminate with extreme prejudice.
You should have high standards for your KPIs, and if any potential metric even slightly has any qualities from the above points, cross it out.
4 – Signs of Good KPIs
Once you have deleted your list of metrics to avoid, look through non-eliminated metrics for signs of good KPIs and put a star next to them, circle them, etc. As said, you should have high standards for potential KPIs.
To “star” a potential KPI, it should meet the following qualifications:
- It is quantifiable;
- You have the means to monitor and track the metric’s data points;
- It is aligned directly with company goals and objectives; and
- It is “specific” – i.e., few or no other organizations will have this exact same statistic.
Consider each remaining metric carefully. After going through the list and starring/circling potential KPIs, cross out any un-circled/un-starred metrics.
5 – How Many KPIs Should You Have?
Every organization will be different. Smaller organizations may have 5 KPIs that they monitor. Larger organizations may have considerably more. The right number of KPIs for your organization should be:
- However many is manageable by your safety manager and/or safety team.
In the case of KPIs, more does not mean better. Having many KPIs is a very good indication that:
- Objectives and goals were not clearly defined;
- KPIs were not chosen carefully enough;
- Some KPIs are dated and no longer relevant; and/or
- KPIs are not tailored to your organization.
The “right number of KPIs” is something that very well make take time to figure out. At first, you will probably have too few or too many. Over time it will become apparent that:
- Some KPIs are not as relevant as you first thought they would be (so you can remove them); or
- Your current list does not capture one or several key metrics that mark performance (and you should have a good idea of which metric(s) to add).
6 – Create Plan to Monitor KPIs
A solid plan for monitoring KPIs is absolutely essential. You need to ensure that KPI data is accurate and dependable, as you will be making safety-critical decisions based off of those KPIs. Your plan should capture:
- How each metric will be monitored, such as with aviation SMS software; and
- Who will be managing the monitoring of the KPI.
This plan will be useful to ensure that KPIs are adequately monitored and managed, as well as strengthening confidence with auditors and other stakeholders.
Get started with creating your KPIs with our list of proven-quality KPIs in the aviation industry: