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HomeArticleLaboratory ManagementMeasuring lab performance: How OKRs and KPIs help with decision-making

Measuring lab performance: How OKRs and KPIs help with decision-making

By Jana Erjavec, Senior digitalization consultant&Chief Commercial Officer, BioSistemika

Throughout my career as a researcher, diagnostician, and digitalization consultant, I had the privilege of working with many excellent lab managers and lab leaders. They understood their laboratory processes in detail and put a lot of effort into optimizing them.

You may now think that “everyone does that”; however, this is not true. I have also seen laboratories with an outdated stock of chemicals, redundant instruments sitting idle, and no clear understanding of the bottlenecks in their processes.

There are many different approaches to successful laboratory management, but they all have one thing in common – they all make data-informed decisions and have clear objectives. Namely, they measure performance metrics of their laboratory operations with Laboratory Key Performance Indicators or KPIs and execute their strategy with clear Objectives and Key Results (OKRs).

Before diving deeper, let’s clarify: Laboratory Key Performance Indicators (KPIs) are measures of the performance of the laboratory and its activities, such as projects, processes, products, or services. KPIs in laboratories are also used to track the performance of the inventory, devices, environment, data, and results. Objectives and Key Results (OKRs), on the other hand, are a strategic framework where objectives set the direction and key results measure progress towards these goals.

Before setting up KPIs, every lab manager must understand what is important for their laboratory. While for a diagnostic lab, a turnaround time and price per sample may be critical, this does not apply to a research lab, where the amount of wasted consumables and average grant revenue are more important. In practice, it turned out better over and over again to start with a few critical KPIs, based on which you will be able to make informed decisions (i.e., can we justify the purchase of a fully automated system). Lab managers may then gradually expand performance measurement if they believe it will further help their decision-making. I also recommend openly communicating the KPIs with the employees and showing them progress, either on a weekly, monthly, or quarterly basis. Many laboratories already use dashboards in the hallways or in the laboratory that display key KPIs. This not only boosts morale but also encourages employees to think about how they can contribute to improving the KPIs.

Many lab managers are also considering adopting a more strategic approach to lab management. I recommend starting with defining a vision and a five-year strategy, which will help everyone on the team understand where the organization is going and how you plan to achieve your vision. However, I have seen too often that vision becomes just a nice quote on the webpage, and strategy collects dust in some hidden file or drawer. So, to quote John Doerr: »Ideas are easy. Execution is everything«.

This brings us to the Objectives and Key Results methodology or OKRs. Objectives are clear, inspiring, and qualitative, for example, »Our laboratory is efficient.« Key results (KRs) are specific and measurable, for example, »Reduce turnaround time from 48h to 24h«. While KRs are a measurement of success, KPIs are a measurement of performance. In that case, a KPI could be »90% of samples are processed in less than 24h«.

At the end of the previous year, the lab manager and the team can set 3-5 clear Objectives for the upcoming year and 1-5 Key results per objective. It is vital that employees contribute their ideas to the OKRs and later take ownership of individual KRs. This will align everyone within the organization with short-term and long-term objectives, which pave the way for success. Furthermore, organizations and laboratories that have a clear vision and are able to execute their strategy will have an important competitive advantage over those that don’t.

While focusing on metrics like KPIs and OKRs provides a structured approach to achieving lab efficiency, one might argue it risks overshadowing the importance of innovation and creative problem-solving. However, the key lies in finding a balance. By setting objectives that encourage innovative thinking alongside performance metrics, labs can ensure they’re not just meeting targets but also pushing the boundaries of scientific exploration.

In conclusion, setting OKRs and keeping track of laboratory performance with KPIs enables better decision-making. Data provides important insights, based on which lab managers and leaders can make important strategic decisions related to laboratory automation, laboratory digitalization, HR management, and other business-related decisions.

Many laboratories have already gained significant improvements by implementing KPIs and OKRs. An advice for those yet to embrace this approach: start small, engage your team in the process, and gradually refine your approach as you discover what works best for your lab. By doing so, you’ll not only enhance your lab’s operational efficiency but also contribute to a culture of excellence and innovation.

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