How to Measure – In this refresher series on KPIs, we have been assessing the role and value of KPIs from several angles. Firstly, we looked at the all-important ‘why’ of setting KPIs, before looking at ‘what’ is a true KPI.
Now, we move on to the ‘how’ – how we measure KPIs once we know why we are setting them, and are confident that we are choosing them accurately and linking back our strategic objectives.
Process, process, process
This third stage – the process of measurement and target setting – tends to be the one that managers feel the most comfortable with, especially if they are from operational backgrounds and deal with a wide range of metrics on a daily basis.
The need for realistic targets
Most employees generally don’t have measures associated with the work they do. They will often be set objectives, and simply be expected to complete the objective. Some employees, certainly salespeople or account managers, will have personal objectives that have associated measures and targets. In the case of sales, these will almost certainly be based on the value of the sales revenue.
If there is one thing that upsets employees – even the best workers in an organisation – it is when they are set unrealistic targets. In fact, the setting of an unrealistic target is a rapid way to switch off engagement, morale, productivity – and to damage your employer brand in the process. Keep setting unrealistic and unachievable targets and your employees will simply start to look for work elsewhere – letting their own network now that you aren’t an attractive employer to work for.
The rule of appropriate measures
The desired goal of KPIs is to stimulate high organisational performance and to ensure that individual, team and department efforts are being directed towards the activities that will meet the business’s strategic objectives.
It is vital to set the right targets that will motivate individuals to achieve their best work and deliver consistently. Often these are linked to profit related or performance pay programmes, so there needs to be a necessary element of stretch involved – but with the realistic possibility of achieving the target.
Get the measures right and you can then begin to work with individuals and teams across your organisation to gain their buy into each objective, with its accompanying measure and the ultimate end target.
How to Measure – 5 top tips
So we’ve reminded ourselves that our KPIs need to be attainable (with the right degree of stretch) and embedded into operational processes and procedures. Here are some other tips for success to remember:
1. KISS
Remember the KISS (Keep it Simple, Stupid) rule for setting KPIs – and choose just 3-5 KPIs for each objective. Remember the ‘key’ principle to keep your staff focused and productive.
2. Your Top Five
Avoid decision-paralysis by asking yourself which five pieces of business data you look for at the start of each day. This will help you to choose five measures that instantly explain progress. Sense check your choices by confirming that they measure progress towards the business’s identified goals – rather than being the goals themselves!
3. Be SMART
Use SMART criteria to review the goals and check that your proposed KPIs will support them – being specific, measurable, attainable, relevant and time-bound.
4. Collaborate
Work with others on your KPI measurement rather than taking the risk of a silo approach. Speak to other managers of departments you work with for example, because some of your KPIs will be cross-departmental. When you communicate with peers across the organisation, you will ensure local metrics don’t compromise the wider whole. Understand where there are linkages so that you can coordinate your efforts and accelerate progress.
5. Think process
Who will own each KPI that you set? It is vital that each KPI has a lead. How will you communicate and measure the progress of your KPI sets? For most businesses, this will mean creating dashboards. Make sure you are using automated and specialist KPI management software such as Spider Impact to make this process as simple and as effective as possible. With modern KPI management tools, you can create rich and compelling KPI dashboards in real-time and share them across the organisation for review, input and collaboration – without errors or waste.
6. Communicate regularly
Build a regular structured communication programme of KPI progress into the business as a whole. This should be tiered but not top-down – ask local champions to deliver structured team briefings for example. Or train junior members of teams to use KPI Software to update and analyse KPI dashboards as part of their own development. The more you can engage and enthuse your employees on the topic of business strategy and KPI progress – particularly where year-end bonuses or similar incentives are involved – the more energy and excitement your strategy will create across your organisation, and the better the success your business will enjoy!
Find out more
Use the Intrafocus Academy of Strategic Planning as a resource base for developing your KPIs, specifically, download the eBook How to Develop Meaningful KPIs (you will need to join the Academy first!)
