- September 12, 2016
- Posted by: Mitch/Admin
- Category: Uncategorized
I am frequently amazed at how many companies jump immediately to the KPIs when they think about managing performance, or about the balanced scorecard. “Show me the KPIs” they ask in the first meeting.
In a recent visit to France with a client this struck home as I was walking back to my hotel from our first workshop. In the round of introductions at our first meeting, each of the management team introduced themselves following their role with “and I am here to get the KPIs”. I walked by a bistro called Prêt à Manger (Ready to Eat) with ready-made sandwiches and meals. An image suddenly flashed through my mind of managers going into the store and picking out ready-made KPIs from the shelves and bringing them back to their organization. I imagined the lively discussion as each one described how good his KPI was and why s/he wanted it.
Developing the performance measures and KPIs are a key element of any balanced scorecard. And often they are one of the more challenging steps in the implementation. It’s only natural that managers would look for an easier way to accomplish this step. And there are many options available. For example, there are many websites that offer libraries of KPIs and performance measures. And there are “industry standard” measures of performance in all industries. And don’t forget that these organizations also already have measures in place, so “why don’t we just use the ones we already have since we put so much effort into developing them last time?”
Using off-the-shelf KPIs is like eating someone else’s lunch. It fills you up, but it’s not what you wanted. Those ready-to-eat KPIs don’t do what you really want – drive alignment to YOUR strategy and mobilize your organization to high performance.
There are good answers as to why each of these solutions is wrong, but rather than address what’s wrong with them, I will just jump ahead and describe the right answer.
Good KPIs are like the gauges on your car dashboard. KPIs are quantifiable “directive indicators” of how the organization is progressing towards established targets. They indicate how the organization is performing in the areas most important in executing your strategy, and inherently direct you towards an action when the performance is veering off target. And of all the measures you may have in place, they are the key ones. They align the organization to the strategy, engage the employees, and are credible.
So how do you get the right KPIs?
- Start with the strategy and what you are trying to achieve. Don’t confuse project performance measures with business performance measures
- Engage those at the front line in defining and selecting – they are closer to the impact and more likely to be able to describe reactions and measures that have clear impact.
- Involve line, finance and IT in determining the collection and identification of what can easily and directly measured – hands-off collection and presentation – what systems have the info; remember you don’t want to make more work gathering the data than it’s worth to have it to act on
Look at your organization’s KPIs. Are they off-the-shelf and ready-to-eat, or are they really your KPIs? Sort them out and drive your business to higher performance.
And… now that you’re hungry, let’s eat!
Managing Director, Lumen, Inc.