If you want to improve your team's performance, you need to measure it. But how do you choose the right indicators that reflect the quality, efficiency, and effectiveness of your team's work? In this article, we will explore some of the best key performance indicators (KPIs) to identify high-performing teams in the context of performance management.
KPIs are measurable values that show how well a team or an individual is achieving their goals and objectives. KPIs can be quantitative, such as revenue, customer satisfaction, or productivity, or qualitative, such as innovation, collaboration, or feedback. KPIs should be aligned with the organization's vision, mission, and strategy, and should be relevant, specific, and achievable for the team.
KPI's cannot just be measurements, they must be measurements that matter. Establishing KPI's that once achieved, do not bring the success the organization (or department) had aimed for is an exercise in frustration for both those who attempt to achieve them.
KPIs are important for teams as they allow them to track their progress and performance, identify strengths and areas for improvement, communicate results and achievements to stakeholders, motivate and engage team members, and align actions with the organization's goals and values. Managers can also use KPIs to evaluate and reward team performance, provide feedback and coaching, identify and resolve issues and conflicts, foster a culture of accountability and collaboration, and allocate resources and support.
Not only are KPI's important for each team, but it is even more important that each team's KPI's align to achieve the corporations larger goal. Once established, the organization KPI's must be broken down into team KPI's that once achieved roll up to achieve those established at the highest level. This process takes time and is fraught with accidental misalignment where a KPI provided to one team can be at odds with one that might be provided to another. When done successfully, not only should the KPI's for a team help the members of that team work together, but they should also help all of the organization's team to be pulling in the same direction.
When selecting the best KPIs for your team, there are some general guidelines to follow. Utilizing the SMART criteria can ensure that your KPIs are specific, measurable, achievable, relevant, and time-bound. Additionally, it is important to use a balanced mix of leading and lagging indicators, input and output indicators, and individual and team indicators. Finally, it is best to focus on the most critical and influential indicators that reflect your team's priorities and goals, and avoid overloading your team with too many or irrelevant indicators.
While each team must have its own KPI's, it is also critical that KPI's be shared between teams. This is especially true for teams that share boundaries and handovers (eg: Marketing to Sales, Sales to Service, Service to Support and Customer Success). Poor transitions between corporate silos damages the customer journey. My experience has been that both silos tend to share the blame. The silo providing the handover tends to avoid its responsibilities in favor of returning to repeat its business process (eg: Sales wanting to get back to selling). While the receiving silo tends not to establish a formalized mechanism for the handover (eg: Services not insisting that it be done before taking on a new customer project).
When measuring your team's performance, you can choose from a variety of KPIs that depend on your team's context, purpose, and objectives. For instance, customer service KPIs could include customer satisfaction, customer retention, customer loyalty, net promoter score, first response time, resolution time, service quality, customer complaints, and customer referrals. Sales KPIs might include revenue, profit, market share, sales volume, sales growth, sales conversion rate, average order value, customer lifetime value, sales pipeline and sales cycle. Marketing KPIs could involve brand awareness, brand reputation, brand loyalty, website traffic, website conversion rate, social media engagement, lead generation, lead quality and lead nurturing. Project management KPIs could be project completion, project scope, project budget, project schedule, project quality as well as project risks and issues. Innovation KPIs may include new products and services as well as new processes and markets. Finally collaboration KPIs can measure team communication and cooperation as well as team trust and diversity.
High performing teams share KPI's that measure how well they maintain a successful customer journey. This includes things like "Days to make first contact after MQL" between Marketing to Sales transitions. "Days to Project Pre-Kickoff Call" for Sales to Services transitions. "Average Tickets for first 30 days after go live" for Services to Support transitions.
Once you have chosen the best KPIs for your team, you need to monitor and improve them regularly. To do this, you must first define a baseline and target for each KPI that is realistic and attainable. Then, collect and analyze data for each KPI using appropriate tools and methods to ensure accuracy and reliability. After that, report and communicate the results in clear and concise formats to present relevant insights. Next, review and evaluate the performance of each KPI to identify gaps and opportunities for improvement. Plan and implement the necessary actions to close these gaps and meet the targets for each indicator, while ensuring they are aligned with one another. Finally, repeat and refine this process on a regular basis, adjusting your KPIs as needed to reflect changes in your team's environment and objectives.
Love the focus on KPIs. Unfortunately, many internal initiatives to push KPIs on employees have been done so poorly that people find it revolting. It's better not to implement than to get it wrong. Do it wrong and you'll never have buy-in again. What's helped me is to assign no more than 3 KPIs in a period. Any more and it's overwhelming. Also, I try not to give 'maintenance KPIs' (eg 'continuous improvement'). Sometimes a good KPI is a task or project accomplishment in a small period of time.