How do you review and update your financial KPIs based on changing circumstances and feedback?

Reviewing and updating financial KPIs requires a dynamic approach. Regularly assess KPIs against current business goals and market conditions. Use feedback from stakeholders to identify gaps. Analyze financial reports to pinpoint trends and anomalies. Incorporate real-time data to ensure accuracy. Adjust targets to reflect new strategic priorities. Employ tools like dashboards for continuous monitoring. Conduct quarterly reviews to adapt to any economic shifts. Encourage team input for a well-rounded perspective. Remember Peter Drucker's wisdom: “What gets measured gets managed.” Stay agile and responsive to maintain relevance and drive success.

The first 2 sentences include the basic inputs to financially oriented KPIs. Assessing your current situation occurs when you take an honest look at the calculated KPIs and compare them to prior periods as well as established benchmarks. While external factors should be considered in explaining KPI performance & variances, these factors should not be used as excuses and explanations for why KPIs are not valid and need to be changed. As for the last sentence, one must realize that this is NOT happening in step 1. Such analytics are the result of using the results generated by the KPI process. Even HORRIBLY constructed KPIs may provide useful information if these KPIs have been in effect for a while. Moving targets are less useful IMO.

This should not be a priority. Use the tools you have and perform the assessment. If minor tweaks are needed, add to your KPIs but retain the existing KPIs for important historical comparisons. At some point, you could replace a less relevant indicator with a better indicator. Otherwise, one may find that the analytics never get completed because some stakeholder always has a problem with some KPI. Measurements are what they are -- perhaps not perfect -- but they provide insight and comparative information. If the results look bad, they probably are bad but they may not be irrelevant or outdated. The measurements that unearth the bad and the ugly are undoubtedly unloved. Discarding or replacing KPIs should be a rare phenomenon.

when receiving the feedback try not to take it personal. You have opened yourself for feedback and may receive feedback that may hurt but can help you build for the future.

KPIs should be published on a regular basis with an invitation to comment if feedback is being solicited. Historical KPIs should be available in a dashboard or other vehicle to encourage relevant historical perspective. Feedback from stakeholders may provide the explanations that management is seeking.

One major pitfall is failing to provide context for the KPIs. Ignoring Context and Purpose: When soliciting feedback, ensure that the stakeholders understand the purpose and objectives behind each KPI. Without this context, the feedback might be misaligned with the strategic goals or miss the nuances of why specific KPIs were chosen. For example, if a KPI is designed to measure long-term customer engagement, feedback focusing only on short-term sales metrics might not be relevant. Always explain the rationale behind your KPIs to ensure that the feedback you receive is pertinent and useful

This is The Myth of Sisyphus. You can keep pushing that rock up the hill and it will keep rolling back to you until it crushes you. This is why KPIs are not understood or considered relevant. When continual changes are part of the process, it becomes a waste of time. It becomes difficult to understand the assessments. Stakeholders struggle to get a view of the baseline case. KPIs need consistency and stability. The continual change-up does not benefit management or other stakeholders. Perhaps the benefit is job security for analysts well versed in erudite minutiae? When minutia reigns, it is a yawn in the boardroom, unless it actually becomes a debate about the irrelevance of KPIs. Job security? Do you like pushing that rock!!

It is essential to USE the information from the established KPIs on a regular basis. There should be consistent publication dates for the information. Too often with the chameleonization of KPIs to be "more relevant", management and stakeholders are never sure when the information will be available. This is unacceptable. If you have a KPI process stick to your schedule and your measurements.