KPIs Winning Tips & Common Challenges

Having an effective key performance indicator (KPI) selection and monitoring process is becoming increasingly critical in today’s competitive and integrated business environment. Companies rely on managers and staff to choose and monitor the right KPIs. This requires the development of a robust performance-measurement capability that is based on mature KPI management expertise and supported by a collaborative performance culture.

A good corporate strategic plan includes a solid set of KPIs that can translate strategy into manageable operational actions for employees. Usually, a business strategy fails to achieve this objective if it includes too many or unaligned KPIs. This can weaken the focus on objectives, making it difficult to communicate a consistent implementation plan to staff. KPIs should give individuals concrete links to the organization’s corporate objectives.

Moreover, a large list of KPIs that does not have clear linkages to a business’s overall objectives may be a sign of a larger problem: a lack of strategic focus. Selected KPIs in any strategy should have clear and solid links to the overall performance. Understanding the importance of different KPIs in driving these objectives is a necessary condition for providing good, actionable information at the operational level where corporate strategy is implemented.

There are some overarching messages that all organizations would do well to remember.

• Firstly, KPIs can have unintended influences on people’s behavior. For example, a company might set productivity targets to encourage employees to complete tasks as quickly as possible, i.e., some sort of time-related target. But the unintended consequence could be that employees are so motivated to hit these targets that they endanger themselves and the company finds they have lots of injured employees! This is just one example from many that demonstrates how important it is to understand the broader effect a target could have on employee behavior.
• A second point is about the quality of the KPI itself. It’s not good enough to set a vague target, such as “improved productivity.” There always has to be a quantifiable and realistic goal. It seems obvious, yet, so often, this is overlooked.
• Finally, it is worth remembering that there is no science behind KPIs — it’s an art, something that you can only get really right by trial and error. For example, one expert may recommend a list of KPIs and another expert would likely recommend a completely different list. Neither of them is right or wrong — both lists will have their advantages and disadvantages. So, be confident with your target setting: brainstorm, filter and seek agreement. Be realistic, but be wary of being vague. Be ready to measure your organization’s success! 

This article is sponsored by www.kippy.cloud