Why Does Every Public, For-Profit and Non-Profit Organisation Need KPIs?
Stacey Barr
Performance Measure & KPI Specialist ? Author of "Prove It!" & "Practical Performance Measurement" ? Creator of PuMP
If you only have rudimentary knowledge of KPIs and performance measurement, can you still lead a successful organisation?
Harald Matzke is our licensed PuMP provider to German-speaking countries. His journey with performance measurement began quite a few years ago, when he used PuMP to transform his previous company, cubus. Harald's words are the inspiration for this article:
"I've been wondering for a long time whether you can run a company successfully if you only have rudimentary knowledge of KPIs and performance measurement. In my opinion, the right set of KPIs is essential to successfully run a business and achieve set goals. I have seen in many companies where only 'common' KPIs, mostly from the financial sector, are used. This is not fundamentally wrong, but only mediocre." -- Harald Matzke
I believe that one reason we need good measurement for running any business or organisation is that ambiguity is the enemy of effectiveness and efficiency, and measurement goes a long way to help us remove ambiguity. Evidence-based leaders, like Harald, understand this. But there are not as many evidence-based leaders of public, for-profit or non-profit organisations as there should be.
Do public, private and non-profit leaders alike believe they need KPIs?
It does not matter the size, sector, industry or culture of an organisation. Leaders always have to deal with ambiguity. What continues to baffle me is why, as Harald also observes on the other side of the planet to me, the resistance leaders have to meaningful measurement. Many Measure Up readers observe this too (as I found out by asking them in this survey). Here's a taste of what they shared:
"The CEO speaks on the importance of focusing on outcomes but insists on measuring milestones, activities and projects."
"From experience I observe that many managers don't dare to show explicitly their accountability... They think that it is enough that they work intuitively."
"My workplace is a university. I am puzzled why leadership who also work in the knowledge sector (teaching and research) resist performance measurement. My theory is that the political or social agenda outcompetes the evidence based approach in most cases."
"My organization rewards many other behaviours (working harder, shiny launches, etc), but not evidence of real improvement."
"Leaders are looking for the holy grail of performance measurement, but don't know enough, nor have thought it through. The result is they measure the usual (outcome) financial metrics. "
"The only time the leaders really talk about our measures (particularly strategic measures) is when the results are showing strong improvement."
In that survey, 68% of people said their leadership teams were resistant to better measurement. The top 3 reasons for this resistance that they most commonly shared were:
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This experience is not rare. My PuMP Partners and I have seen the same patterns in leadership teams, in hundreds of organisations, all over the world, and for many years. The vast majority of strategy and performance professionals, data scientists and quality practitioners, and improvement-oriented employees sincerely want to see better measurement in their organisations. But more often than any other obstacle, leadership resistance is in their way.
Can we reduce leadership resistance to better measurement?
If your leadership team resists better measurement, it's worthwhile to test more deeply for the reasons for their resistance. It will always boil down to their worldview and values, and the level of KPI consciousness they consequently may have.
But a few practical ideas to help your leaders appreciate why their public, for-profit, or non-profit organisation needs KPIs, include these:
There is still more to learn about why public, for-profit and non-profit leaders resist better KPIs. Maybe you can help shed more light on this subject? I would love your answers to the two questions in my survey:
If you want to add your experiences and thoughts (this article will update again in the future to include them), then please do so here: https://www.surveymonkey.com/r/kpiresistance
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The post “Why Does Every Public, For-Profit and Non-Profit Organisation Need KPIs?” was first published by Stacey Barr on https://staceybarr.com/measure-up.
Business Architecture | Operational Excellence | BPM | Digital Transformation
2 年It's not that leaders don't understand what good performance measurement is, in fact it's the exact opposite. They are highly intelligent people, they very well know what it is hence they stay away from it. See, measures create transparency, and people can hold them accountable for it. In the context of pubic service, THERE'S NO INCENTIVE FOR LEADERS TO CHANGE OR IMPROVE THE STATUS QUO, so why bother and put their years of accolades and socio-political status at risk? This is why the emphasis on compliance and risk, as they ensure control over the status quo. Leaders still need to tick the box of service performance measure though, so this drives the third point - just show the public how busy the organisation is through those widget counts, the busier the better. It's all smokes and mirrors. Cliche but it's a never-ending cycle of bad leadership culture.
Supporting purpose, progress, and growth in the public service.
2 年The accountability/compliance > improvement comment is sticking with me too - I think that's the root of why folks at all levels resist or feel yucky about performance measurement. Done with logic models alone, without the engagement that is central to PuMP, it feels punitive (at worst) and ho hum (at best) rather than motivating and clarifying.
Management Consultant, Advisor, Researcher and Author.
2 年I agree thatL The leaders don't really understand what good performance measurement is. The leaders put more emphasis on accountability and compliance than on performance improvement. The leaders focus too much on activity and milestones, and not nearly enough on results. But I believe the first point is the most important. Generally, there's a poor understanding of performance measurement at each level of the organization. If you don't know what it is, you are not going to trust it.