Posted on 18 Feb 2020
Key Performance Indicators (KPIs) are your guide to understanding every moving part of your business. They measure the achievement of your strategic goals against a range of quantifiable or qualitative data over a period of time – in actual fact they are your roadmap, and without a roadmap your business risks losing direction and it may even start to stall.
Introducing KPIs successfully is not as straightforward as it might at first appear. Your management team may have worked for you for a number of years and performed their jobs well enough without any explicit targets other than the obvious one of getting the work done. Their horizons might not have stretched too far beyond their daily and weekly objectives, so to expect them to embrace KPIs and use the data generated to inform their decisions without coaching and support is entirely unrealistic and unlikely to lead to any noticeable business improvement.
Involve managers from the start
Your managers are the experts – they are the ones who do the job day-in, day-out, so work with them as a project team to determine the KPIs appropriate for their departments, all linked to your high level strategic objectives. By involving them from the beginning, they are more likely to take accountability for the achievement of the KPIs and become proactive in making decisions to influence positive outcomes.
Communicate with employees
A KPI is useless if it doesn’t get communicated properly. If employees have no idea about what the goals are, how will they ever achieve them? They need to understand the overall business objectives but this, in itself, is not enough. KPIs need to be broken down by function and expressed in understandable terms, so every team and individual team member knows exactly their part in making them happen.
KPIs need to be communicated in the right way, too – you need to be clear not only about what you’re measuring, but why you’re measuring it, otherwise they risk becoming just numbers with no meaning to your employees. So facilitate regular, two-way communication to keep employees up-to-date with the company’s performance against KPIs, to demonstrate the decisions made as a result of the data, and to encourage them to engage in the process by feeding back their ideas for business improvement.
Coach managers to work with KPIs
Managers may feel vulnerable and a bit out of their comfort zone when you start to measure their performance against KPIs, so it is vital they are seen as a carrot and not a stick otherwise managers may become defensive and even lose confidence in themselves and trust in you. Worst of all, it may lead to a blame culture whereby managers level criticism at other teams in an attempt to mask their own under performance.
To overcome any negative assumptions, coach managers to interpret the KPI data for their area to identify trends, problems and opportunities. The logical next step is to agree SMART actions to bring about the necessary changes to deliver the optimum impact. Progress against these actions can then be rolled over to the next one-to-one to form a continuous, dynamic loop.
Make KPIs part of the appraisal process
Managers’ performance against KPIs should form a natural part of the appraisal discussion, but there should be no surprises. Any problems should be addressed in real time through coaching, agreeing targets and monitoring the employee’s performance against them.
Engrain KPIs in the business conversation
Make KPIs part of the everyday business language to reinforce their importance and relevance to the company’s continuous improvement. One way of doing this is to include them as a standard meeting agenda item to encourage an on-going dialogue to identify potential courses of action and opportunities based on the data. Recognise managers and employees for achieving positive results against KPIs – a simple ‘well done’ may work wonders as you walk around, and gear your reward policy to those individuals who drive business performance through consistently exceeding their KPI targets.
To find out more about how to drive business performance through the successful introduction of KPIs, get in touch!