What Are Your KPIs Measuring?

 

It is universally accepted that it is important to measure a company's performance. However, when it comes to individual performance, there is very little acceptance and it is something that is avoided by one and all.

The KPIs that are designed today is numerical and it becomes difficult for operational managers to begin to understand them though it measures their performance.

KPIs are about relationships

Managers spend a lot of time measuring the KPIs of the staff. But there is very little understanding of why it is done and whom and what is the benefit? Both should understand their contribution to the growth of each other. It is vital to understand the decision-making criteria of the company and what is expected by the employees in return. This is defined by how ell the company fulfils what the employees expect, 

In sales, the focus is mostly on what the company gets out of the deal rather than what the customer gets. The measures must shift to customer satisfaction factors and product ranking in the market. Digital innovation has made this easy. There is great transparency (social media) where the feedback is immediate, enabling correction.

Consider causality

For many managers, KPI measures are just a series of numbers that they do not question their impact in the future. But the indicators should be capable of predicting the future. If the employees are happy today, they create satisfied customers tomorrow that will improve the company's performance.

Once managers understand this, they start analysing their work and optimise the job to deliver the desired results.

Numbers never tell the whole story.

KPIs' are not everything, they are only indicators. KPIs must be reviewed regularly and factors that do not contribute should be dropped. Keep the criteria manageable (not more than 6-8). 

As the market dynamics change, be prepared to change the criteria. It should not be set and forget. The business dynamics are changing all the time in response to digital innovations, social media, crisis. It is important to review the development of KPIs and attune it to the changing needs of the market. Constantly examine the impact of one factor on other factors and always keep in mind that performance is a two-way street. Changing the criteria too frequently is also harmful, and it is necessary to strike the right balance of reviewing and implementing the measures depending on the market dynamics.

What Are Your KPIs Measuring?
by Graham Kenny HBR 2020/09