#66 Three Things You MUST Have Before KPIs Can Work

March 15, 2011 by Stacey Barr

We rush off in search of KPIs or performance measures way too soon. We find some, grab them and shove them into the KPI columns in our business plans or employee performance plans. Then we expect to hit targets. But it doesn’t happen.

People don’t use the KPIs, they complain about them, and even fail to bring them to life (that is, report them). That’s because at least 3 important must-haves are missing.

MUST-HAVE #1: A climate of trust.

For a lot of people, KPI is a dirty word (well, acronym to be accurate, but let’s not get distracted). They have all manner of bad experiences anchored to that word and as a result they don’t trust you when you say that KPIs are good for them and good for the organisation.

Ask yourself this question: What will the measures be used for? And be honest when you answer it. You really need the right reason to measure before KPIs can work for you. The right reason is organisational performance improvement. The wrong reason is controlling or managing people’s performance.

MUST-HAVE #2: A clear strategy.

You can really measure just about anything and lots of people try. Or at least they’ll measure just about everything that’s easy to measure. Or that has already been measured in the past. Or they’ll measure whatever they have data for. But they’re rarely measuring what matters.

All performance measurement should be driven by the strategic direction and priorities for the organisation. Only measure what you should, can and will do something about. If you shouldn’t improve it, can’t improve it or won’t improve it, then don’t measure it.

MUST-HAVE #3: A performance measurement champion.

It’s all well and good to train people how to measure performance, to create templates for KPIs and to invest in dashboard software. But no performance measurement project ever gets real traction just by throwing resources at it. It needs to be given serious priority.

When you have a CEO or Executive who believes that measuring what matters is essential to success and is willing to shout from the mountain tops that measuring what matters is essential to success, as well as give her or his time to measuring what matters, you have a chance.

TAKE ACTION:
How much trust do you have in your organisation around performance measurement? What’s limiting it? How clear is your strategy? What would it take to make it more easily measurable? Do you have a performance measurement champion? How could you influence the right people to take on that role?

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  1. Barry says:

    Hmmm, a bit surprised with your view that Organisation and People Performance are separate “things”, and that KPIs can only be used to manage organisation performance, and not individual performance.

    Organisation performance is after all the combined performance of people, especially the leaders?

  2. Eleanor says:

    This makes total sense but what’s the best way to record all that KPI data?

  3. Hi Stacey. Enjoyed reading your article, albeit it was written 2 years ago! I agree, KPIs can be seen as an ugly word. Like you suggested it can be because people can rush off without understanding the need in the first place. I have also found that there is a tendency to try and manage everything rather having a select few KPIs, defeating the whole idea of KPIs!

    Darran

    • Stacey Barr says:

      Hi Darran, glad that an old article still has some relevance for you!

      In fact, I’ve found many of these topics have remained relevant since I began exploring them (and being confronted by them!) back in the 1990’s. Your point about aiming for the select few KPIs is one of the big areas that people stumble. Better to have one KPI that really matters and is put to good use than to have a hundred in the KPI column of the business plan that never see the light of day.

      Smiles, Stacey.

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