Do We Need a KPI Methodology?

by Stacey Barr

Do you have a KPI methodology? Or do you still treat it as an ad hoc collection of tasks? How’s that working for you?

The definition of the word ‘methodology’ varies. defines it as ‘a system of methods used in a particular area of study or activity’. Wikipedia defines it as a meta concept to that, as ‘the systematic, theoretical analysis of the methods applied to a field of study’.

Irrespective, it’s a word that many of us understand to mean a deliberately designed approach to something, to achieve a specific result.

We have methodologies because we want to achieve outputs or outcomes as easily and successfully as possible.

In the absence of methodology, we are ad hoc, random, even chaotic. And this wastes time and energy, and often fails in achieving the result we want.

The result we want from performance measurement is that we achieve our goals sooner and with less effort. A good performance measurement methodology is a system of methods deliberately designed to achieve this. But most organisations don’t have a good methodology, and many don’t have one at all.

Most approaches to KPIs and performance measures are ad hoc and unproven.

There are common methods people use to choose performance measures and KPIs:

  • Brainstorming them with colleagues
  • Buying them off-the-shelf from KPI libraries and databases and special reports
  • Benchmarking what other organisations in their industry are using
  • Basing them on existing data they already have readily available

But the people who use these methods still don’t have great KPIs or measures that help achieve goals sooner and with less effort. That’s because there is no theoretical basis to these approaches. They’re just common practice.

A good methodology for KPIs and performance measures is deliberately designed.

A good KPI methodology isn’t ad hoc or made up on the spot. It’s not a single tool or template. It’s not vague and generic. It’s not a software application. And it’s most definitely not a prescribed list of KPIs sorted by function and industry.

A good KPI methodology will be based on a deliberately chosen set of methods that are:

  1. Comprehensive: collectively, they assist each step or stage in KPI development, from selection, through implementation, to use.
  2. Non-prescriptive: they don’t prescribe the KPIs to use, but rather facilitate the user to create the KPIs appropriate to their situation.
  3. Necessary: they are chosen and designed to replace poor KPI practices that don’t work and eradicate or ease known struggles or challenges with KPIs.
  4. Founded: they have a consistent rationale, philosophy, or set of principles, about what good KPIs are, what purpose they serve, and how they should be used.
  5. Proven: they reliably produce KPIs that help achieve goals sooner and with less effort, no matter who uses the methods or in what context they use them.
  6. Practical: they can be learned, resourced, and performed as part of the routine work of strategy development, performance monitoring and improvement.
  7. Useful: they improve people’s experience of creating and implementing and using KPIs.
  8. Transparent: their limitations or weaknesses in producing KPIs are known, openly admitted, and continually improved upon.

Is yours a true performance measurement methodology? We use PuMP, and it’s about the only true performance measurement methodology we know of, one that has all of these features. Do you know of others?

Do you have a KPI methodology? Or do you still treat it as an ad hoc collection of tasks? How’s that working for you?
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Which methodology or approach to performance measures and KPIs do you use? Let me know (and I’ll report back an evaluation of all that we collate).

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