How Can You Prove They Need Better KPIs?by Stacey Barr
No-one will put effort and time into better performance measures or KPIs, if you can’t prove why they need to.
Ultimately, any KPI or performance measure is going to be used to inform a decision. It might be your decision, a team’s decision, or a leader’s decision. In that context, KPIs or performance measures are only meaningful if they do, indeed, inform a decision that leads to an outcome we (or they) want.
Possibly the four most important qualities of information that informs a decision are these:
- Relevance: the information directly answers questions essential to making the decision.
- Accuracy: the information isn’t wrong or misleading and can lead the decision to the right choice.
- Speed: the decision can be made without wasting time waiting for or trying to make sense of the information.
- Ownership: the information and its implications on the decision can be accepted by those the decision affects.
As far as a KPI or performance measure is concerned, it therefore needs to provide the kind of information that contributes these four qualities to the decisions it informs. Those decisions are generally about strategy implementation and performance improvement. And if the KPI doesn’t satisfy these four qualities, then you have proof that the KPI or measure needs to be better.
It’s not complete, but I hope the following examples give you a starting point for how to test existing KPIs for their impact on decision-making, and how to start a conversation that moves toward better KPIs where they’re needed.
Relevance: KPIs need to be direct evidence.
KPIs are relevant to a decision when they provide direct evidence of the answers to questions which are essential to making the decision.
Ask questions like these, to test if a KPI or performance measure isn’t relevant:
- Do we have a history of ignoring this measure for decisions like this?
- Which question does this KPI answer for us, to make the decision?
- Are any of our questions unanswered?
Trigger a conversation about what the questions really are that need to be answered to make the decision. Check if those questions are articulated clearly enough that everyone has the same understanding of them. Then suggest trying to design a few measures that might be more direct evidence for answering those questions.
Accuracy: KPIs need to be accurate [enough].
KPIs are accurate enough to inform a decision when their information is close enough to the truth to lead the decision to the right choice.
Ask these questions to test if a KPI or performance measure isn’t accurate enough:
- Do we trust the data this measure is based on?
- Is this measure giving us a biased view of reality?
- Are we drawing conclusions from insufficient data?
Trigger a conversation about the factors that might be affecting the KPI’s accuracy. We don’t have to aim for perfect KPIs, but it will be worth suggesting an investigation into the data on which the KPI is based. Use this framework of the 5 Rs of data integrity.
Speed: KPIs need to be current and clear.
KPIs aid the speed of decisions when they are a current and clear picture of what performance is doing, right now.
Ask these questions to test if a KPI or performance measure isn’t aiding decision speed:
- Does this KPI make it clear what performance is doing?
- Do we debate what this KPI is telling us?
- Do we keep asking to see the KPI in different charts, hoping for more clarity?
Trigger a conversation about the essential pieces of information we need to get an objective agreement on what performance is doing. Talk about what a KPI graph really needs to have, in order for us to quickly see what performance is really doing.
Ownership: KPIs need the buy-in of decision stakeholders.
KPIs can increase ownership in the decision when those affected by the decision feel part of the process of choosing and using those KPIs.
Questions to test if a KPI or performance measure isn’t getting ownership:
- Does anyone seem hesitant or anxious about the decision?
- Is anyone complaining about KPI relevance or accuracy or interpretation?
- Are people procrastinating or avoiding the decision?
Trigger a conversation to explore where the KPI came from, and who was involved in choosing or implementing it. It might help to map out all the questions and KPIs needed to make the decision, and create an open space for all decision stakeholders to get to know them, and suggest how they’d like to see them clarified or improved.
It’s worth it.
If this feels like a lot of work to them, the decision-makers might feel like giving up, assuming they’d be better off without measures at all. And in that case, you can offer them these 8 logical reasons why getting the right measures is worth the effort. Measurement, done well enough, is far superior to no measurement at all.
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