How Long Should a KPI Live For?by Stacey Barr |
We put so much effort into developing our performance measures (aka KPIs). It seems only natural to want them to be relevant and useful for a long time, to get the return on the effort we invested into their conception and implementation. So what is the ideal lifespan of a performance measure?
Should all measures last as long as possible? Is a short-lived measure a sign of rapid improvement or is it a sign of poor measure conception?
The useful truth is not so cut-and-dry. It depends. It depends on what level of result we’re measuring. It depends on how long our core business stays core. It depends on how fast we can attain those results and make them stable.
So a measure’s lifespan can be as short as a few months, or as long as several decades. As long as a measure produces a benefit that is well worth the cost invested to bring it to life, it’s lifespan really doesn’t matter.
Nonetheless, what follows is a guideline for what to expect a measure’s lifespan to be, based on what it’s measuring.
Organisational success and sustainability KPIs.
An organisation’s success and sustainability is evidenced by how well it fulfils its mission, achieves its vision, and is giving something of value to each of its stakeholder groups.
Measures of an organisation’s success and sustainability will be relevant for a long time, likely for the life of the organisation. That can be decades. The only reason to kill off these measures is if the fundamental purpose of the organisation changed, or stakeholders value different outcomes.
Corporate strategy KPIs.
When an organisation sets a new strategy, it will describe a set of corporate or strategic goals that all parts of the organisation should align to. These goals are the current priorities, given the internal and external business environment, for improving the organisation’s success and sustainability.
The measures we use to track our strategic or corporate goals will live at least as long as the horizon of the current strategy. This is usually between two and five years. But often strategic goals carry over into new strategic plans, and so their measures are kept alive for two or more planning horizons.
Business process KPIs.
Business processes are the routines and habits the organisation practices to fulfil its mission. There are business-as-usual results of processes, aspects of performance that need to be measured for operational decision-making (working in the business). And there are strategic-priority results, that are measured to drive change (working on the business) in alignment with the organisation’s current strategy.
Measures of the business-as-usual results of processes will live as long as those processes remain core to the organisation’s operations, which can be many years. For a transport company, on-time delivery will be a useful thing to measure while ever predictable delivery matters to customers.
Measures of the strategic-priority results of processes will switch and change with the corporate strategy. Sometimes these measures will last for only a few months, being ‘put down’ after the results they track are achieved and performing predictably without intervention. If that same transport company’s strategy is about being the fastest in the industry, delivery cycle time might become highly important for a few months, until the delivery processes are reengineered to be naturally faster.
Horses for courses.
Don’t get hung up on how long a KPI or measure should live for. Be more hung up on how well that measure aligns to a strategic goal, and how much of an impact that measure has on achieving the goal.
What are some examples of long-life measures in your organisation? What about some short-life measures? Let’s explore some real-life situations!
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