How Many Organisations Have Meaningful KPIs?

March 21, 2017 by Stacey Barr

Meaningful KPIs are quantifiable, able to be monitored over time, and are direct evidence of the goals they measure. This practical study of 50 organisations reveals just how many organisations do (or don’t!) have KPIs that are meaningful.

Walking around in the dark without meaningful KPIs?

The design of the strategy study…

The study consisted of a Google search for ‘strategic plan’ on Australian websites. The sample for the study was the first 50 results that Google returned.

Most of these organisations were government agencies, at local, state and federal level. Some were non-profits and education institutes. These tend to be the sectors that will publish strategic plans on their websites.

There was bias, of course. Due to Google’s ranking algorithms, the sample wasn’t random, nor was it representative of all organisations’ strategic plans. But it’s unlikely there is much correlation between the measurability of a strategy and the likelihood of it being published on an organisation’s website, nor it’s Google rank.

The study focused on the goals and measures in strategic plans.

For each search result, the organisation’s strategic plan was located, and then the following questions answered:

  1. Are there any strategic goals?
  2. How clearly and specifically are the strategic goals worded?
  3. Are there any KPIs or measures of the strategic goals?
  4. Are the measures ‘real’ measures (quantitative and able to be monitored for change over time)?
  5. How directly do the measures evidence the strategic goals?

The standards and criteria for Steps 2 and 3 of the PuMP methodology were used to assess the wording of goals and the ‘realness’ of the measures.

The findings of this strategy study are not only fascinating, but insightful too.

The overwhelming majority of organisations have useless KPIs.

These results, remember, are derived from the current published strategic plan for the sample of organisations. This may differ to what actually is in practice within the organisation.

But certainly from my personal observation over the past 20 years, what’s in the strategic plan is almost always an accurate indication of what is in practice internally.

Q1: How many organisations have strategic goals?

In the sample of 50 organisations, 12% had no strategic goals published in their strategic plan (six organisations).

The sample estimates that 88% of organisations have strategic goals in their strategic plans.

Q2: How many organisations have clear and specific strategic goals?

Of the remaining 44 organisations that did have strategic goals:

  • one organisation’s goals were mostly measurable (you could understand the goal and easily imagine what you would quantify to evidence the goal)
  • six organisations’ goals were somewhat measurable (some of the goals were understandable and quantifiable)
  • 68% had immeasurable strategic goals that were too vague to understand or quantify (37 organisations)

The sample estimates that 14% of organisations have clear and specific strategic goals in their strategic plans.

Q3: How many organisations have measures of their strategic goals?

Of all 50 organisations in the sample, 42% had no strategic measures published in their strategic plan.

The sample estimates that 58% of organisations have measures of their strategic goals.

Q4: How many organisations have measures that are real measures?

Of the 29 organisations that did have measures for their strategic goals:

  • one organisation had a complete set of strategic measures that were quantitative and able to be tracked over time
  • three organisations’ measures were mostly real measures (a few measures were milestones or activities or reworded versions of their goals)
  • 86% had measures that weren’t real measures (25 organisations)

The sample estimates that 8% of organisations have real measures for their strategic goals.

Q5: How many organisations have measures that are direct evidence of their strategic goals?

Of the 29 organisations that did have measures for their strategic goals:

  • three organisations’ measures gave fairly direct evidence of their strategic goals
  • 90% had measures that were not direct evidence of their strategic goals (26 organisations)

The sample estimates that 6% of organisations have real measures that provide direct evidence of their strategic goals.

How many organisations have meaningful KPIs?

At least for the Australian public sector, this study suggests that only 6% of organisations have meaningful KPIs for their strategy.

Because the results here are so overwhelmingly in the extreme, this study probably does hold enough credence to conclude that the majority of organisations of this type really struggle with meaningful performance measurement.

The problem of poor measures or KPIs rests quite heavily on how goals are written. These results back that up, along with my own personal observations over the last 20 years.

Without good measurement, there can’t be good decision-making about organisational performance. We have to do something about this.

DISCUSSION:

How do the findings of this strategy study compare with what happens in your organisation?

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