How to Know if Your Performance Measurement Approach is Workingby Stacey Barr |
Here are six indicators you can track, easily, to know how well your approach to performance measurement is working at generating the right KPIs.
One of the least popular posts I’ve written, back in 2017, was How to Measure the Performance of Performance Measurement. It isn’t very popular because it’s next-level measurement: the performance measurement of performance measurement. Most readers of my work are not quite there yet.
But this doesn’t mean we can’t know if our approach to performance measurement is working or not. That first article was about proving if performance measurement itself is worth doing. This one is more practical, because it’s about six simple indicators to help you prove if your chosen KPI approach is working.
Indicator 1: the maturity of your performance measurement approach
There are some well-known qualities associated with measurement done properly. Evaluating to what degree your approach to KPIs has these qualities is a great way to benchmark how good that approach is.
To do this, you can use a measurement maturity model. Not just the first one you find in a Google search, though! You want one that has been developed by people with true expertise in performance measurement, not just people trying to sell you a KPI app.
In PuMP we use a maturity model called the PuMP Diagnostic. It measures 26 qualities of performance measurement. A version of the PuMP Diagnostic is freely available, here.
Indicator 2: the engagement of people in your performance measurement approach
One of the greatest struggles with embedding a better approach to KPIs is all that negative baggage measurement has. This means we almost always start with very low engagement in measuring performance. Your performance measurement approach should not ignore this!
To measure performance measurement engagement in your organisation, you can gather feedback from colleagues about the measures you are creating with your KPI approach, as you create them.
In PuMP we use a very short feedback form in Step 4, Building Buy-in to Measures. It’s the point at which your Measures Team will run a Measure Gallery. And the visitors are asked a few questions about their understanding of, their agreement with, and their confidence in the measures developed by the team.
Indicator 3: the time it took you to create measures that are meaningful
Most of the time lag in getting to meaningful measures is due to the spinning of wheels. We go around in circles trying to get agreement on a set of KPIs that were easy to come up with but not really that meaningful at all. There can be so many circles that we lose count, and lose awareness of just how much time we’ve wasted in search of meaningful measures.
From the point at which a team decides it needs better performance measures, to the point at which the team is using those measures for the first time, is a useful measure of how well you KPI approach is working.
In PuMP this means we count the days from when a Measures Team is formed, to when that Measures Team has their brought-to-life measure right in front of them. This is generally the time it takes for a Measures Team to get to the start of PuMP’s Step 8, Reaching Performance Targets.
Indicator 4: the effort you gave to create measures that are meaningful
It’s not important to only measure the elapsed time that passes before we get our meaningful measures. It’s also important to know how much effort was put into the process, and that’s the active time that the Measures Team spends implementing the performance measurement approach.
Measuring the effort invested in implementing meaningful KPIs means tracking how much time each person in the Measures Team is spending on the tasks of deciding the results worth measuring, designing the measures, getting the data, putting the measures into graphs, and getting them into a performance review meeting.
In PuMP this means counting the hours spent by each member of the Measures Team to get to that point when their brought-to-life measure are right in front of them. It’s all the time they spend on Steps 1 through to 7 in PuMP, to arrive at Step 8.
Indicator 5: the impact on your Measures Team members
Proper performance measurement causes mindset shifts. The Measures Team members will experience very positive mindset shifts if your KPI approach is a good one.
This does not have to be a quantitative indicator. In fact, it provides richer evidence when it’s left to be qualitative. And that simply means descriptions of the mindset shifts people have in how they think about the purpose of measurement, what goals really are, what makes a good measure, and how it feels when they can use a good measure.
In PuMP we ask the Measures Team members a few reflection questions at the end of each step, to gauge how they’re feeling about it. But also at the very end of the PuMP implementation, we ask “What’s the single most significant change that has resulted from this journey?” Yes, it’s qualitative, but it’s excellent evidence of the impact the KPI approach has had on the Measures Team members.
Indicator 6: the ROI of your new performance measures
The ultimate proof that a KPI approach is working is that it produces performance measures that lead to fundamental performance improvement. That means that the value the measures create for the organisation far outweighs the cost of doing measurement in the first place.
This is a basic return on investment, or ROI, measure. Its basic calculation is [benefit – cost]/[cost], where the benefit is the value of the performance improvements that the new measure has made, and the cost is the total investment in learning and implementing the KPI approach.
In PuMP we keep track of the dollar value of the time and expenses of the PuMP implementation. And we also put a dollar value (even if only an estimate) to the size of the improvements we make using the measures we created with PuMP. An example of how this is done is described in this case study.
Measuring the performance of performance measurement, as a whole, is probably more a theoretical exercise. But it’s definitely useful to measure how well your approach to performance measurement is working. If your KPI approach should be changed or improved, these indicators will show you where. And if your KPI approach is a good one, these indictors also prove it (and that’s great for getting more support and wider implementation.)
What indicators would convince you that a KPI approach was working well? [tweet this]
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