Which KPI Methodology Is Best For Your Organisation?

February 13, 2018 by Stacey Barr

Which KPI methodology works best for your sector or industry or organisation size or culture? It’s the wrong question. The right question is which KPI methodology works best at producing the right KPIs for your organisation’s unique strategy.

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If you work in the public sector, and you look over at what the private sector are measuring, you’ll be quick to decide that all those sales and profitability measures don’t suit you.

Likewise, if you’re in the non-profit sector, and you look at what government is measuring, you’ll feel it’s all too much about budgets and efficiency and not enough about the softer things that matter in social-good organisations.

This is natural. Different sectors – and indeed, different industries – will find different types of measures or KPIs more useful in their context. So it also feels natural to assume that different organisations need different approaches to selecting their measures or KPIs.

But the assumption is wrong.

Looking for a bespoke KPI approach is a mistake.

It’s not the KPI approach that needs to fit the organisation; it’s the strategic direction.

The strategic direction for a commercial organisation is going to focus on different results to a charity or a government agency. The strategic direction for a manufacturing organisation is going to focus on different results to a service organisation. A boutique gym is going to focus on different results to a multi-national mining company.

In fact, I believe that the strategic direction of an organisation is as individual as a personality. It’s the composite reflection of the organisation’s unique strengths, weaknesses, values, culture, desired future, customer perceptions and needs (and more).

Strategy is bespoke, not your KPI approach.

Because each individual organisation is unique doesn’t mean that each organisation needs its own bespoke KPI approach. Rather, it needs a KPI approach that is capable of producing the bespoke set of KPIs that directly match its strategy.

A good KPI approach is more like a recipe than a platter of cupcakes.

Everyone, in every type of organisation, can use the same basic KPI approach, but only if that KPI approach has all the qualities that rigourous methodologies have.

A good KPI approach works for everyone.

The reason that a good KPI approach – one that is rigorous and deliberate – works for everyone is that it’s a process, not a solution.

A good KPI approach will focus on what’s important for you to measure, and it will help you decide or design the measures that are the best for your situation. And it will help you implement those measures as feasibly as possible, and use them to inform your decisions and improvement initiatives.

That’s why KPI shopping lists, brainstorming, industry benchmarking and expert opinion don’t work. They’re not rigorous and deliberate KPI approaches.

But is your current KPI approach a good one?

Try this self-assessment to test if your current KPI approach, or one that you’re considering, has all the essential qualities that any good methodology should have.

The self-assessment also includes a five-minute video of what these essential qualities mean, and a 10-minute video about how good several common KPI approaches really are.

Your organisation’s strategy is bespoke; not its KPI approach. A good KPI approach works for every organisation, in every sector and industry.
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DISCUSSION:

What KPI approach are you using? Tell us how well it meets the criteria of a good KPI approach, on the Measure Up blog.

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  1. Husam Sarhan says:

    Hi Stacey,
    I read this article through your Measure Up email newsletter. The takeaway that I had from the article was that the KPI approach to use is the one that is able to produce KPIs which are aligned with the company’s strategy, and which is rigorous and deliberate enough. On the flip side, if a company’s strategic direction isn’t good enough, then it won’t really matter what the KPI approach is; the measures will be aligned, but they won’t be good enough because the strategy they’re aligned with isn’t good enough. This has me wondering: How can we tell when a strategy is “good enough?” What does it look like when a strategy is the best it can be? How can we go about getting it to that point?

    • Stacey Barr says:

      Excellent question Husam. We often find our clients don’t have a good enough strategy. We can’t always tell before we start the measurement methodology. But the first few steps of PuMP make it very clear if the strategy isn’t sensible or consistent, or if it contains operational results, or if it’s too broad. So in fact, we find that the measurement approach often shows the strategy for what it really is, and also makes it easier to see how to fix it.

      Of course, it’s still best to use a deliberate strategy approach too!

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