Monitoring Performance is About 2 Comparisons

by Stacey Barr |

Don’t default to familiar or traditional KPI monitoring methods; focus first on the two comparisons that get the most insight from our performance measures.

Only two comparisons matter for interpreting KPIs

When we monitor performance measures, it can seem very natural to analyse the data in a variety of ways, like comparing performance between work groups or business units, or classifying the performance measure based on variables like month of the year, day of the week, work shift, geographical location or customer segment. But really what we are doing is diluting the information we are getting from our performance measures.

Generally the analysis we do is driven by what might be interesting or familiar to us. The diving straight into analysis without first thinking about the questions we’re really trying to answer.

When we look at performance measures there are really only two questions that we need to ask first and foremost:

  1. The first question is how does current performance compare to the past?
  2. The second question is how does current performance compare to where we want it to be?

These are the two questions that matter, because monitoring performance is essentially about monitoring change over time relative to an ideal change over time.

The first question, how does current performance compare to the past, helps us work out if performance has responded to the actions we’ve taken to get it to improve. The second question, how does current performance compare to where we want it to be, helps us assess whether we are doing enough of the right action to lift performance to the level we want it to be at.

So the first comparisons we’re interested in with each performance measure are:

Any other comparison, like comparing geographical locations or customer segments or business units, are comparisons that may be useful in understanding or explaining the way that performance is changing over time. The other comparisons are part of cause analysis, not performance monitoring.

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