The Three Human Conditions for KPI Targets to Work

March 14, 2017 by Stacey Barr

In our search for how to choose meaningful targets for our KPIs and performance measures, we often look for a procedure or a formula to set the right KPI target value. But what we ought to do before that, is check if the conditions are right for any KPI target to work.

In their book How Learning Works, authors Ambrose, Bridges, DiPietro, Lovett and Norman describe an elegant model of the factors that contribute most to a student’s motivation to learn. These factors are environment, value, and self-efficacy.

This motivation model lends itself, with some tweaking, to something else that we always battle to create motivation for: pursuing KPI targets.

Three conditions impact a team’s appetite for KPI targets: support, buy-in and belief. Get them wrong, and targets will do more damage than good.

Condition #1: Support.

The condition of Support is about how visibly and actively and regularly the team’s leaders provide what the team needs to pursue the target. These needs might include inspiration, encouragement, permission or authority, money, access to help, space and time.

Condition #2: Buy-in.

The condition of Buy-in is about how much ownership the team has over the measure and its target. The level of ownership usually comes from the amount of involvement and the amount of sway the team has had in designing the measure and selecting the target.

Condition #3: Belief.

The condition of Belief is about how much the team perceives they have the ability to reach the target. This might be their level of skill in the task of performance improvement. Or it might be their level of knowledge of the causes that constrain current performance. Or it might be their level of control or influence over the business process or system that needs improving.

When to set stretch targets.

A stretch target is a big-step improvement, that usually can only be achieved through innovation or a radical process redesign. This requires a lot of buy-in from team members, and a very high understanding of their business process. Because the effort it will take to reach a stretch target is unknowable in advance, it also requires a high level of support from leaders.

Only set stretch targets when all three conditions – support, buy-in and belief – are high.

When to set achievable targets.

An achievable target is one that can be achieved with a predictable amount of effort. This predictability comes from the team having a high belief in their ability to make an improvement. And their high belief likely comes from having made improvements in the past. But to make the improvement happen, they need just a bit more than belief; they need either the support from leaders, or a high sense of ownership (buy-in) for the result.

Set only achievable targets when you have high belief, and you also have either high support or high buy-in.

When to avoid targets altogether.

A high amount of support to pursue a target won’t budge a team that doesn’t buy in to it, nor believes they have any ability to make a change. A high amount of buy-in to pursue a target isn’t enough fuel for a team that has no support and no belief in their ability to make a change. And a high amount of belief on its own won’t lead to any change unless the team feels supported and actually cares about the change.

Avoid targets altogether when two of the three conditions are low.

DISCUSSION:

Do these human conditions for making targets work resonate with your experience? If so, in what ways? If not, what’s your experience?

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  1. David says:

    Great points, but only part of the story. Targets have to be rational in terms of the business system used: what are the barriers in the system to their achievement (or to past failure to achieve)? These are usually system problems. How can the system be changed to eliminate the problems? What are the market, competitor and financial implications of the targets? Are they doable within the Firm’s resources? Leave it to governments to use a chocolate wheel to select targets. Targets in business must be meaningful in terms of the business delivery system used. For instance, a ‘10%- increase in sales may be way under capacity, while ‘doubling sales’ might be crazy….I’ve seen both! But if we can invest, have the funds for production, the distribution system and sales capability, we can calculate the expected sales in terms of the whole pipeline. of course, all this is out the window if the market changes, or a competitor comes up with a genius product.

    • Stacey Barr says:

      True, David. Deliberate analysis (or at least thinking) must go into the selection of what value the target should have, and over what timeframe to strive to reach it. Do you agree that this piece comes after the assessment of whether a team is ready for targets at all, or which type of target they are ready for? Not doing the readiness assessment first risks dysfunctional behaviours in trying to hit the targets, no matter how carefully those targets are defined.

  2. Stacey – great summary of the people aspect of creating and implementing effective KPIs.

    I used your article as this month’s post on my website.
    Thanks
    Bob

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