Why Leaders Mustn’t Delegate the Design of KPIsby Stacey Barr |
If your organisation’s leaders write the strategic direction, but delegate the strategic KPI design, the strategy won’t be executable.
It’s not uncommon, in larger organisations particularly, for the senior leaders to write the strategic goals, then delegate the design of the KPIs for those goals to the strategy and performance people, with the next-layer-down managers.
And the result is a lot of wasted time for a set of KPIs no-one owns.
Of all the Delegated Strategic KPI Design Teams I’ve seen in this position, greater than 90% of them simply can’t do it; they can’t produce the ideal set of KPIs for their leaders’ goals. They have to guess:
- What does this goal really mean?
- Is this a goal or an action, and what impact were they intending?
- Which parts of this strategic direction do they want measured (just the goals, or the strategic themes and actions as well)?
- Which KPIs would the leaders find most convincing of each goal?
- How much investment are the leaders prepared to put into the data for these measures?
- Which leader is in the best position to own which measure?
These guesses have to be made for three significant reasons.
Firstly, the other people weren’t part of the goal design conversation.
The Delegated Strategic KPI Design Team don’t always know the context of the goals that the leadership team chose. And with the wrong context, we unavoidably end up with the wrong measures.
“Build the capability of our people” sounds quite familiar, as most organisations have a strategic goal like this. But in an automotive sales company that has failed to attract and develop its workforce to meet even the basic role requirements, the context of such a goal is very different compared to a defence agency that must prepare its workforce to meet a new era of national security threats.
Without the whole Delegated Strategic KPI Design Team having the context, weasel words cannot be deweaseled and multi-focused goals cannot be further prioritised. It’s not enough for one or two people in the team to have the context, because that means everyone else has still has only second-hand interpretations.
Secondly, leaders probably used weasel words to write their goals.
Weasel words mean different things to different people in different contexts. Weasely goals have more than one meaning, and the specifically intended meaning is hidden from everyone who was not part of the conversation that chose it. And it’s even true that those who chose it can later forget what they meant by it, too!
‘Capability’ is a weasel word. Its definition is the ability or power to do something, but in business it’s used to mean any or all of ‘the right people with the right skills in the right place with the right resources doing the right things in the right way’. No-one is going to measure every dimension of capability. Each organisation will have a nuanced version of capability that is meaningful to it. And that needs to be deliberately clear.
If the Delegated Strategic KPI Design Team don’t deweasel a goal accurately, they end up arriving at the complete wrong thing to measure. And often they don’t have the opportunity to even ask the leaders what the weasel words meant (or they are too
embarrassed to ask, for fear of seeming stupid or ignorant).
Thirdly, leaders will still challenge whatever others come up with.
If leaders aren’t part of the KPI design conversations, they cannot understand how and why decisions are made about the measures. It will be too easy for the leaders to believe it was a trivial process to arrive at them, so they equally as trivially criticise them.
But measure design is never a trivial process. When it’s done without a good method, it goes around in circles. When it’s done with a good method, it requires deliberate decisions along the way. The leaders don’t appreciate the process the Delegated Strategic KPI Design Team went through. They don’t hear the struggle to understand and translate the goal. They don’t witness the depth and breadth of the exploration of potential KPIs. They don’t understand the rationale for rejecting or accepting each KPI.
So just as the Delegated Strategic KPI Design Team don’t understand the context and specific meaning of the strategic goals, their leaders won’t understand the context for how the KPIs were arrived at.
Work-arounds, if your leadership team just won’t take responsibility…
The first option to explore is always to encourage your leadership team to own the responsibility of designing their own KPIs. Not every leadership team has the right culture yet, however. So, if this is impossible in your situation, no matter how hard you try to convince them not to delegate their KPI design, there are a few work-arounds:
- Include the Delegated Strategic KPI Design Team in strategy design sessions, as ‘flies on the wall’ . This way, they will have more understanding of the context and meaning of the goals.
- Leaders make themselves available to the Delegated Strategic KPI Design Team throughout the KPI design process, to answer questions and provide more detail about the meaning of the goals and their intended impacts.
- Leaders write clearer goals, and more description for each goal, to make them easier for others to understand. This should happen anyway, when you think about it. If the Delegated Strategic KPI Design Team can’t understand a goal, then how could the rest of the organisation possibly understand it?
Never forget, though, that the true owners of the strategic KPIs are the members of the leadership team. Those strategic KPIs are vitally important to guide the leadership team’s decisions about strategy execution. And strategy achievement. It’s the leadership team that will use those strategic KPIs. And there’s only one way this can happen.
We can only own what we take our hand to creating.
If you need a tailor-made suit for an important event, you don’t send your staff to the tailor on your behalf. If you own the goals, you own the measures. The only measures you will feel you can own are the measures you create yourself. So, the only true solution is this:
- Leaders design their own strategic KPIs. The only way I have ever seen KPIs come to life and create real performance improvements is when the owners of those KPIs were the ones who designed them.
Our organisations need evidence-based leaders who are deeply committed to their strategic goals, who have a crystal clear vision of how those goals will become manifest in the real world, who can easily help others see that vision just as clearly, and who routinely monitor those goals and prove it as they become reality.
These are the leaders that, with PuMP, we can help.
Only the leaders know what the true evidence for their strategic goals can be. They are accountable for using that evidence to reach the strategic goals, and often accountable to a Board. Leaders cannot delegate that level of accountability.
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