Why Your KPIs Still Suck

November 7, 2017 by Stacey Barr

Your KPIs still suck not because you haven’t found the right ones yet. It’s because you’re not deliberating creating them.

http://www.staceybarr.com/images/kpisthatsucklikemosquitoes.jpg

In September 2017, I ran a survey of Measure Up subscribers to find out about their current approaches to KPIs.

The data certainly showed the basics of a correlation between KPI approach and KPI success. It’s pretty much what you’d expect:

  • Lower KPI success happens with chaotic and ad hoc approaches.
  • Some KPI success happens with framework approaches, particularly when they’ve been in use for a while.
  • More KPI success happens with methodical approaches, once they are integrated or embedded into the organisation’s management processes.

http://www.staceybarr.com/images/ourapproachdeterminesoursuccess.jpg

What are the different KPI approaches?

The survey respondents shared quite a few “approaches” to KPIs, and I classified them into those four types you see in the chart above:

  • Chaotic: approaches that have no framework or deliberate intention and often consist of making it up as you go along. The poster child chaotic approach is brainstorming.
  • Ad hoc:
    approaches that might have some kind of deliberate intention, but they are incomplete, lack how-to detail, or are made up without a theoretical foundation. The poster child ad hoc approach is SMART.
  • Framework:
    approaches which might give a logical structure to the kinds of things to measure, but no how-to detail to develop the measures. The poster child framework approach is the Balanced Scorecard.
  • Methodical: approaches that are comprehensive, have a theoretical basis, have how-to detail, and are proven to produce better KPIs. The poster child methodical approach is PuMP.

http://www.staceybarr.com/images/commonapproachestokpis.jpg

Shouldn’t methodical approaches show more KPI success?

With methodical KPI approaches, we’d expect a lot of KPI success organisation-wide, but this particular survey data didn’t show a great result for methodical approaches (see the first graph above). There are a few very valid reasons:

  • There is some selection bias: the more likely an organisation has KPI mastery, the less likely they’ll look for my website. So the sample was low. Only 8 respondents used a methodical approach.
  • It takes time to build mastery with a new methodical KPI approach, and the commentary that many respondents had only just started using a true KPI methodology.
  • Some respondents explained there was still a tendency for their colleagues to revert back to chaotic or ad hoc habits e.g. “we are regulated by governing bodies, such as State Government, whereby we have a set of prescribed measures that we need to adhere to”.
  • The KPI methodology hadn’t been rolled out within the organisation, certainly not as widely as some of the framework approaches were e.g. “while our maturity levels are still fairly low we are gaining confidence and experience”.
  • People, in general, tend to claim mastery when they haven’t yet been exposed to truly good KPIs e.g. when they think great KPIs are milestones or ticking off actions as completed.
  • And, in no small part, it’s because mastery in performance measurement is rare, and for most people, we don’t know what we don’t know about creating and using great KPIs.

But, with some data, and with some logic, we can decide: will even more KPI success come when a true KPI methodology is implemented well and broadly? Yes. That’s how your KPIs will no longer suck.

Your KPIs suck not because you haven’t found the right ones yet. It’s because your approach sucks.
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DISCUSSION:

What KPI approach do you use? What KPI success are you getting?

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  1. Mike Davidge says:

    Hi Stacey

    Another great post so thanks for setting things out so clearly.

    I want to comment on the third bullet of the valid reasons section. The excuse that we have to use these KPIs is quite common in the English health service too. My response recently has been to quote an article by Richard Bohmer. He wrote about the 4 habits of high performing healthcare organisations. One of those was their use of data and particularly that they made a distinction between data for external reporting (those mandatory KPIs) and internal performance management and they didn’t confuse the two.

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