How to use KPIs and performance measures to improve performance…
Putting your performance measures or KPIs to use is how you get the return on all that invested time and money associated with choosing them, implementing them and reporting them.
So make sure you do get great performance improvement by getting the most out of how you interpret and use your measures. Here are some ideas:
The business questions your performance measures should answer
The report design working group sat around the table, sifting through the draft strategic performance report to suggest how to make it more useful. Measure by measure they chatted and suggested and critiqued and debated: “this one would look better if it was a bar chart”, “yeah, I like the three-dimensional bar charts”, “we should add another line to this chart because it would be interesting to show”, “it’s pretty easy to get Excel to turn this one into a stacked bar chart, that way we could get more information onto it”. Then someone asked: “hang on, what questions are we trying to answer with these measures anyway?”, and there was dead silence.
Are your decisions based on fact?
How do you know if your decision process is well-informed or ill-informed? And even if you could detect the clues of an ill-informed decision process, would you know what to do about it? Here are some ideas for how to get more rigour into your decision process by sliding a little further away from fantasy and a little further toward fact.
Do you listen to your performance measures?
A management team distributes themselves around the board room table, the ritual of the monthly performance management meeting begins. Before too long, the first performance measure in the monthly report is under their scrutiny. It seems that supply costs have increased and now the procurement manager is under scrutiny. He deftly deflects the result with the explanation that a major supplier upped their prices. On to the next measure, and it shows that unfinished work is climbing. The operational manager takes his turn in the cover-your-butt game… How should we be using our measures?
Do your performance reports “stack up”?
It’s an emotional thing, performance reporting. Executives give up the precious little time they have for their families to instead paw through piles of strategic reports often more than an inch thick (or they leave the pile of reports on their desk and make decisions from their guts instead). Managers earnestly trawl through operational reports (particularly looking for the measures that give their performance contracts teeth) to check if anything needs a bit of positive light thrown on it. Supervisors and teams cynically scoff about the volumes of time and effort they waste reporting tables of statistics that track their daily activities to audiences they never see or hear from. What makes performance reporting such an ordeal?
Are you reacting to trends that aren’t really there?
We all love a chart or graphs that tells us how things are trending. And while there are lots of ways explore trends (or changes over time) in performance results, one of the most commonly used is the moving or rolling average. Are you using these? If so, you might want to find out why your interpretation could be misleading you more than they are helping you…
Use the best chart there is for highlighting true signals in your measures
If you are SERIOUS about using your performance measures to make it clear when performance improvement is needed and whether or not it has worked when you’ve done some performance improvement initiative, you must have this book in your collection: Understanding Variation – The Key to Managing Chaos, by Donald Wheeler.
It explains why most people are drawing the wrong conclusions from their measures and teaches a very simple method for highlighting the real signals in performance measures, so we don’t waste time chasing problems that aren’t there, or missing problems that are.
Traffic lighting: are you getting the right signals?
Many decision support tools sport the concept of traffic lighting, the visual flagging of performance measures in terms of whether they are going well, going badly or looking a bit ordinary. And doesn’t that make decision making a whole lot easier! You don’t have to analyse and interpret every single measure to determine if you need to respond to it or not, because the coloured traffic lights do the job for you. Or do they…?
Are you aiming too high?
What’s your target achieving track record? Do you reach the majority of your targets within their set timeframes, or do you find yourself throwing up all kinds of rationalizations and reasons as to why the majority of your targets were not met? It might be because your target setting process is a little too much about numbers and not nearly enough about emotion, about how people feel about the various aspects of target setting, pursuing and achieving.
If you’d like more information about measuring what matters, contact me.
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