Use K.P.I.’s as a way to Communicate, not Control

  • An objective stated in words can be misunderstood or interpreted in many ways. 250 employees may mean 250 strategies.

If your organization states an objective such as “improved employee morale” or “Closer relationship with customer” you best be prepared for a lot of surprises.

By using numbers as our KPIs we take vague ideas and concepts and turn them into tangible standards. These standards are then easy to communicate and are then also easy to evaluate.

Each employee should have a selected set of KPIs, few enough to keep track of, and with these KPIs better understand the bigger objectives and strategy of the organization.

These KPIs help you communicate clearly through your organization. By following up with a regular review process (reminding everyone about which qualities are the essential ones) you are more likely to achieve the organizations goals. This tracking method is often called a scorecard or dashboard.

Everyone in your organization should understand how these measures are “scored” and how they are used in describing the desired outcome of the bigger picture. This is even more important than their design, because with a deeper understanding of the concept, each employee can adjust their efforts and focus on the KPis that really bring about the big picture success. Without this common understanding, you only have boardroom exercise without the support and commitment from those on the frontline.

Where ever or however these KPI’s are established, many have found that KPI’s are not enough. The issue with running an organization based on KPI’s is that it is possible to “hit the numbers” but still not create the mandatory results outlined in the bigger picture of the organizations strategic objectives. Reducing your employee turnover and maximizing your return on assets are fine KPI’s. But if an organization achieves these it is not guaranteed success. It may be those KPI’s are not the best indicator of organizational performance.  We believe it far wiser to have everyone understand the objectives to serve as the guideline one uses in pursuing these KPI’s.

If you are currently only using KPI’s in your organization, the following tips can be beneficial in creating the meaningful objectives required to ensure the best in performance management.

    1. Just ask “Why?” – The danger of not questioning a KPI can have you working in pursuit of achieving a KPI’s numbers, but not necessarily pursuing it in the right manner. If a sales number is a KPI you might discount price or resort to high-pressure sales techniques. Both may result in the Sales KPI being met, but may conflict with the strategy of building the desired brand.
    2. Achieve KPI “so that”… – When looking to create an objective from an existing KPI, you can ask yourself this question. “I am pursuing this KPI so that…” It is in this answer that you start to see the bigger picture and can begin to write your objective.

3. Objective description – We suggest testing for validity of SMART objectives, by asking yourself the following classic questions;

S = Specific, Exactly what is my objective?
M = Measurable, What measures would I check along the way?
A = Attainable, Is my objective feasible?
R = Result-oriented, Is my objective meaningful?
T = Time-limited, Does my objective have a start and completion date?


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