Make performance metrics work for you

Key Performance Indicators (KPIs) are often thought of as mere metrics that demonstrate an organisation’s progress towards its goals. But they’re much more important than that, says Richard Davies, MD Evbex

When considered strategically, KPIs can become tools of not just performance measurement, but also performance management. The performance indicators can translate into a story about your organisation, shedding light on every tangible facet and letting you know areas of improvement by generating actionable insights. However, as varied as the insights would be for each organisation, so should be the KPIs. What might work as a performance measurement metric for one company, might not be the right measure for another organisation. KPIs are unique to every organisation and to get the performance metric to work for you, you need to pick the right ones.

THE RIGHT KPI?

While the objective of setting and monitoring the KPIs is to ensure a company’s progress by interpreting results and enabling leaders make better decisions, each plays a key role at a granular level. Every employee, team, and department need to have KPIs assigned that are in alignment with their goals, strategy and working models.

• A KPI should focus on solid, measurable goals that are both quantitative and qualitative.
• For an individual employee, performance indicators should align with the organic growth path in their job role, with some challenging objectives met for career progression purposes.
• Rather than focusing solely on the end-goal, a valuable KPI should consider the segment of the goal. For example, instead on focusing on the low revenue KPI, measurement should be sub-divided, covering the individual reasons for the low revenue such as poor customer experience or obsolete service/ product offering or poor working conditions (leading to demotivated employees). This way, actionable insights can be gleaned and remedial actions can be taken.
• KPIs should be relevant to the team so that they can gauge their performance to generate further growth options and opportunities. For example, for the marketing department of a company, if the KPI measures the outreach of their content on digital platforms, this would enable them to make their content more engaging and SEO-friendly.
• The right KPI should always be achievable. Nothing demotivates an employee more than targets which are not realistic. Also, an unachievable KPI would defeat the whole purpose of gauging progress based on the actual performance potential.

HOW TO MAKE THE PERFORMANCE METRICS WORK FOR A COMPANY

Ensure Intersection of the KPIs with the Company Strategy

An organisation’s growth strategy defines its working model, resource management, budget allocations and priorities settings. All these parameters need to be monitored and assessed regularly to align them with the company’s strategy. If performance indicators are mapped according to company strategy, then measuring and managing performance is a parallel activity that guides the organisation in the right direction.

Make Your Key Performance Indicators visible

By ensuring that they are visible across the organisation; once all the employees as well as leaders are cognisant with the goals of the organisation, understanding and working towards those goals becomes easier. While the KPI’s of individual employees, teams and departments would vary, they are interlinked and related to the common goals. Visible KPI’s also ensure accountability in the company.

Make them measurable and actionable

Many organisations fall short of selecting the KPIs that are Specific, Measurable, Achievable, Relevant and Time-bound (SMART). Similarly, the insights generated should end in an action item that can be worked upon for improvement. For example, instead of the KPI being ‘enhanced brand visibility,’ a more focused and measurable metric like, ‘20-25 per cent increase in the click rates on the company’s digital pages’ demonstrates progress made for the metric. This is the difference between an objective and a subjective metric.

Using the Right Tool for Your KPIs

The role of data visualisation software Power BI in creating easy-to-interpret and insightful KPI dashboards is undeniable. With the help of the right BI tool, you could get KPI dashboards that can be accessed by your employees as well as leaders for better performance management. Leveraging technology to generate reports and dashboards is the concrete way towards ensuring that your KPIs are being assessed and worked upon regularly.

Power BI and other similar tools will only allow you to create powerful dashboards and the presentation of data in a visually pleasing manner. They do not guide you through the process of selecting the most appropriate KPIs for your service area/business to create an effective and fit-for-purpose scorecard.

Choosing the right performance metrics (KPIs) for your organisation is the first and most important steps towards ensuring that you are collectively working towards your goals. These should be SMART and Objective wherever possible. They should also be based on the organisation’s Critical Success Factors (CSFs) so that for everything that is important to it will be measured and reported on accordingly.