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How to create great KPIs & performance measures

Performance Measurement 15th January 2020

This video is the first in a series, and has been informed by our databank and work with Stacey Barr , a performance measurement expert and founder of the PuMP methodology. It addresses some of the most common challenges teams and organisations face when it comes to developing measures and KPIs that reflect and support the improvement of performance.

The first video in the series explores two challenges: the gaming of measures and developing measures that are aligned to and support an organisation’s strategy.

Free toolkit accompanying this video

Building KPI’s to enable easier, faster and better informed decision making.

Download now

About the presenter: Paul Frith

Paul is a performance measurement specialist and has worked both internally and as a consultant to deliver change programmes and support the fulfilment of organisational goals and ambitions – based on a foundation of advanced analytics.

Paul is Director of Performance Measurement & Analytics and co-founded Rubica. He leads on all of our performance measurement work – integrating it into our organisational change programmes so it ultimately improves performance.

Find out more about Paul


Transcript: Common KPI challenges – what they are and how to overcome them.

00.00 Common KPI challenges – what they are and how to overcome them

Hi, I’m Paul. I’m the Director of Performance Measurement and Analytics at Rubica.

Rubica are an organisational change consultancy and we help organisations of all types that are facing perhaps some kind of level of under performance compared to where they want to be or some kind of disruption that’s happening within their marketplace, and this is leading these organisations to know that they need to make some changes and are seeking expert help to actually make that change happen.

My focus within all that tends to be mostly around the actual performance measurement itself, and how can we really focus on the outcomes that people are trying to achieve how can we actually measure that
and use the measurement to actually then drive momentum and to help make that change happen by focusing people and also noticing what’s working.

00.53 What we’ll be covering

So this is the first in a series of videos and we’ve delved into our data banks from running workshops and projects around the world and from the work that we’ve done with Stacey Barr who’s a renowned performance measurement specialist.

What that data shows us is that actually we all face some very common challenges when it comes to performance measurement and how we can either use that or not as the case may be in order to improve our organisational performance.

So from this series of challenges, we’ve identified two that we’re going to talk about today and really find some top tips and some ideas that will help you to overcome and start to move forward with your performance measurement.

Make sure you stay to the end because we’ve got some free downloadable tools that you’ll be able to actually use to get you started and help you think about these first two struggles that we’re going to be talking about.

01.48 Why so many people struggle with KPIs and performance measures

So experience shows that all around the world people are struggling with performance measurement and with KPIs. And the reality for most people is that they’re not getting what they need from performance measurement and it’s not helping them to actually move forward. Indeed actually many teams or most teams normally feel quite unfavourable about performance measurement and the KPIs that they have. But if we don’t get better at setting performance measures, we’re not going to be able to improve the results that we get from our performance initiatives, and we’re not going to be able to drive for the results that we’re looking for.

So what we need to find is a way for an organisation to really reset the way it does performance measurement for us to rethink the way that we actually approach it. And so, for most organisations what we found is that they need a very deliberate, step by step or stages of performance measurement in order to do that. We need to unlearn the bad habits and the struggles that seem to have become a part of a KPI culture
and we need to find a better way of doing things by deliberately removing each of those common challenges that we’re going to be talking about.

02.59 Struggle 1: Gaming the measures

So the first struggle that we’re going to talk about today is people gaming measures. So what do we mean by that? Well measures drive focus, they drive our behaviour within our organisations, but we’re also very judgemental about those measures. They’re either good or they’re bad and people or teams actually feel that judgement coming down onto them.

And so naturally what they try to do is protect themselves from the judgment and this often leads to a distortion of the data whether that’s an intentional or unintentional distortion, but that effectively means we don’t have a true picture of what is the performance within the organisation and so therefore it’s very hard for us to be able to drive an improvement in that performance from a vague picture of where we are now.

03.47 Solving struggle 1: Gaming the measures

So when it comes to that first struggle around people gaming the measures what are some of the things that we could do to actually overcome that? So we’ve got two tips for you, and the first of those is to consider setting up a performance forum – a team meeting where we can actually discuss where is performance at now? What’s happening and why is that actually happening? Within that what we’re looking to do is understand where are we already doing well, where could we get better and how can we actually focus more on continuous improvement?

So whether performance is already good or not. We’re always looking to actually find a way of improving and moving forward. And the final part of our forum is actually can we think about resetting the measures at a level that’s right for the team so we can actually focus on a team ego go rather than most of the measures we see become individually orientated. So again, how can we actually get that measure set up in a way that the team is driving it forward and feeling both pride and ownership of a measure.

The second tip is actually then about being really clear about what our measures are there for. So can we get a really clear picture of what we want to actually achieve and as a team can we really actually articulate that and understand it? Can we get a picture in our heads of exactly what that would look like when we’ve been successful? When we talk about that as a team what we then need to do when we’ve got more granular is then review the measures that we currently have and actually really understand what’s the intent of the existing measures and why have we actually got them? And what we really need to do is be objective about
whether or not those measures really do represent the evidence that we’re going to be progressing towards that outcome that we’ve just discussed or not. And if we don’t have a valid reason and a valid answer about the intent then we need to be brave and get rid of them and actually design a new measure the better actually reflects what we’re trying to achieve as a team.

05.57 Struggle 2: Measures aren’t aligned to a strategy

So the second struggle we’re going to talk about is one where our measures and KPIs actually aren’t aligned with our strategy. What we’re looking for is for the collection of measures that we have or the KPIs that we have to tell a strategy story for them to actually be the bones of how we’re actually succeeding overtime with the strategy that we’re looking to implement.

Quite often what we find is that the KPIs we have are siloed or tell a part of the story but not everything that we need people to focus on. And often they’re actually focused on some of the old measures, the old things that we’ve always reported which aren’t directly aligned with what we’re now trying to achieve. And if we don’t have this strong alignment, it means actually we don’t have a feeling, we don’t have an understanding of actually how well the strategy is actually progressing and equally what elements are actually working or which elements aren’t working, so that we can look at how do we need to tweak what’s going on within the actual strategy. And this has a knock-on effect so if as individuals that have may be designed the strategy and come up with it, if we can’t see how it’s progressing then certainly our teams and the people that work for us can’t either. And without them being able to understand that the strategy is having an impact and that it is working, we actually don’t get to build the momentum that comes from people actually seeing success happen and actually then building on it.

What also we find is that actually if we don’t have measures that are closely aligned with the strategy, if they are being measured for old things, then actually they don’t come together to really focus on the elements that are critical to our strategy now. They stay focused on the elements they’ve been measured on and what’s actually coming out of that rather than what we need from them moving forward.

07.52 Struggle 2: Measures aligned to a strategy

So how can you build closer alignment of your KPIs to your strategy? One of the starting points is to be really clear about where we are now and where do we want to be? The difference that we’d be looking to focus on within that is what your measures should actually represent. So how are we actually getting closer to where we actually want to be and if we spend more time actually, really clearly articulating the outcomes that we’re trying to achieve then actually that will help us to really focus in on what’s actually important for us all to be focused on.

So what we would recommend that we do is actually write a very clear statement about where we are now, that we want to move away from and a clear statement about where we want to be, so the outcome and actually that’s what we’re looking to move towards. And with those in mind, we want to be very specific, very clear, paint a picture in our minds with those statements so that it’s really clear to everybody exactly
what it means and what it would look like. And we need to do that in a way where we have what we call a lack of ‘weasel words’. So ‘weasel words’ are something like a efficient or effective. My favourite used to be optimised in the results that I used to write. And we need to make sure we’re getting rid of any of the language that is not specific or clear enough in the statements that we’re putting together.

Once we’ve got those clear statements what we then need to do is come up with what we call the observable evidence. So with that statement of where we’re looking to move towards what would be the evidence that you’ve actually achieved that? What would you be looking to see, hear, touch that would actually demonstrate that you’ve got closer to it? And if we can outline that evidence that will actually be the basis of the
measures that we then actually start to create. And if we build the measures based on that evidence they will be closely aligned to our strategies. So there’s a whole load of things that we could actually focus on to improve this measure and we’ve added a couple more top tips actually within the downloadable toolkit that you can actually have a look and work through if you actually download that at the end of the video.

10.09 Tools to support you

So in summary, we’ve been talking about avoiding gaming measures and really making sure that we’re putting the focus on continuous Improvement and on the right collective behaviours. We also talked about making sure that our measures are aligned to strategy and this is about them getting that collective organisational view of what matters most and being really clear about that.

We’ve talked from the beginning about having a downloadable toolkit and within that we’ve got the tips, we’ve got some elements that would really help you to get started and to move these topics forward. You can get access to that by clicking on the button at the end of this video. And if you’re interested in taking it even further, you might be interested in our diagnostics package, which will help you to understand where you’re already strong within this area and some of the areas that actually if you focus on it, you can get big improvements relatively quickly. If you’re interested in finding out more about that,then send me an email again, the details are on the screen ([email protected]) and then we’ll actually get back to you and can organise that for you.