The design process can make or break the success of your KPIs
The process you take to design a KPI(s) is fundamental to the value it provides. Get it wrong and it can affect the whole lifecycle of that KPI. A key component to this process is the team that designs the KPIs – they need to be able to offer:
The right perspectives
The right accountability
The right degree of collaboration
Designing KPIs – what doesn’t work
Our performance measurement consultants constantly see teams struggle with their KPIs because one of the following approaches is used to design them:
1. Management have prescribed the KPI
If a KPI is prescribed and presented without any context, teams often won’t understand what that KPI is looking to achieve or what it is helping them to work towards. As a result, they won’t buy into the measure or view it as a tool that is supporting them. When this happens, the purpose and intent of that KPI is lost.
2. Brainstorming instead of a deliberate approach
You would have witnessed it…the 5-minute brainstorm at the end of a meeting to pick measures. The issue with this is a reliance on the best idea in the room at that time (which may be subject to individual bias), rather than a deliberate method to design a measure that feeds back on progress towards a result.
3. KPIs are a data capability
When a KPI is chosen because of the data available, rather than a KPI being chosen because it offers the right evidence and feedback, the person responsible for providing the data is often seen as the owner of that KPI. This should be avoided as a data provider often doesn’t have any ownership or accountability for shifting a KPI.
4. KPIs are defined by project management teams.
When KPIs are used in projects, they often become milestones for progressing an activity rather than achieving the outcomes.
When KPIs are designed in the way discussed in points 1 and 2, the context and purpose of those KPIs are lost to those who weren’t involved in the process. Without that connection, there is no ownership for that measure or the goal it is linked with.
KPIs designed with purpose
Our performance measurement consultants advise clients to build a team that will design KPIs with purpose. This is achieved by starting with the end in mind and capturing, defining and articulating how you are going to use KPI(s) to improve performance. To do this, address 4 areas:
Be clear on the performance result you are working towards, and use this as the reference point for your measure design.
Think accountability – performance is usually only improved when teams take ownership for improving it, so ask yourself: ‘how are we going to build ownership in our team?’
How will the KPI be used to make decisions? Measures should offer guidance on when interventions need to happen and should answer the following questions: ‘are we on the right track?’, ‘where is performance not improving?’ and ‘what action should we take as a result?’.
KPIs should help learning – measures should highlight and help determine what worked, what didn’t work and what should be done differently next time?
The right team to design your KPIs
To achieve what is required in the KPI design process, the right perspectives, the right accountabilities and the right team are required. Our performance measurement consultants, advise that the best teams consist of 4 roles:
Leadership – a leader defines a strategy so they will be able to provide clarity on that strategy, the intent of the goals, the problem it solves and the benefit it will deliver – the context needed to design meaningful measures.Leaders should also take accountability of strategic results and their measures, so by having a leader involved in the design process, that process exists from the outset.
Subject Matter Expert (SME) – SME’s will identify where the right leverage can be applied for quick results and a good return on investment. Their expertise will also give the team understanding on what has and hasn’t worked historically – belief in a measure is crucial for team confidence and SME’s give the best chance that the right plan for performance improvement exists.
Data Expert – many organisations make the mistake of seeing KPIs as a data capability rather than a focus on performance. Data experts shouldn’t own measures, but they are critical to their implementation. These individuals will advise on the data available and what can feasibly be measured. They will also provide innovative ways to pull and present data – further supporting the fulfilment of performance improvement initiatives.
Facilitator – KPIs can be heavily influenced by biases or ‘what we have always done’. This can undermine the objectivity of KPI design and its value as a result. By introducing a facilitator to the process an outside perspective is offered that can ask the ‘dumb’ questions: ‘why do you do it that way?’, ‘can we do it better?’. By having this objective challenge in the design process, it’s more likely that a transformational measure is created that will drive a step-change in performance.
This cross-functional team will also serve another purpose; to build buy-in for the KPI and its purpose by acting as ‘change champions’ in the organisation. They can articulate the process for creating a KPI, why it has been created/its purpose. The most successful performance improvements require a belief in the purpose and its measures, and this team mix can build that belief through their perspectives in design, and ability to implement.
Our performance measurement consultants believe there are 3 critical components to building a team that will design the best KPIs:
KPI design needs to be cross-functional so the right perspectives and expertise exist. Multiple perspectives are needed to support the design of the right KPIs.
Start with the end in mind – how you will use the KPI should be at the heart of its design. A deliberate design process needs to exist to support the fulfilment of this.
The 4 perspectives needed to design the best KPIs are: leadership, subject matter experts, data experts and a facilitator. This team will become your change champions – the people charged with gaining buy-in for KPIs and begin the process of moving performance.
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