By having the right KPIs you significantly increase the opportunity of your organisation’s strategy succeeding and its performance significantly increasing. In fact, it’s proven: 80%* of organisations see an increase in sales when the right KPIs and performance improvement practices are deployed in their organisation.
Yet when building KPIs so many organisation fail to address one fundamental area: KPIs and how they drive behaviour.
When a new strategy is developed and to maximise its success, KPIs must be aligned with it. Fail to do this, and employees will feel the conflict of what they are being told is important vs what they are being measured on. When this happens, there will only be one winner – what they are measured on.
Measuring what matters shifts the way people think about: performance; their contribution to the organisation; and why they come to work each day.
– STACEY BARR, PUMP FOUNDER
How to test if your KPIs support your strategy and people so the right behaviours are generated
Tip 1: Has the evidence of success changed?
No matter what your strategy sets out to achieve, it will require you to make some sort of change(s). In fact, in a recent Rubica survey, respondents said that an average of 63% of their strategic goals required them to lead some sort of significant change.
If you make a change, it is likely the evidence of success has changed too. You therefore need to be clear on what evidence would feedback that you are achieving your strategic goals. This evidence doesn’t have to be data-led (that comes later), it can be sensory. For example:
- We see certain processes changing and improving
- People feel a more positive working environment – a boost in morale
- We hear more positive feedback from our customers
Tip 2: Do your measures align with the evidence?
Leaders frequently fail to look at their existing measures and address, whether they are fit for purpose based on the goals they want to pursue.
By missing this crucial step, you risk having conflicting measures that drive opposing behaviours. In the worst cases, this can create a drop in performance rather than an improvement.
To avoid falling victim to this, test your existing measures against the evidence of success (defined in Tip 1) and ask: are/will they create the right focus and desired behaviours to support you in fulfilling your strategy.
To ensure you don’t miss anything vital, get others involved in this process so they can challenge (where appropriate) and provide their feedback on what is being proposed.
People need to be engaged in a discussion about the strategic plan, they need to ponder it, to ask questions, to challenge it, to explore how they contribute to it. Then they can make it their own. This needs communication that is: two-way, like a dialogue, unstructured to allow for exploration, and flexible so people can join in on their own terms.
– STACEY BARR, FOUNDER OF PUMP
Tip 3: Create focus on the measure and the goal
Strategy execution and fulfilment comes about when an organisation is encouraged and inspired to perform better and better. This won’t just happen – it comes about when you learn from failure and inspire continuous improvement. To do this:
- Focus on results that matter most and support the fulfilment of strategic goals.
- Monitor the right measures that tell you how your results are tracking, and what performance gaps you need to close.
- Continuously improve your organisation’s policies, processes, and systems – leveraging resources that generate the biggest performance improvements.
Source: Stacey Barr, PuMP founder