Many KPI projects fail because of the approach taken at the KPI project planning phase. Too often a plan is created that features one (if not all) of these areas (below) and with a plan in place, its simply followed through to reach the finished dashboard or report:
- Gather data: What current internal data exists and how is it collected and measured? What current industry reports and measures exist?
- Create a framework: what measures should be used, and how do they relate to goals or outcomes.
- Provide recommendations: about the measures, report design and future ideas.
- Outline the methodology: the approach taken, which generally follows something too simplistic like the SMART framework.
- Timing: focusing on the number, length, and purpose of workshops to be conducted, who the people are to be involved, and deadlines.
A typical approach like this is often then implemented by a Departmental Head, Project Manager or a Consultant (who thinks they know how to develop meaningful performance measures).
An approach like this will usually mean you are set to fail because of the inherent assumptions that haven’t been tackled – many of which are wrong! Performance Measures are there to help us focus our time and energy on what matters most in our business or organisation and to do that we need to develop truly meaningful performance measures! So what are some of the most common assumptions and how can we avoid or quash them?
Assumption 1: Reformat existing measures and reports.
This is a classic fail, reviewing the existing reports and measures and selecting those that seem most in demand or relevant. After all you have the data, so surely this is the quickest road to take?
There are a few problems with this:
- It assumes the measures are accurate and correct (unfortunately from experience we often find this is not the case);
- It assumes people understand the intent of the measure and the behaviour it was supposed to support within the organisation;
- We often find measures are simply being reported and not acted upon;
- A performance measure is there to provide strong evidence feedback on whether the strategy it supports is working and if it still has real strategic relevance.
Existing measures might be appropriate to retain, but they need to be taken through a deliberate definition and selection process to ensure there is a focus on what matters most to the success of the organisation, and not what we have now or was helpful in the past.
Assumption 2: Replicating measures from the industry.
Taking this approach and simply copying ‘what everyone is measuring’ is lazy. For measurement to be successful, it is fundamental that you ask yourself: what do we really need to measure, as evidence of our unique strategy?
Performance measures are there to support your organisations strategy, helping leverage your strengths and counter act or develop any gaps or weakness you have to face currently. The industry won’t have the answer to this. Just because a measure is relevant to an industry, doesn’t mean it’s directly relevant to your organisation. And just because the industry is measuring something, doesn’t automatically make it a good performance measure (or a real measure).
At best, what the industry is measuring could build a list of potential measures. But to sort that list, you need to understand the key results you want the measures to evidence, so you can filter them and make them relevant and feasible to you.
Assumption 3: KPI stakeholders know what they need.
Actually they don’t. People may know what measures they currently use or things they’d like to report on, but often they don’t know what they really should be measuring, because they don’t know how to design evidence of their most important – and usually intangible – performance goals. So simply asking them their reporting requirements won’t help!
We think KPI stakeholders (not just the KPI owners) should be involved in two fundamental steps:
- Education on what good performance measurement is and how to develop good measures. Most people don’t know how to design meaningful measures.
- Implementing what has been learnt (from step 1) so the right measures are designed. In doing this, ownership of the measures and the results they generate is created.
Assumption 4: Just a few workshops…
When you are new to performance measurement, the design of the right measures is difficult and strategies are often inherently written in terms or language that takes time and is hard to measure. Add to that the pressure of working in environments where people are always busy, KPI workshops are often kept as short as possible – limiting much needed discussion. Equally, deadlines are usually way too tight, because the effort to get buy-in and to get data is underestimated.
Try to allocate more time. By investing initially into the design of measures, you’ll save time later. That’s because the measures designed are relevant, are useful to drive the business forward (not just report back) and are something people can buy into.
Assumption 5: KPI’s are about measuring.
They’re not! Performance measures are actually about value creation, and a KPI project is more often about the changes that need to happen in a business to secure the change in performance that is being aimed for. Typical KPI projects put most of the effort into finding measures. You may start with a list of goals or a specific programme that the measures are for. But still, attention almost always goes to answering the question: “what could we measure?”
The problem with this is that a very important question is never asked: “how would we recognise the results we want if they were happening now?” If you can’t answer this question, you don’t really understand why you need the measure(s).
What you really need for great KPIs
- A deliberate measure development methodology (no brainstorming).
- A step to make sure results are measurable before the final measures are chosen.
- A realistic timeframe for implementing your KPI methodology.
- The owners and users of the measures need to be trained on how to use the measurement methodology.
- The owners and users when selecting measures, actually apply the methodology.