KPIs should give a team the feedback they need to drive performance towards some important strategic goal. So why is it that KPIs are so often a bit, er, featherweight?
Can you defend your KPI against these 3 jabs?:
- Was it deliberately designed by the team executing the improvement?
- Does it provide direct evidence of the intended result of the improvement?
- Does that result have a causal relationship to the valuable strategic goal?
KPIs which hit the canvas in any of these tests are likely to have low value for driving performance improvement (and probably shouldn’t be called KPIs either).
Many measures are created because 1. everyone else uses them, 2. they’re an easy comfort blanket, 3. there’s an impulse to measure staff or 4. there’s a contractual obligation. In Lean terms some of these measures can be ‘essential but non-value-adding’ (ENVA) but all too often they are ‘non-value-adding’ (NVA) waste. In the worst case they can create an illusion of knowledge and produce undesirable behaviours.
How can KPIs punch above their weight?
I was lucky enough to meet up with Stacey Barr the Performance Measure Specialist this week on one of her annual trips from Australia to the UK. Stacey is the inspirational author of Practical Performance Measurement and the creator of the PuMP® Performance Measure Blueprint which we use here at Measureology.
In contrast to most best practice, the PuMP® Blueprint doesn’t try to tell you ‘what’ to measure. It focuses instead on clearly-articulated purpose, collaborative measure design and robust statistical interpretation and improvement. It does this using an 8 step method which creates powerful measures with team commitment, a method which has now been adopted by the Balanced Scorecard Institute.
I don’t believe anyone out there thinks more deeply and holistically about performance measurement than Stacey. You only need to read this quote from her book to know what it means to her:
We don’t measure performance for the fun of it; we measure performance to dramatically improve it, to achieve lofty goals and exciting targets that mean the world’s a better place on account of our endeavour.
Maybe “Making the world a better place” should be the ultimate knock-out punch for a KPI?
Get Killer KPIs
Good measurement feedback is a powerful driver of performance but only if we invest in higher value KPIs and use them wisely. You can read more about what bad measurement looks like here.
Get in touch to set up a discovery call.