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11 Powerful KPI Insights

by Stacey Barr, Performance Management Specialist, Stacey Barr Pty LtdWednesday, March 24, 2010

The greatest management thought-leaders in the world insist that measuring the performance of your business or organisation is essential to its succeeding. There are no qualms about that. If you want to improve the performance of your business (or anything), you must measure performance.

Fewer and fewer managers are struggling with this premise, that you have to measure performance to manage it. But what they do struggle with is how to do measurement properly. These eleven insights will guide you to improve how you do go about measuring performance.

Insight 1: Only measure what you’re going to do something about.

Don’t measure just because you can, just because you always have, just because you’ve got the data, just because someone says to. Measure only the results you are going to give your time to improving, by “working on the business, not just in it”.

Insight 2: Measure drivers, not just outcomes.

It’s great to know how profitable your business is, or how well you’ve kept to budget, or how happy your customers are. It’s at least as important to know also what operational results have the most influence over these outcomes. It’s those drivers that you can do something about, to get the outcomes you want. You can’t influence outcomes directly. So find the drivers, and measure them too.

Insight 3: Measure not what you can control, but what you can influence.

No-one really has control over anything other than their thoughts. We do have a lot of control over what we do, but even extraneous factors can limit that control too. If we only measured what we could control, we’d be measuring useless things. So expand your thinking to what you can influence, and you’ll find yourself measuring much more meaningful results. Remember, your target doesn’t have to be 100%.

Insight 4: Measures impervious to change are useless.

Why do call centres continue to measure the number of calls received? It’s not a performance measure – it doesn’t measure how well the call centre is performing. It just tells them how many calls they’re getting. And even if they could change this number in some way, what kind of change would reflect an improvement anyway? Measure only the results you know you can (and should) change for the better.

Insight 5: It is essential that your measures conflict with one another.

Everything is about balance. Cycle time versus quality, profit versus customer retention, employee satisfaction versus productivity. These things are in conflict with one another, and that’s how it should be. Management is about balancing the conflicts that are important, so if your measures aren’t in conflict with one another, then you’re missing essential information to manage.

Insight 6: Think like a marketer to engage people in measuring.

What do great marketers do? They capture people’s attention, they get the right message across, and they influence people to act in a way consistent with that message. Traditionally, we think of marketers as selling products or services. But why can’t we use the same process to sell performance measurement? Consider collaborating with your marketing department, or learning more about marketing yourself, to increase the engagement your colleagues have in performance measurement.

Insight 7: There is no “set it and forget it” with measuring performance.

There is no set of industry standard performance measures you can buy off the shelf, bolt onto your organisation or business, and then sigh in relief that you’ve “done performance measurement”. Performance measures are a reflection of the things that matter most, and the things that matter most are a reflection of what’s going on in your business and it’s environment. And in case you haven’t noticed, this is constantly changing!

Insight 8: Reward people for local results AND organisational results.

Reward people just for local results, and you’ll be encouraging them to compete internally with other departments and teams and individuals, or cause unintended consequences for them. Reward people just for organisational results and you’ll be frustrating them with the expectation to influence results they can’t directly influence. Reward people for both local results and organisational results and collaboration across traditional organisational boundaries toward common goals is what you’ll get.

Insight 9: Use data and not opinion to determine causality.

Sitting around the meeting room table to discuss an increase in error rates (or cycle time or costs or whatever), everyone’s got an opinion about why. We’re so quick to find solutions that we often forget to define the problem properly. A proper cause-effect analysis has to involve scoping potential causes and using data to determine which are the most influential causes.

Insight 10: Measuring performance is not a tool, it’s a way of life.

If you’ve been interested in performance measurement for more than a few months, you’ve probably already discovered that it’s not all about numbers and data. Mostly it’s about culture, a culture of results-orientation, feedback, learning and continuous improvement. It’s not enough to learn the tools and steps of performance measurement, you need to live the philosophy.

Insight 11: Performance measurement requires humility and transparency to work.

Ego, fear, arrogance, carelessness and sloppy thinking lead to performance measurement attempts that fail because bad results are swept under the rug, data is manipulated, only good results are measured, and any kind of objective evidence is ignored in favour of intuition and experience. Those who are humble will learn from the valuable feedback measures offer, and those who aren’t afraid of transparent feedback will turn their performance measures into performance improvement.

About the author:

Stacey Barr is a specialist in organisational performance measurement, helping corporate planners, improvement officers, business analysts and performance measurement officers confidently facilitate their organisation to create and use meaningful performance measures with lots of buy-in.
Sign up for Stacey’s free email tips at www.staceybarr.com/202tips.html and receive a complimentary copy of her renowned e-book “202 Tips for Performance Measurement”.

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