numbers that count
DESCRIPTION
My thoughts on how KPIs should be applied inside an organisation from a leadership perspective. I believe that when it comes to leadership, theoretically ultimate models can be thrown overboard. Focus on what people care about and are able to keep in mind. And repeat.TRANSCRIPT
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NUMBERS THAT COUNT
6 (cheeky) thoughts on KPIs as a management tool
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Ever felt that your people did not care about those
numbers of yours?
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If so, you’re missing out
on a powerful leadership tool!
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“Leadership is the art of getting someone else to do something you want done because he wants
to do it”.
General Dwight Eisenhower
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Here are my 6 thoughts on
KPIs as a leadership tool
http://www.flickr.com/photos/boklm/486677337/sizes/m/in/photostream/
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http://www.flickr.com/photos/foradoeixo/8239441790/in/photostream/
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Consider…
Customer LifeTime
Value
Net Promoter
Score
A pile of cash A human being
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#2 Beware of
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“Whilst Performance Management was aimed at altering policing behaviour with a view to increasing efficiency […] police officers were employing unethical practices designed to meet targets”
Performance management, gaming and
police practice, Patrick Rodger, 2009
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Closing rate
Sales budgets
Reducing data registered in CRM system (prospects kept outside system until likely to close to maximize closing rate)
Avoiding competitive situations (raising the bar on when to send in tenders/take sales calls)
Discounted (too low) offers to customers towards end of month/quarter/year to fill quota
Increased spending (if costs below budget) towards end of period to avoid a reduced budget next year
Cost vs budget
Customer satisfaction
A few random KPIs… …and some gaming examples
Manipulating answers (throwing away low point questionnaires or ”forgetting” to give them to certain customers)
Manipulating customers (”if you give me anything less than full score they will think you hated me”)
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The truth is that every KPI is a double edged
sword.
The good news is that gaming is easy to spot.
If you dare to look for it.
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#3. Look for a clear connection between effort and outcome
http://www.flickr.com/photos/timg_vancouver/756492323/
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Consider…
Sales Market share
Going slow Leading the field
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Try to minimize ”noise”, i.e. factors outside the control of those being measured.
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#4 Focus on a SMALL number
of numbers
http://www.styrbord.com
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For the numbers to do their part, people must
think about them. Often.
To think about them, they must be able to
remember them.
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”We can store only 3 to 9 chunks of visual
information at a time in short term memory”
Information Dashboard Design, Stephen
Few, 2006
Don’t expect to be able to occupy all of these seats. Go for max 3!
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#5 Use Positive Wording and Visuals
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In practice - some do’s and dont’s…
Good ideas…
Positive angle (net promoter
score rather than number of
complaints)
Development focused
(progression, % of target)
Action oriented (focus areas
rather than problem areas)
Relative (% change since
yesterday)
Not so good ideas…
Subjective labels
(“unsatisfactory”, “inadequate”,
etc.)
Traffic light metaphors (avoid
yellow lights, things on track are
green and things off track are
red)
KPIs that signals acceptance of
what should not be (“budget
deficit”)
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Note! Positive wording does NOT mean that
problems should be swept under the rug.
Problems will arise and
should be recognized when they do.
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Rationalize why a KPI is off-target once and that KPIs is
forever a dead duck
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#6. Update and Communicate your KPIs. All the time. Everywhere.
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“Students who thought they’d receive rapid feedback
performed 22 percentile ranks higher than students who
thought they wouldn’t receive feedback for several
days...”
David DiSalvo (http://neuronarrative.wordpress.com) on an
article by Kettle, K., & Haubl, G. (2010). Motivation
by Anticipation: Expecting Rapid Feedback
Enhances Performance Psychological Science
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Continous feedback means completing feed back loops all the time instead of once a week, once a month or once a
quarter…
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So. To summarize.. .
#1 Look for numbers with a bit of soul
#2 Beware of gaming
#3 Look for a clear connection between effort and outcome
#4 Focus on a small number of numbers (3)
#5 Use Positive Wording and Visuals (but don’t rationalize)
#6 Update and Communicate your KPIs all the time, everywhere
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Or simpler put…
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Always focus on what matters the most!
Feedback? Getting in touch?
My 6 (cheeky) thoughts on business intelligence?
http://www.slideshare.net/KristofferFredriksso/business-intelligence-6-cheeky-thoughts