why most kp is dont work and what to do about this

8/13/2019 Why Most Kp is Dont Work and What to Do About This

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Why most KPIs don't work and

what to do about this

By Aleksey Savkin

Based on http://www.bscdesigner.com/sound-approach-for-kpis.htm
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Why most KPIs don't work

There are many companies where KPIs are

treated as a "necessary evil," one of the

reasons is a poor implementation and

translationof KPIs to employees.



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We need a sound approach for KPIs that

will:

Help managers to use KPIs for business

management, not just for measurement;

Ensure that line-level employees buy-intoKPIs as

a business tool.



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The business context of any KPI is formed

by:

Business Objectives

Action Plans

Team

Let's have a look at these parts and see how they

might help us to convert a KPI from a measurement

tool that employees disparage to a management

toolthat employees will buy into.



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Alignment with business objectives

Each KPI should be alignedwith a specific businessobjective.

According to the practical usage, there are two functionsthat typically are associated with a KPI:

Monitoring of the performance

Measuring of the progress

Example: KPI: Number of leads per month -> Function:measuring the progress -> Business objective: Ensurethe growth of the number of deals closed by 30% duringthe next 6 months.



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Action Plan

In a case of monitoringof the business

performance a business objective might be to

ensure that its KPI is in the green zone and reactappropriately when it goes in the red.

When a business objective is focused on achieving

something, a KPI will measure the progress towards

the goal. An action plan in this case includes all thesteps necessary to achieve a specified objective.



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Team Translatea KPI to your team by explaining to employees a why

aspect, e.g. how a KPI is aligned with a specific business objective,how that business objective helps to execute a companys strategy.

Avoid using reward KPIsor linking any type of compensation to aKPI. Check out this articlefor details and best practices.

Cultivate in your company a tolerant culture that will treat red-zoneKPIsas opportunities. Check out the articleby Sandy Richardsonthat explains the details.

Assign a responsible employeefor a specific KPI. The person

should be responsible not just for filling in data each month, but forensuring that an action plan is executed.

Involve your team in KPI design.

http://www.bscdesigner.com/reward-kpi-best-practices.htmhttp://sfo-blog.typepad.com/sfo-blog/2013/11/your-red-is-dead-culture-is-killing-your-balanced-scorecard.htmlhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://www.bscdesigner.com/sound-approach-for-kpis.htmhttp://sfo-blog.typepad.com/sfo-blog/2013/11/your-red-is-dead-culture-is-killing-your-balanced-scorecard.htmlhttp://www.bscdesigner.com/reward-kpi-best-practices.htm


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Automation software

MS Excel for small companies when no strategy

map is designed and there is only a single scorecard

BSC Designer when it is necessary to create a

strategy map where business objectives are linked

by cause-and-effect connections and it is necessary

to visualize important data about objectives andKPIs. Learn more http://www.bscdesigner.com

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A sound approach for better KPIs

Start KPI design with a business context, not with a KPI. Define what your businessobjective is.1Do you have an action plan? What are you going to do to achieve a specified businessobjective?2Define aKPI; it can be a KPI for monitoring of the performance or for the tracking of theprogress.3Translateyour KPI to a team. Explain the context, avoid reward KPIs. Involve your team

in KPI design.

4Choose a proper KPI automation and visualization tool.5


why most kp is dont work and what to do about this

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