Pick Smart KPI
Key Performance Indicators are important metrics with one little difference, a title. Metrics get promoted to the status of KPI when they become a point of focus to help achieve an organization’s strategy. It is a powerful tool for communicating what is important for all aspects of an organization. KPI is also a change management tool to get buy in and build habits.
P.I.C.K
Positive – Only consider metrics that count toward winning a strategic objective of the business. It can be tempting to considering numbers that are just measuring problems or errors. However, those are best left for analysis and quality control.
Immediate: Go for real time data when it comes to KPI. If you don’t have the system capabilities then daily will work but don’t settle for less. A key performance indicator should be watched, talked about and acted upon to achieve results.
Certain: Everyone needs to be able to trust the data. Once you see a number, you can be sure it is correct. Metrics that are systematically stable are better choices as they are more trusted as the process to generate the data is standard.
Know-how: Have a plan for your KPI beyond just hitting a goal. Use them to help understand your organization so that you can help it grow. Ask yourself questions like: What does the metric represent and mean to the team or company? What will need to happen if the number is too low or too high? Make sure metrics that are promoted to KPI connect directly to company strategies.
S.M.A.R.T
Simple: People only care about things they understand. Therefore, KPI must be easily understood. Being specific can go a long way in helping to achieve simplicity. Additionally, make sure to always limit metrics that you crown as KPI around 6 to 8 at any given time. A big mistake people make when it comes to KPI is having too many of them. This is self-defeating since nothing can be important when everything already is. Use focus to drown out the noise and hit the important things.
Measurable: You can’t manage what you can’t measure. Quantitative metrics are always the best choice here. Qualitative metrics represent opinions and classifications that are usually better left for support and analysis. Fun fact, qualitative metrics are not actually considered a measure.
Actionable: The subject being measured should have direct impact on the numbers. Feedback will be useful in changing processes that can yield better results.
Results-based: One of the main purposes for KPI are to measure results. Example, if you have ever spent any time in sales you have likely heard that “sales is just a numbers game. For every 9 no’s there is 1 yes. Therefore, more calls will make more sales. Let’s make outbound calls our KPI!” Sounds like a great idea but measuring tactics like this have limited growth potential. Instead, measure how many deals are getting closed. This sends a clear message that sales getting closed is what is most important. Inspire and empower your people to be resourceful.
Temporary: Give your KPI an expiration date. Business changes and strategies shift. Busy seasons and growth can dramatically raise importance of certain metrics. Try to time them and find cycles that go with the ebb and flow of your business. Aim to have KPI reviewed and switched up monthly or quarterly. You want it long enough that you can build habits and implement changes.
KPI Overview
It can be very difficult to find KPI that is perfect and covers everything mentioned above. You may find yourself needing to pick KPI that is just good enough. Lastly, Make sure your KPI is not used for incentives or discipline. This will corrupt your data as it motivates people in finding ways to game your systems. Now that you know what it means to pick smart KPI, use what you have learned for the next goal setting or strategic planning meeting.