KPIs: One Way Smart Companies Measure Success

My favorite line from the movie "Starsky and Hutch" was the “Do it” refrain repeated by Ben Stiller’s character. This line is the first thing that comes to mind having recently presented at the 2014 NECA conference, as well as the 2014 Collaborate Viewpoint User Conference. During the presentation, I did a small survey of the audience about how many companies had a Key Performance Indicator (KPI) program in their organization. Only 10 individuals raised their hands out of more than 200 people in the combined sessions. That’s why I’m compelled to discuss the importance of using metrics in your organization and hopefully convince you to “Do it!”

DEFINITION

KPI: A periodic assessment of an organization, business unit, division, department and/or employee. These are sometimes referred to as metrics.

While I’m not big on definitions in general due to the potential for boxing you in with regard to the interpretation of the program, this definition, if allowed to evolve to match your company’s culture, describes the purpose of KPIs quite well.

Benefits

While efficiency and profitability will be a major benefit to a successful KPI program, there are also many intangible benefits to consider. Here is a list of the top 10 intangible benefits that I have experienced.

1. Demands communication
2. Clarifies expectations
3. Eliminates micro-managing
4. Provides gauges to monitor for all involved
5. Identifies when you’re successful but also when you’re not
6. Defines key area of focus
7. Converts people into planners, not reactors
8. Transforms an organization to improve, not just maintain
9. Trains a culture to overcome challenges
10. Adds fun and excitement to your organization

Added Benefits (Bi-Product)

I have found an important bi-product of a good KPI program is an improved company culture and employee satisfaction. If you take professional, industry-accepted surveys of your company staff, you will find that most supervisors utilize 50 percent to 60 percent of their team’s skills and brainpower – that’s very unsatisfying to motivated leaders. Additionally, one of the key characteristics to retaining good employees is to ensure they feel they are heard and appreciated. If you implement a KPI system correctly, it will allow your employee’s ideas to be heard and acted upon, and will ensure good work is noticed and appreciated.

Quick-Start Steps

If you are intrigued by the potential benefits of a KPI program, here are some basic quick-start steps to get you going and starting to “Do It.”

The following graphs are examples of the steps your business could take for developing a company-wide KPI strategy with integrated business intelligence tools.

[caption id="attachment_5376" align="aligncenter" width="280"] Figure 1[/caption]

1. Create - Brainstorm and list all your collected ideas, starting with your mission, goals and objectives. Next, identify good indicators for success at the company level, department level and each individual level. Even if you can’t convince your entire organization to implement a KPI program, your department or area of responsibility will thrive with a well-communicated KPI program in place.

[caption id="attachment_5375" align="aligncenter" width="280"] Figure 2[/caption]

2. Implement - Start small and simple. Define mutually agreed upon rules and targets and receive acceptance from all involved in the process.



3. Report - Develop simple measurement tools such as easy-to-follow graphs and charts that can be delivered when needed. Remember though, if the data takes too long to compile and report, the program will frustrate users and will stop being utilized. This is another reminder of why integrating your business intelligence system to pull information daily from all areas of your company is so important.

4. Communicate - Communicate openly and often. Top performers of KPI programs monitor their progress daily, review results monthly, and adjust targets quarterly. Expectations are clear at companies where the supervisor and staff formally meet quarterly to discuss the accomplishments and adjust their resources or focus if necessary. Frankly, a once-a-year meeting will not have the desired results or reaction time needed in today’s competitive marketplace.

If KPI goals are not met, the situation presents an exceptional opportunity to learn about what happened and take corrective actions to ensure the problems are resolved. The best news is that by discussing KPI results on a quarterly basis, you will avoid potentially nine months of missed targets or opportunities to improve.

I recommend a quarterly review within a week after the quarter ends. I use a one-page review sheet (shown below) to list the KPIs, which are grouped by company, department, individual and projects. You can also establish a score system that may be tied to compensation, time off, department party or some reward system. At the review meeting, I spend half of the session discussing the completed quarter and the other half focused on the upcoming quarter. I complete a new review sheet for the upcoming quarter featuring the agreed upon items. Do not make it a long and hard process; keep the meeting to an hour if possible. Spend most of your time discussing new ideas for improvement and less time documenting. Don’t be afraid to have the difficult discussions, if necessary.

A unique area to track and discuss is the subject of key projects. This is the smartest area to make quick improvements and also a great opportunity to solicit improvement ideas from the individual. The person who identifies a challenge or area of improvement is usually the most passionate about taking on the challenge to complete the project. Give them a chance to show you what they can do; you will be pleasantly surprised.

Closing thoughts

When deploying a KPI strategy, start out small and keep it simple. You may want to consider a technology resource to help simplify your KPI program. Even if you only do one this each quarter and report it manually, just get started. You can grow the program over time by adding one KPI each quarter. Once you see the results, use the data to justify resources to expand and automate. Most importantly, “Do It!”

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