The KPI Mystery

The best things in life are usually the simplest. Most of us would subscribe to that assertion and yet in a management meeting I attended recently I was astounded at how complicated things became when the subject of performance was discussed. Specifically, the concept of Key Performance Indicators (KPIs) and how to implement and measure the effectiveness of them. It was a mystery to me as to why this had become so complicated.

As I listened it became clear that the whole point had been missed as to what they were there for and how they are to be used. Moreover, the word ‘indicators’ seemed to be lost on the team around the table as there was so much time spent on specifics, I was bewildered by the degree of possibilities that were offered up.

After the meeting, the sales director asked my opinion on how I thought things had gone. I was loathed to criticise too much as the meeting had gone very well in many ways, but I did offer up a view on the area of KPIs with some suggestions as to how implementation and examination of this area could be improved to help measure business performance.

As it was, there was so much information and opinion on how they should be used, I likened it to opening a box of Christmas lights and seeing a bundle of tangled wiring. The task now was, how do I untangle that wiring into a nice straight line that is easily understood and remembered?

As there were some new managers in the meeting, I suggested that we break down the fundamentals of KPIs into a few shorts steps and keep it simple. This could then be transferred into an aide memoir of sorts and put on to an office-based tool (desk top card or mouse mat etc.) which would be in the eyeline of the manager as a constant reminder and so more easily remembered.

With a little application, here’s what we came up with to try and simplify the process. Plus, in order to help us remember it (and it looked good on the mouse mat) we came up with the perennial acronym which took the persona of a very helpful ‘virtual’ lady called PAMELA. I hope you find it just as easy to use and helpful in some way.

Implementing and Measuring KPIs – an aide memoir

Planning

Accountability

Measure

Examine

Layoff!

Ask

Phase One: Planning

This may seem like the most obvious thing to say, but if we don’t establish which area or areas of the business we wish to measure then there’s little point in continuing. This is an area where we can be specific as we need to understand more about each facet of the business we wish to assess. The best way to do this is to take specific goals and objectives from our business strategy, for example, sales performance, production, HR or waste management and align our KPIs to these areas. This creates and all-encompassing entity that is clear and easy to understand for everyone.

Phase Two: Accountability

By that, what we mean is to have a specific target for each element of the business identified rather than something vague or ambiguous. So, if you were looking at improving sales performance for example one of your KPIs might be to increase sales of the ‘Blue Product’ by a minimum of 6% before the half year is up. Rather than simply, ‘we need to sell more of the blue product’.

Phase Three: Measure

Find ways to measure each component part of the KPIs you set into achievable parts. So, if we need to increase sales of the blue product by 6% by the half year, then in real terms, for example, that could equate to, ‘we need to sell at 47 more of them each month before the half year is up’ and so on. We now have a specific (and achievable, with a little effort) monthly goal to aim for rather than an overarching 6% target over six months.

Phase Four: Examine

That is to say, examine each KPI based on current and previous performance. Ensure that they are entirely relevant and fit for purpose. It may seem obvious, but it wouldn’t be the first time I’ve asked a manager “Why are you measuring the this?” and the answer was “I don’t know but we’ve always done that”. It could be that the individual concerned has a job and job description that are not properly aligned which can result in unrealistic goals or areas of the business being examined that are no longer relevant.

Phase Five: Lay-off!

This just reminds us not to ‘overcook’ checking and monitoring where it’s not necessary. Measure outputs at appropriate times. Each area of the business will require monitoring at different intervals and so set a schedule to measure each area as appropriate and stick to it.

Phase Six: Ask

As in, ask yourself ‘have we done everything we can do to ensure this plan will work?’ Have you planned accordingly so you know what you are measuring and why? Do you know what your expected outcomes are in terms of targets and have you got the right metrics in place to ensure we can assess ongoing performance and guarantee successful implementation? If you are happy with all of that, then implement and measure away…

There you go… PAMELA.

At Maguire Training, not only do we offer classroom-based courses and programmes, but we are also proud to offer a versatile and intuitive suite of over a hundred e-learning modules on our website, which covers a range of sales and customer service topics.

Have a look at the on-line module ‘KPI's and Individual & Team Performance Assessment’, which would be a perfect complement to the classroom-based performance management courses we offer.

If you need further information then you could always call us of course on 0333 5777 144 for a no obligation discussion about your training requirements. Alternatively, simply hit the ‘Contact Us’ on any page of our website at www.maguiretraining.co.uk and we’ll get right back to you.

Either way it would be great to hear from you.