Refresh Your KPIs – 8 Tips For Getting Your KPIs (Or Scorecard) Into Better Shape
I have used Scorecards and KPIs with turnaround clients and on performance optimisation projects for nearly 20 years and I’d like to share with you what works and what doesn’t when it comes to key performance indicators.
Whether you are formulating your first KPIs, or wanting to refresh your existing ones, these plain English pointers will get you off to a good start.
- Balance the boat
- Performance on a page
- Include important others in the build process
- Ditch the spreadsheet
- Don’t just measure, do something
- Ownership equals accountability
- Kick butt and applaud the achievers
- Walk the talk
Tip 1 – Balance the boat
It is easy to rely on your financial KPIs because that is where you will find most of the available data. However, make sure you have a balance of financial and non-financial measures that are both internal and external to your business.
Here is a good example from a private hospital that demonstrates a spread across four perspectives.
People and processes drive your business, not financials. Be proactive not reactive.
Bottom line is to not overcook the financials but get a balance. A balanced scorecard is simple: a balance on internal and external KPIs and a balance of financial and non-financial KPIs.
Tip 2 – One page strategic planning: performance on a page
I have a rule of thumb to force teams to avoid information overload. Keep KPIs to one A4 page each week or month or whatever your desired frequency. Just like the hospital scorecard above. All on one page to run a large acute care metro hospital.
Tip 3 – Include important others in the build process
If people haven’t really bought into the KPI thing, chances are they weren’t consulted or involved in the build. There are some simple ways to do this – drop me an email if you would like more info.
Tip 4 – Ditch the spreadsheet
Don’t be lulled into thinking spreadsheets are the technology platform for your KPIs. They are not, plain and simple. I have seen very senior executives spend days every month manipulating spreadsheets when purpose-built software does the job much quicker and more accurately. Spreadsheets will have errors and again these same managers will spend more time checking formulae because they don’t trust the accuracy. Dashboard software is the answer but in keeping with my philosophy, keep it simple.
Tip 5 – Don’t just measure, do something!
One surefire way of killing off KPIs is to measure every month and then do nothing about it. If there is a problem with staff turnover for instance, then take action and make sure the problem goes away. Don’t have it surface again the following month where your team will roll their eyes and lose motivation. After all, KPIs are meant to bring to the surface problems and opportunities, so that something can be done.
Tip 6 – Ownership equals accountability
Make sure each KPI has a designated owner. Nothing like your sales manager seeing his or her name against Sales Conversion Rate, for example, to galvanize them into action.
Tip 7 – Kick butt and applaud the achievers
Make sure you reward and recognise those involved in achieving their targets. Similarly sanction under performance, privately of course. Applaud publicly, address underperformance in private.
Tip 8 – Walk the talk
Don’t forget that if you are team leader then your team will be watching to see your commitment to delivering on targets. Another key for leaders is to be across all metrics and thread this into conversations as you do your walk around. This is powerful and demonstrates leadership.
By the way you might like to know that Vantage Performance takes its own medicine. Our scorecard is a key foundation of our business and is reviewed weekly.
Vantage Performance specialises in the turnaround of businesses in crisis as well as performance optimisation and capital raising.