In this Webcast with Stacey Barr we explored what the most common approaches to KPIs are and what criteria defines a performance measurement approach that really works.
The audience were invitees from Australia and New Zealand and the enthusiastic group bombarded us with heaps of feedback and questions as went.
The main thrust of the presentation was to share insights from Stacey’s research, into her own mailing list to find out what approaches people and organisations were using for performance measurement and KPIs. Those results were categorised into four categories; 1 Chaotic, 2 Ad hoc, 3 Frameworks and 4 Methodologies.
Within the first two categories we saw that people were using approaches to KPIs that had no structure or framework, it was essentially just doing KPIs by the seat of your pants. The Frameworks category included for example, regulatory frameworks that really just provide a structure for your KPIs (rather than methods to develop KPIs), or structures that mandated what the KPIs should be. Additionally, the Frameworks category included the Balanced Scorecard.
I was involved in a Balanced Scorecard implementation in the late 1990’s in a large financial services group, and we struggled. Whilst we got the strategy side of the Balanced Scorecard – that is moving away from just financial measures – finding KPIs for each of the quadrants was difficult, why? Because we had no method to develop our KPIs, other than the ad hoc approaches we had been using. Balanced Scorecard is not a KPI methodology, which is why the Balanced Scorecard Institute of the USA is a licensed PuMP® Partner.
From the survey only 11% were using a KPI methodology, either the Performance Prism and PuMP. And using a methodology is highly correlated to success with KPIs.
If you think about it, we use methodologies for most of what we do at work and in business. But for some strange reason KPIs have been left behind.
PuMP®, developed by Stacey Barr over many years is the only comprehensive KPI methodology Stacey and I have ever heard of, if you know of another, please let me know.
Stacey then defined the key criteria for a KPI methodology that works. Firstly a balance between Theory and Practice, and Whole and the Parts. Within these four domains there are eight criteria for a well design methodology for KPIs:
- Necessary, where each part is chosen and designed to replace poor KPI practices that don’t work.
- Founded, where each part has a consistent rationale, philosophy, or set of principles, about what good KPIs are, what purpose they serve, and how they should be used.
- Proven, where the methodology reliably produces KPIs that help achieve goals sooner and with less effort, no matter who uses the methods or in what context they use them.
- Comprehensive, where the methodology assists each step or stage in KPI development, from selection, through implementation, to use.
- Non-prescriptive, where the methodology does not prescribe the KPIs to use, but rather facilitates the user to create the KPIs appropriate to their situation.
- Useful, where the methodology improves people’s experience of creating and implementing and using KPIs.
- Practical, where the methodology can be learned, resourced, and performed as part of the routine work of strategy development, performance monitoring and improvement.
- Transparent, where the methodology’s limitations or weaknesses in producing KPIs are known, openly admitted, and continually improved upon
For more on this topic see Stacey’s article here.