To make our KPIs more meaningful, the first thing we need to do is change our approach. It is how we use KPIs that causes most of our problems with them.
So let’s first recognise that there are two key ideas behind KPIs:
- The whole idea of the division of labour that, economist Adam Smith at the beginning of the industrial age observed, led managers to the idea of applying quotas on individuals to ensure they focused on their tasks and delivered a required level of productivity. Seemed like a good idea when roles were specialised and management were keen on controlling people.
- The idea that if we set a challenging goal that we will lead people to extraordinary performance.
Let’s deal with the first point. Are we really about controlling individuals today..? Or do we want to free them up to perform at their best..? Own their own performance – test, try, fail, reflect, learn – and do it again. I feel it’s the latter, therefore let’s stop using KPIs to control people. Let’s take a different approach.
Now, setting challenging goals for individuals. When we look at motivational theory we see that there are three criteria for someone to be committed to a challenging goal. 1: their commitment to the goal; 2: their self-efficacy (or their belief that they can achieve the goal) and 3: national culture plays a huge part. Based on the research I’ve seen it’s the Americans and the Singaporeans that really like setting tough goals and charging ahead. In Australia, we know we like to support ‘under-dogs’ until they make it, then we knock ‘tall poppies’ – not really a national culture conducive to setting challenging goals, on their own, and then expecting great results.
So when managers set KPI goals for individuals and obtain sign-off, is this real commitment to the goal ? I don’t think so. If we consider an athlete who wants to compete at the Olympics, maybe win a medal. Their first goal is to get to the Olympics, the focus is on their personal best until they are in medal contention. To get there they (normally) have a belief in themselves and a team of supporters around them that build their self-efficacy and ability to progress towards their goals. Many smaller, progressive goals over time.
Again, it’s about changing how we think about KPIs – what do we actually want to use this tool for..?
I subscribe to the PuMP – performance measurement process, developed by Stacey Barr. An awesome approach for overcoming so many struggles with measuring performance. Isn’t that what KPIs are about…measuring organisational performance..?
Without a deliberate method to approach measuring performance we tend to lean towards a data driven perspective of measurement. Step 2 of the PuMP method is about making strategy measurable by ensuring we are using, measurable Result or outcome statements.
For example, in a customer contact centre, if we lean towards a data driven view of KPIs we will look at measures like: Grade of Service, the average time to answer a call, so the KPI becomes the percentage (let’s say 90%) of calls answered within say 60seconds. KPIs are measures with targets, this measure has two targets.
What then commonly flows on from this data driven perspective, is measures of; the average time in seconds to handle a call (AHT); the average talk time in seconds (talk time); or the amount of time in seconds to process the call (PCP). What is the focus of the people answering calls from customers..?
If we take a Result or Outcome perspective of KPIs, then our first question is – what are trying to achieve here..? The answer is perhaps: Our customers have a great experience and/or Our customers love our service. Then we look for measures that will provide feedback that we are making progress towards these results (or not). So, maybe measures like: Average experience score from CX survey or Average score to the Question to the customer: I love the service provided by the contact centre. If we continues to flow this out we would find that a measure of Call Quality becomes really important, and that the team is ready to take calls when required. Now the focus of the people answering calls from customers is now – the quality of the call or conversation with the customer, and being ready to take calls (or Schedule Adherence).
I have discussed other issues with how we used KPIs in an earlier article. The purpose of this article is to progress towards making our KPIs meaningful – so in summary:
To make your KPIs more meaningful, I suggest you try the following approach:
- Don’t start with asking: “what’s the best KPI here..?”
- Start by asking: “what is the result or outcome we really want from this activity..?” The articulate what it is that you really want to achieve, the ideal outcome.
- When you have articulated the result you want then ask: “what measures will give us feedback on how we are making progress towards this result (or not)..?” (PuMP Step 3 uses a Measure Design technique).
- When you have those measures – collect the data and monitor it. Understand what current performance looks like, how much natural variation is there..?
- If you want to make more progress towards that Result – then set some targets collaboratively, test and trial interventions to see what gives you the maximum impact.
How do you feel about changing your approach to make KPIs more meaningful..?