🆕Three Simple Things You Can Do To Achieve Effective KPIs

1. Select your focus,
2. Make it graphic,
3. Keep it visible.

More is not necessarily better.

It is very easy to get caught up in the ‘measure to manage’ culture and assume that the more KPIs you have, the better. But this is not so. When you have - as many do - about a dozen or more KPIs, the focus becomes one of ensuring that the KPI measures look good - rather than that the performance is good. In other words, you end up managing the KPIs, rather than managing your performance. (A good example of this is the case of the white goods manufacturer who refused to implement a simple measure that would have reduced overall cost, improved reliability, and increased staff health and amenity - because it would have adversely affected individual sections’ KPIs. See SAM Issue 39).

You can only answer to one master

The problem of having many KPIs is that the more you have, the more potential conflicts you set up. In a recent exercise for a waste management company, I noted that the company had set up KPIs for waste converted to energy as well as for waste recycled. They also had KPIs for waste sent to landfill, with and without biogas treatment. All of these potentially conflicted. A KPI of ‘maximising value from waste’ would have recognised that recycling was better than energy conversion and that energy conversion was better than landfill, etc. And that simple priority ranking would have led to a clearer focus.

The first principle of Effective KPIs is FOCUS

Years ago I was doing some AM work for BP Australia. BP had a very clear understanding of its KPI. It had one - the BP share price. This was kept in the forefront of everyone’s mind since it ran as a ticker tape in real time in the lifts, across the top of the doors into the lunch room and in the board room. It was simple, graphic, always visible. More? see SAM 317, pp4-6.