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How Useful and Usable Are Your KPIs?

by Stacey Barr, Performance Management Specialist, Stacey Barr Pty LtdThursday, March 11, 2010

DOES YOUR MEASURE HAVE A CLEAR PURPOSE?

You know the reason why the measure exists and this reason is related to either tracking or improving your business success. This means the measure is related to either a strategic, tactical or operational goal or objective. If it isn’t, ask yourself: “what would happen if I didn’t measure this?”

DOES YOUR MEASURE DRIVE THE RIGHT BEHAVIOUR?

What message does the measure send to people in your business about how to behave? Does it encourage “performance improving” behaviour, or does it encourage “sweep things under the mat” or “fudge the figures” behaviour? If it encourages the wrong kind of behaviour, check if you are measuring the right thing in the right way.

DOES YOUR MEASURE HELP YOU UNDERSTAND AND MANAGE VARIATION, NOT JUST AVERAGES?

If your measure is showing only this-month-to-budget or this-month-to-last-month type comparisons, you are missing out on a lot of valuable (in fact, more valuable) information about performance. You need to see the historic patterns in performance over time (that is, patterns of variation) if you are going to be able to pick up real trends and changes. Point to point comparisons are not very informative – if you have the historic data, use it to show you the trends and patterns.

DOES YOUR MEASURE HAVE SUFFICIENT INTEGRITY?

How much integrity do you need the measure to have? If you said “100%”, it’s not a good answer – nothing is that perfect, or that necessary. How much integrity does the measure actually have? If there is a gap, then your data collection, data analysis or graphing processes may need a review.

DOES YOUR MEASURE ALIGN WITH PROCESSES?

If your tactical and operational (not necessarily strategic) measures aren’t clearly and directly linked to a business process outcome, output or process activity, then deciding what to do to improve performance is going to be hit-and-miss.

DOES YOUR MEASURE HAVE NO UNMANAGEABLE UNINTENDED CONSEQUENCES?

If you managed to improve the area of performance the measure tracks, would this cause negative consequences elsewhere in your business? If so, either rethink the measure or make sure you establish a measure of the unintended consequence to balance it. For example, an unintended consequence of reducing cycle time could be increased risk of accidents or errors.

DOES YOUR MEASURE GET USED IN DECISION MAKING?

If the measure is never used to drive business improvement, then what is its purpose as a performance measure? If it does have a clear purpose, then why isn’t it used? Is it due to any of the above criteria? If not, it might be a case of unclear ownership – who is accountable for the measure?

About the author:

Stacey Barr is a specialist in organisational performance measurement, helping corporate planners, improvement officers, business analysts and performance measurement officers confidently facilitate their organisation to create and use meaningful performance measures with lots of buy-in.
Sign up for Stacey’s free email tips at www.staceybarr.com/202tips.html and receive a complimentary copy of her renowned e-book “202 Tips for Performance Measurement”.

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