Each KPI and Priority should have clearly defined success criteria. What is success? What is failure? Discuss, debate and agree as a team.
Sounds simple, right?
For many teams, setting Red-Yellow-Green (RYG) business success criteria is a challenge. It doesn't come easily for everyone. Fortunately, it's a skill that can be learned.
First and foremost, success criteria should be SMART (specific, measurable, attainable, realistic & timely) red yellow green performance indicators are critical to hitting your goals and targets. Below are a few examples of using SMART red yellow green performance indicators in the real world.
1. Leave no performance metrics up to interpretation.
A properly selected Green success criteria should leave no room for argument or nuance. It is what it is. Example: The KPI is “Employee Health.” An effective Green would be a survey result score or a retention number. An ineffective Green would be "Employees are happy."
2. Performance metrics doesn't always mean a number.
There are generally two ways to RYG a Priority: tactically or with a number. For tactical priorities, sometimes Green describes an outcome. You should know when you achieve it. Example: The Priority is "Develop an M&A Strategy." An effective Green would be "Strategy defined and approved by the board" by the due date.
3. Try to avoid using dates.
Priorities, by definition, already have a due date. KPIs also have a time parameter defined; sometimes it’s understood as a quarterly number or the description identifies it as a weekly or monthly number. Green has to define a result - using dates does not align a team on an expectation. Example: The Priority is "Hire a new VP of Sales" and the due date is March 31. An ineffective Green would be “3/31.” An effective Green would be "Hired, trained and operating independently" by the due date of 3/31.
4. KPIs, by definition, are metrics.
The RYG success criteria for KPIs are always defined by a number. Example: The KPI is “Sales Revenue.” An effective Green is “$24M.”
5. Red Yellow Green success criteria should describe and drive results.
Consider this example: the Priority is "Complete 2 marketing webinars." Instead of saying Green is “2 webinars completed,” base it on results. Green is “100 leads generated.” Simply completing the webinars won't drive sales. Completing a webinar that nets 100 leads will impact results.
6. Frame RYG criteria within the quarter time frame.
Even if a priority will take longer than a quarter, define success and failure in terms of a 13 week race. How far do you need to get by the end of this quarter? Performance reporting should be based on your progress during the set time frame.
7. Make sure Green makes sense.
Consider all the steps needed, or sales needed, to achieve Green on a Priority or KPI. Is your Green goal realistic? Can it be done in the time frame you've defined? Setting unrealistic goals will kill morale and execution.
8. Is the team aligned on RYG success criteria?
RYG criteria should be set as a team during your planning session. There should be no surprises and everyone should have input and agree on the criteria. You don't want to find out in your Week 8 Weekly Meeting that you and your VP of Sales weren't on the same page on an expectation. RYG business examples will help you set the correct Red, Yellow, Green SMART success criteria.
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This blog was originally published Mon, May 8, 2017 @ 09:00 AM and has been updated on April 30, 2019 by the publisher.