The most popular topic throughout our blog and social media, and what I’m most frequently asked about at speaking events or when meeting other business professionals – is always Key Performance Indicators (KPIs). Getting started with measuring KPIs is difficult enough, but then it is very easy to veer off track.
Your KPIs need to work for you. They need to be leading indicators to tell when you are doing well or need to make an adjustment. Your team should look forward to reviewing them each week, and if not, it may be time to work on your KPIs to get back on track. If your KPIs are not working for you, it means you are working for them , a.k.a. wasting your precious time and energy measuring, without receiving the benefits.
Here are some common pitfalls:
- Measuring too many KPIs
- Not setting the right success criteria
- Focusing only on financial KPIs
- Not making your KPI dashboards public
- Not changing your KPIs as your business changes
- Not taking action when your KPIs trigger the need to take action and solve problems
So, you’ve made a few of these mistakes. Not to worry, follow my 4-step process to audit your KPIs and get back on track.
Step 1: Restate your purpose.
- What business problem are you trying to solve? Do you still have this issue to solve?
- What actions are triggered by this KPI when it registers red or yellow?
- What are you measuring? And is it still the right KPI to measure to solve this problem?
Step 2: Decide which KPIs to keep and which to lose.
- If you are measuring 12+ KPIs, it’s time to clean your KPI closet. I recommend 10-12 KPIs for the executive team. Less is more in this case. Fewer KPIs lead to more focus that leads to actions being taken.
- If it’s an important KPI, but it’s not giving you the information you need, consider changing the success criteria. Are you setting an unrealistic goal or is it too easy to hit?
Tip: Instead of measuring everything that moves, measure the things that you want to move.
Step 3: Add new KPIs.
- What’s new in your business? Any new opportunities you want to stay on top of?
- Your KPI list should include a good mix of both leading and lagging indicators. Are you tracking both?
Step 4: Educate, Share and Set Expectations.
- Do not assume that your team will know how to react to the measurements of these KPIs.
- Educate them on the purpose and how to react when these KPIs are red or yellow.
It’s not the number of KPIs you measure that’s important. It’s the actions these KPIs prompt you to take to get ahead of the game that is important.
And finally, remember that for KPIs, Less = more focus = more things done = stronger results!