This is why your KPIs fail

Every company uses Key Performance Indicators (KPIs). Or, rather: every organization has a few figures that it knows are important to track and steer by. KPIs are the most important measurements in an organization and give you an overview of how things stand at a glance. Yet many companies fail to work in a data-driven way with those KPIs, or to get their organization on board with using them. There can be several reasons for this. We list the main ones below.

#1 You have no goal

Okay, you probably do have a goal. But you haven't determined which KPI can tell you whether you are achieving it. Or, the other way around, how your KPI contributes to achieving the goal. Does your company have objectives at the strategic, tactical and operational level? Or in the long, medium and short term? Then when setting those objectives, it is a good idea to think about how you are going to measure how far along you are in achieving them. A KPI without a goal is not a KEY Performance Indicator.

#2 You measure what you already know

A popular misconception is that KPIs exist to monitor all aspects of your business operations. All processes, all departments, all areas. After all, every step is important, right? Undoubtedly. But for some processes you know they are running well even without looking at them. Or their outcome changes so rarely that there is no point in putting it in front of everyone every day. For example: employee satisfaction is essential for a well-run organization. But if you only measure it once a year, it is not very relevant to show the employee satisfaction score in your weekly dashboard.

#3 You measure too much

In many companies there is quite some confusion between having an overview and gaining insight. Many managers feel comfortable with broad reports that neatly list all aspects of the company or department side by side, line by line. This kind of overview report does indeed give you the full picture. But overview is not the same as insight. That long list doesn't tell you where to look. And why waste your time looking at information you are not going to act on anyway? A good KPI tells you when it is time for action, and where it needs to happen.

#4 Everyone is no one

Great, KPIs for the entire company. Management loves having everything neatly in view across the organization. But for an employee in an individual department or at an individual branch, such a KPI says nothing. Like objectives, KPIs have a hierarchy, and just as in your organization, the KPIs of individual departments and branches contribute to the KPIs of the entire company. Such a KPI cascade ensures that you can bring the relevance of your KPIs back to the people who have to contribute to the results.

#5 You've become stuck in your ways

We already wrote that KPIs must be and remain relevant. That also means regularly evaluating whether the KPIs you track are still the right ones. Because just as the objectives of your organization change regularly, so should your KPIs. When you formulate new goals for the next financial year or set a new strategic course, it is time to check whether your KPIs still fit. And so to stop focusing on the KPIs that no longer contribute to your goals, even if they may still be quite useful!

#6 You can't do anything about it

No, really. Or at least: if you do something about it, it can't be seen. Many KPIs are measured cumulatively over a financial year. And although that is quite useful for seeing where you stand at the end of the year, it gives you little opportunity to evaluate the effects of your actions. A good KPI measures on the same time scale as the process it aims to measure. Do you have a weekly operational process? Then your KPI shows the results on a weekly basis. That way you prevent attention from flagging during the year because the figures no longer change as a result of small improvements.

#7 You're not unique

Of course you are. And so is your organization! But then why do you measure the same as everyone else? In every management course you learn the standard measurements that tell you whether your company is doing well. And the accompanying KPIs. And if you stick to those KPIs, you will probably get quite far. But you are missing your own input. Because why did you start this company in the first place? What makes your company unique? That distinguishing factor is what should set your offering apart from the rest of the market. Do you measure whether you are doing that?

Data is everywhere. That is exactly why it is important to make clear choices about which data is truly valuable for your processes, objectives and vision. With the right data and the right KPIs, you really know where you stand, and where you are heading!

Getting started with your KPIs?

After reading this blog, do you think your KPIs need another close look? We can help you with that. Think of an extensive KPI Workshop, for example. Do you want to discover right away how you can improve your KPIs? Then take a look at our on-demand webinar 'The KPI Trap'.

Webinar: The KPI Trap