Why You Cant Tell Whats Going on from Your KPI âs? : Gary Jowers, Director at the Business Consultancy specialists, Applied Acumen provides his insight into why KPI âs arenât all they are cracked up to be.
It is a common misconception within business that the recording of performance detail should be done in order to facilitate good reporting of performance. Anyone with this belief should consider substituting the word âreportingâ with âunderstandingâ.
Only once there is understanding can an organisation then start to design deliverable actions to improve the performance.
The acronym âKPIâ can be far too broadly associated to almost any recorded measure where in reality, if you review a set of KPIâs with a critical eye, youâll probably find: some are indeed âKPIâsâ, some are âPIâsâ, some are âIâsâ, and others will simply be a set of numbers where you canât ‘see the wood for the trees’.
Now ask yourself – how easily can my team convert this information into action that will ensure optimum performance? If the answer isnât this is really quite insightful and points to specific actions that will deliver the desired outcome, you should consider reviewing and reworking your Management Control and Reporting System to get it.
Insight Measures should be designed with specific audiences in mind so that the knowledge provided relates directly to the recipientâs field of influence. For example, a daily report showing âthat between 08:00 and 10:00 yesterday line 7 was over staffed by 3 crew and only delivered 75% efficiencyâ is unlikely to be of much use to the CFO of a major corporation.
The team leader in charge of line 7 may, however, find this considerably more useful than the chart on the KPI board showing a slightly worsening trend in EBITDA (earnings before interest, tax, depreciation & amortisation) vs same period year on year when compared like for like.
With specific information regarding his or her immediate sphere of influence, this team leader will be able to plan and then execute actions that will directly contribute to improving the EBITDA trend, simply because they have information that leads to understanding that leads to action.
A good place to start on the journey from âKPIâsâ to âInsight Measuresâ is to actually engage with each level within your organisation to give them an understanding of what is possible and for you to learn how you can remove the barriers to their success.
When this is clear the team can work together to design a Management Control and Reporting System process with “level appropriate” measurement and action that ensures a route for escalation and a structure for support.
Remember, most people will want to do a good job and adopt good business practice. It’s the leader’s job to give them what they need in order to facilitate the right behaviours to deliver results.
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