Friday, May 29, 2020

The Monthly “Performance Master” Summary: The KPI Promises and Pitfalls May 2020

KPIs must be aligned with the corporate goals and objectives - but should also be directly relevant to the activities that businesses are attempting to manage (process execution). 

Corporate Performance Management is a management control from strategy to the shop floor. "If you can't measure, you can't manage," legendary management guru Peter Drucker once asserted.

Managing performance means understanding results, setting metrics, fixing plans, and making decisions to ensure it happens. It takes multifaceted approaches from multidimensional perspectives to unlock digital performance and catalyze change.

The KPI Promises and Pitfalls

The KPI Promises & Pitfalls You can only manage what you measure, defining the right set of Key Performance Indicators is important for managing projects or business effectively, and measuring KPIs to keep track of progress makes a certain level of promise for success. However, there are also big pitfalls when selecting or measuring the wrong KPIs. What is a good process to determine the right KPIs, and what is the process to change it when they are no longer relevant?

What are the Goals to Choose the Right KPIs Choosing the right KPIs is crucial. The challenge is that people have their own take on KPIs. KPIs must be aligned with the corporate goals and objectives - but should also be directly relevant to the activities that businesses are attempting to manage (process execution). If you only select KPIs based on outcomes without managing the processes that contribute to 'good and bad performance', you will continue to be out of control. However, it is equally dangerous when you focus on 'process execution' without understanding if the process is delivering the desired 'outcomes'. Perhaps the greatest challenges are not about 'data management' - but 'relationship management' within the organizations.

Three Challenging Aspects of KPIs You can only manage what you measure, metrics & KPI (Key Performance Indicator) management is not a simple task though, approximately there’re 17, 000 KPIs around today, a bit overwhelming, let's not forget that there is a "K" in KPI for a reason, what’re the most challenging aspects of working with KPIs?

Strategic KPIs vs. Operational KPIs KPIs are indicators to identify if the adopted strategy, operation, and process, etc are working toward the objective. As such, you don't "adopt" a KPI to "achieve an outcome," you adopt a strategy or operational workflow to achieve the outcome, and you define KPIs to monitor the progress and performance. That’s the name KPI –Key Performance Indicators stand for. The provocative question is: is it possible to link operational KPI's to strategic ones to reflect and track the overall progress in achieving the strategic goals?

CIO as Chief Improvement Officer: How to Connect the Dots between PI vs. KPI Performance Indicators (PI) measure progress across a broad range of intended outcomes (goals, objectives, even outputs) and are used at all levels of the organization. Key Performance Indicators can be a subset of PIs, or they can roll several PIs into one (an index). KPIs are used to measure the overall progress of the organization toward its mission and primary goals -- they are high-level indicators that everyone in the organization can relate to. KPIs are often used to create corporate dashboards; they can be used in PR documents and other reporting tools to present an organization's outcomes to the public.

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