The Monthly “Performance Master” Summary: The Goals and Definition of KPIs June 2020

The well-defined measures and KPIs are important factors to map strategy & execution and manage performance effectively.

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 Goals and Definition of KPIs

The Goals for Defining and Assessing KPIs Digital businesses are dynamic, connected, interdependent, and hyper-competitive. Performance Management is no longer a siloed practice but a multidimensional management discipline by connecting all-important dots with multifaceted perspectives to close performance gaps, make continuous improvement, and improve organizational maturity.

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.

What’s the Real Purpose of Performance Indicators The goal of Performance Indicators is to identify if the adopted strategy, operation, and process, etc are working toward the objective. KPIs should be periodically reviewed and revised depending on what the firm's strategy is and what they are targeting. Are they entering a new market? Is their goal to achieve 25% higher profits than the last 6 months? Have they recently re-engineered their organizational structure? All such questions need to be kept in mind when deciding and revising the KPIs. And you define KPIs to monitor progress and performance. KPIs should be under constant review to determine if they actually provide the necessary insight into what is happening in order to make informed decisions. If the KPI is not providing the necessary insight, it needs to be refined. KPIs should change when business needs and environment changes.

Three Challenging Aspects of Performance Indicators You can only manage what you measure, Performance measures and management is not a simple task though, approximately there’re more than ten thousand KPIs around today, a bit overwhelming, let's not forget that there is a "K" in KPI for a reason: Why do you select the certain set of performance measures? What’re the most challenging aspects of working with KPIs? How to leverage the right set of performance indicators in measuring whether the organization is functioning well or dysfunctional? Which management metrics shall you apply to measure organizational overall health and maturity? Who and what tools are being applied to measure if an organization is healthy or sick? Proactive or reactive? Intelligent or dumb? Customer-centric or operational driven? And what are those challenging aspects of performance measurement?

The Principles to Define KPIs The well-defined measures and KPIs are important factors to map strategy & execution and manage performance effectively. However, selecting KPIs is the main challenge in establishing a performance management framework, what are the main principles to define KPIs?

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