I’ve seen many organizations make the cultural mistake of either collapsing goals and key performance indicators (KPIs), or focusing on just one.
You need both. If you just have goals, you’re missing daily motivating momentum and focus. If you have only key performance indicators, you’re missing inspiring strategic progress. Goals are aspirational, strategically taking on inspiring opportunities or problem solving breakout challenges. KPIs measure the health and success of each position through weekly, and in same cases daily, metrics.
For example, in a bakery goals could include:
Purchase a new oven by March 31st
Add cinnamon raisin bread to our line by October 1st
Open a new location by July 4th of next year
While KPIs could include:
Ratio of number of loaves baked to number sold
Scrap ratio – number of loaves burned or rejected
Batch cycle time
Hopefully you’re well on your way to making progress on your quarterly goals – having funneled clarity from big picture organizational goals to team goals to individual goals. If you’re not well on your way, don’t despair, make a goal to get it done 😉
(If you need help around defining goals, check out The 4 Disciplines of Execution. This book is an excellent resource for goal-setting. Or consider the Gazelle’s One-Page Business Plan.)
This culture tip focuses on developing KPIs for each position in your organization. KPIs are one of the many tools that support an extraordinary workplace culture. Think about it–as an employee it’s incredibly empowering to know both where to focus my efforts and where I stand in relationship to expectations. Similar to goals, KPIs should funnel from the organization to the team to each position.
How to Create Meaningful KPIs:
Should answer – how do we know this position (vs person) is accomplishing the mission critical work and is being successful?
Set weekly measurable expectations for each performance indicator. What reasonable number or range would indicate success and healthy on pace progress? Sometimes the KPI is measured by a simple yes or no.
Employees have to have (almost) complete control over the number being measured – in some cases you may need to focus on LEAD indicators (actions, efforts, number of calls) rather than LAG indicators (results).
The KPI has to be KEY. There should be no more than three KPIs for each position. When you find yourself wanting to create four, ask which of these is truly the END measurement?
Have employees self-report their numbers each week in a shared spreadsheet. This simple dashboard should quickly reflect the health of the organization. You may even want to color code measurements red/yellow/green. High-five greens. Seek to understand and address the challenges behind yellow or red. It’s not enough to measure, you have to witness and care about what you measure and then align next steps.
This is an ongoing process. If you find your dashboard is primarily green, but the organization is struggling, reevaluate what you’re measuring. Uncover more pertinent key indicators and replace the prior ones.