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KPI frustration

We all use some sort of instrument to measure the performance of our organisation. We define the desired performance (objectives) and use KPI’s to see if we achieve these objectives. A lot of colleagues get pretty frustrated in this process. A common cause is the mixture of “actions” and “results” when we are formulating objectives and KPI’s. What is the difference and how can you get rid of it?

Actions disguised as objectives

Actions are not really objectives. They seem to be, because completing an action or finishing a project looks like an objective. How can we recognize actions disguised as objectives?

  • Actions have a start and a finish, maybe intermediate steps and often a “1/0” evaluation at the end. The action has been finished (1) or not (0).
  • Actions need a budget and time.
  • Actions are “realised”, not “achieved”.

Some examples of actions, disguised as objectives:

  • Install the new software on all the computers by the end of the year.
  • Give all managers training in time management.
  • Launch the summer marketing campaign from June until September.
  • Distribute the latest monthly budget report every 3rd working day of the month.

What’s wrong with measuring these objectives?

They don’t indicate whether you achieve what you want to achieve.

Of course, you can hope that the managers spend their time on the most important aspect of their job once they have gone through the time management training. And you are convinced that the marketing campaign will boost your sales. But that’s not what you measure.

These measures don’t offer any support. “To measure is to know”, but when you’re reporting finishing actions, you only know that the action has been finished. You don’t analyse the impact of the action. And that’s what you want to know: What is the impact of my action. And this kind of information you need while you are performing the action.

Defining desired results give you the objectives and KPI’s you need.

By defining the end result as your objective and KPI, you can measure how far you are away from the desired situation. And you can see whether you are getting closer and closer to that situation.

How do you recognise this kind of objectives?

  • hese KPI’s show the desired situation concerning an essential criterion like turnover, satisfaction, profit margin… The effect of an action is measured by the impact on this criterion.
  • There are several alternative levers, actions, approaches to get the desired result.
  • Every week or month you can see whether you are getting closer to the desired situation.
  • Results are “achieved”, not “realised“.

Some examples results-KPIs:

  • Reduce the lead time from delivery to invoicing by 50%
    (This can be done by installing the new software by the end of the year, but also by other actions.)
  • Improve employee satisfaction by 10%
    (Perhaps by giving a training in time management to the team leaders, or by other actions.)
  • Increase sales during the summer months by 15%
    (Possibly with the summer marketing campaign from June to September, or with other actions).
  • Respect the budget
    (Possibly by publishing the monthly budget report more quickly or by other actions).

How do you get rid of the mix of action objectives and results targets?

By using the EFQM model you can make a clear distinction between the two types and at the same time make the link between the two. You can ask the question what results we want to achieve with the actions we take. And vice-versa. What are we going to do to achieve the desired results?

How do we eliminate those frustration KPIs?

You probably have an extensive set of indicators or KPIs. What do we do with these?

1. First, list all "KPIs" that you need to report and formulate them as an objective. This can easily be done in tabular form, with a column for the person in charge, a column for the deadline, a column for the standard (the target set), a column for the current situation...

2. Then you classify the KPIs according to the EFQM domains. You split the action domains (= the action objectives) and the EFQM result domains (= the result objectives). This is best done in a workshop together with the management involved.

3. Then you start a first cleaning.

• Are there KPIs that do not really matter? Perhaps some indicators were interesting in the past, but are no longer relevant today?

• You also fill in the empty holes. Perhaps there are important results that we do not measure?

• You clarify the link between each KPI from the EFQM action domains with a KPI from the EFQM result domains and vice versa.

You analyse the result of this exercise. In case you have a KPI in an EFQM result domain, for which you do not see any actions, you may wonder whether achieving that result is based on good luck...

In case you have a KPI in an EFQM action domain, to which no result is linked, then you may wonder why you perform that action...

This step is best done in a workshop formula with the management involved.

4. You give the KPIs based on action domains back to the operational managers. They can safely follow up on that. You can then focus on the result objectives, the real strategic KPIs.

The EFQM-model helps you in many ways. One of them is the cleaning of your KPIs and eliminating the frustration linked to this work.