A key challenge with driving performance across an organization is the ability to deliver consistent information. Companies worldwide are spending huge amounts of time and money on data collection and storage capabilities just to get the truth about their enterprise operations and performance but still they cannot get one version of the truth.
Management are struggling to find a common ground to communicate performance metrics in a consistent manner. For example, if organizational leaders are to ask their employees to define the term Key Performance Indicator, chances are high that different definitions will come forth.
In order to effectively monitor their performance and ensure sustainable improvements, leaders must ensure there is consistency, both in terms of data and information and including the effective use of KPIs to drive consistency across the organization. They have to make sure that people are speaking the same language of performance measurement, management and improvement. People must use common and consistent data and grammar. When effectively used, both consistent data and grammar will lead to information consistency, better execution and ultimately better competitive advantage. Information consistency is therefore the crux of performance management.
High performing organizations have learnt that having consistent data leads to reporting reliably valid numbers and/or performance. Today, one of the greatest challenges leaders have to repeatedly deal with is information inconsistency. Many at times, leaders are being bombarded by different numbers or information from their reporting staff which then questions the credibility of the reported information and the authenticity of that information’s source. For example, one report from one analyst may report DSO of 30 days and another 50 days. Leaders are then faced with the challenge of choosing which report to trust.
How can you ensure that there is information consistency across the organization? Information consistency is reached when data can be trusted, when business logic reflects the definition and approach of the organization and when both data and business logic are shared across the organization. You might be wondering, what is business logic? Business logic is what defines your data, what people do with the data and how they use it to measure performance in their own business terms. For example, a general manager, based on his data collection and analysis, will have his definition of high-growth stores and will have this shared across the organization rather than keep it to himself/herself.
Trusted data alone is necessary but not sufficient to drive better performance. The equation is complete when business logic is brought into the picture. Developing both assets will help organizations focus their employees to work toward the same goals and objectives, reliably across the organization. As information overload continues to increase, today’s managers will continue to get swamped by useless information. As a result, organizations must learn to communicate information in a format that is quickly and easily understandable to make it more easily consumable. One way of doing so is making use of visual dashboards and scorecards. These provide greater visual indicators to quickly communicate the information of what is happening in the business.
When done well, Key Performance Indicators, also known as KPIs deliver organizational consistency because they can be trusted and shared across groups. KPIs help the organization express its strategy and objectives, define success, and hold individuals and teams accountable. With the ability to monitor KPIs and compare actual results with pre-defined targets, decision makers can take immediate actions to correct problems.
Leading organizations focus on only a few summary metrics that accurately represent their strategy, the performance against which determines their success. The right KPIs rest on trusted data and business logic and are linked across all levels of the organization to drive consistent execution. Rushing to develop dashboards and scorecards without taking into consideration information consistency requirements often results in resources and money being spent chasing wrong goals and objectives.
Concluding Thoughts: Even though organizations can more effectively monitor their business by implementing consistency in their data and information and in their use of KPIs, leaders need to understand that decisions are not based on structured data alone but also on unstructured data. They need to trust that their data and information, despite the source from which it comes or its form is trustworthy and consistent. Bear in mind that empowering employees with additional information that is not system generated but very useful in enabling them to execute better decisions is key to consistent execution. They will gain better context of the business situation and develop confidence in their decisions and the information that supports them which will ultimately lead to performance improvements.