Why KPIs Alone Do Not Drive Results

No matter how small or big a company is, all companies aspire to achieve superior business performance that beats the odds. Meeting after meeting, they map out a road map for achieving this success. KPIs are brainstormed and a select critical few to focus on defined for monitoring.

Designed to track performance against targets and drive results, KPIs help managers and executives establish whether performance is improving, deteriorating or remaining stagnant. This then allows them to take corrective action where necessary.

The problem we see in many companies today is lack of KPIs ownership and accountability. Yes, they are tracking the right metrics but the process ends there. There is no individual who is responsible for the performance of that metric.

KPIs Need People Ownership and Accountability

KPIs alone do not drive results, they need people ownership and accountability. Ownership is key to ensuring successful adoption of performance management across the organization. Lack of buy-in and engagement makes it difficult for employees to manage their performance.

On the other hand, accountability ensures that individuals, teams and management are held responsible for their performance against specific initiatives. Having said this, you need to empower your employees to drive performance and not micromanage them.

If employees are not given autonomy to manage their performance, in the event of faltering results, they will most often enter into a fight-or-flight mode which by default is counterproductive.

When it is clear who owns the results, management can make follow-ups with responsible individuals or teams, provide visibility of how they are performing and how their performance is impacting the top-level business metrics. This helps create awareness of any performance problems that need addressing at the earliest convenience.

One of the reasons why companies are facing KPIs ownership problems is because of a lack of shared understanding of the meaning of performance measurement. So often, performance measurement is associated with punishment and rewards. Hit the targets and you get rewarded. Miss the targets and you get punished.

This shouldn’t be the case. Rather, performance measurement should act as an improvement tool that propels the organization forward.

A Culture Focused on Performance is Needed

In order to drive company-wide adoption and buy-in, organizations must develop a culture of performance. What do I mean by this? All employees must go through training on “what is performance management?” and how to do it.

This is key to ensuring that everyone speaks the same language concerning KPIs and performance improvement. It is imperative that employees have a shared understanding of how performance is managed and communicated, both at individual and team level, and how this influences overall objectives.

In addition to training opportunities, organizations should also provide tools that enable employees to embrace this culture. The environment should be supportive of this cultural shift, otherwise all efforts will end up being fruitless.

Improving corporate performance starts with individuals and entails a cultural and mental shift. Thus, employees should be able to see the cause-and-effect relationship between their actions, business performance and rewards. One way of creating this awareness involves identifying performance champions within the organization and granting them the responsibility and resources required for transforming the culture.

For example, performance champions play a critical role of continuously reinforcing the right habits in one another so that performance improvement is on their minds all the time. They also help explain the significance and value of using KPIs or metrics of success in their everyday work.

Once individuals and teams have a clearer understanding of the “why” part of KPIs, it completely changes the way they view performance management and also the importance they grant to the process.

Execution is Key to Business Performance Improvement

Although KPIs provide focus and act as a road map for strategic success, we should not ignore the important role people play in this entire process. There is a huge difference between tracking performance and tacking action. Performance management goes beyond monitoring of key metrics.

To be effective and enable better decision making, KPIs need to be evaluated against a target. This helps establish whether the outcome is acceptable or not, at the same time allowing corrective action to be taken.

If there is no pre-defined target to measure actual results against, how can we expect decision makers to take immediate remedial actions? Positive actions and results are a product of consistent, relevant and reliable information being shared across the organization.

Despite more and more data being tracked, reported and communicated in today’s analytics world, many decision makers are still lacking the necessary business insights to improve performance. They are repeatedly receiving insignificant information, which unfortunately, they are unable to act upon to drive business performance.

Once information is consistent, relevant, reliable and communicated throughout the organization, it can be acted upon. It is therefore important to make sure that the information that is being communicated and presented is in a format that is quickly and easily understandable and consumable.

You can have well-defined KPIs but what matters most are not the indicators or how many you have, but what your employees and teams do with these indicators.