As any sports fan will tell you, success doesn’t come from having just one- or two-star players, but from how effectively the team works together. Organisations are more complex, they literally have more than one goal! But the principles are the same.
How do we get each department or team focused on the right KPIs to ensure the organisation wins?
Our previous article emphasised the significance of establishing KPIs that are in line with your organisation’s strategic objectives and highlighted the difficulties in selecting the right KPI. In this article, we will delve into the complexities of implementing KPIs throughout the entire organisation.
Hitting the target, but missing the point
We all know the apocryphal stories of one department achieving a KPI target at the expense of others. For instance, the procurement team may purchase a substandard part to save costs and meet their savings KPI. However, this leads to more frequent failures, increasing the whole life cost of operations. A classic case of hitting the target but missing the point.
As leaders, when we are setting KPIs across our organisation and teams we need to consider the consequences and ask ‘are the KPIs aligned across teams and will they drive the right behaviours and outcomes we aspire to achieve as an organisation?’.
It’s more than disaggregation
In our view setting well-aligned KPIs is about the thoughtful cascade of leadership objectives throughout an organisation.
It’s not unusual to see the direct disaggregation of a leadership KPI directly to frontline teams. For example, absence levels are monitored by senior leaders but should we use the same measures for frontline teams?
One of the consequences of disaggregating a measure like absence is it can drive reactive behaviours. An organisation I worked with spent a lot of time and effort getting frontline managers focused on improving this metric.
Frontline managers were investing a large amount of time in case reviews, occupational health referrals, home visits, return-to-work interviews etc. There was no focus on prevention, there focus was entirely reactive.
Understanding the drivers of absence and developing a KPI which measures how well the organisation is managing those preventative actions would have a greater impact on absence levels. Thus, reduce management time spent on getting people back to work after the event. Prevention is far better than the cure.
Thinking about the drivers of performance objectives throughout the organisation is critical to setting the right KPI at the right level. Using systematic approaches like driver trees can identify the causal links and help define KPIs.
While the simplest way to set KPIs is a direct cascade, it’s unlikely to harness the collective power of your teams to focus on different but aligned activities that collectively drive performance.
Using KPIs to changing behaviours
Developing the right KPIs is complex. It’s important to ensure alignment throughout the organisation to drive the right organisational behaviour and minimise team friction.
Have you reviewed KPI alignment with your colleagues this year? Or assessed how well leadership KPIs have been cascaded (and not just disaggregated) through the organisation? If not, there may be a performance gain hidden in the metrics.