In this article, we are going to discuss the art of setting KPI’s. We all know that KPI’s are the traditional way to measure a persons (and a businesses) performance however, are they a motivator or de-motivator? There is an Art to setting KPI’s
KPI’s come in a variety of different guises. They could be a budget (sales, expense or both), they can be call objectives, goals, and then there is the vanilla version known as Performance Indicators.
Now let’s stop for a minute and think about this. Part of the journey as a business manager is getting the best out of other people. The label we provide for something is extremely important. So which out of budgets, objectives, goals or Performance Indicators pushes the employees buttons and make them want to get out of bed in the morning? Which one will get you out of bed?
Tip 1. Make sure the label is motivating – or at least not de-motivating.
When “KPI’s” are set, are they set in conjunction with the person who is doing the work? I hope so.
A very good friend of mine was recently told by her “Bosses” that they are building a special room for her to do her work. Sounds creepy and no, she doesn’t need to be isolated due to some strange disease or erratic behaviour. Their intent was positive but because she wasn’t included in the initial discussion/decision, she was less than positive to the concept.
In any survey on why people leave their jobs, no consultation is always up there.
Tip 2. Make sure the person doing the work is included in the setting of the KPI’s
When I first started my recruitment career, I was given a bonus structure that you needed a Phd to understand. It was so complex that I used to read it night to help when insomnia set in. There was no way I could measure my own performance. There was no reporting, no feedback, nothing. I just had to wait until the end of the period to be told if I as going to make bonus, or not. So I stopped trying to measure it, which impacted my performance.
All the business journals say, if you measure it, you can improve it. That goes for employees as well.
KPI’s are not just for the management team. Build the KPI’s backwards with the person involved. That way they understand where the numbers have originated from.
Tip 3. provide constant feedback/reporting on performance v “KPI’s”
When I was first learning to drive, my father bought me a Volkswagen Beetle. It leaked oil, had a good amount of rust, and had that lovely musty smell that wafted out when you cracked a door. In hindsight, it was a heap, but at that time, to me it was a Ferrari.
My first driving lesson was on the side of one of the main highways in Southern Sydney because it had really wide gutter lanes (yes really, the main road out of Sydney). Dad’s commands were,
“Righto son, put your foot near the accelerator but don’t push on it yet, push down the clutch (yes it was a manual), put it in first gear, put the blinker [indicator] on, take off the hand-brake, and as you do that push down the accelerator whilst letting out the clutch and lowering the hand brake.
WHAT! I was still stuck on put your foot near the accelerator, where is that.
Tip 4. Limit the number of KPI’s to 3-4 max
As human beings, we cannot process too many chunks of new information (as per my first driving lesson above). We need to be eased into things. If you provide too much information, then the person will go into a trance-like state and will not hear anything you say(we’ve all been there where our eyes glaze over). The same goes for “KPI’s”.
Limit the number of measurement or “KPI’s” to 3-4 max, any more than that and it just becomes too hard for the person to process and keep track of.
Remember, KPI’s are not only there for the benefit of the organisation, they should be used to help your employees by providing instant feedback. There is nothing better than looking at a report and seeing your performance above the red line.
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