Article:

Key Performance Indicators

16 February 2018

Scott Way , Director, Industrial & Organisational Psychology |

‘Driving miss daisy or driving for performance?’

It wasn’t that long ago that trying to get data regarding the performance of a work unit or division was at best difficult but more often impossible. How things have changed. These days we are now drowning in data and information, so the critical issue is working out what factors are most ‘important’ to measure. Increasingly we are working with firms large and small to develop their ‘dash board’ of true Key Performance Indicators (KPIs). The following is a summary of some of the key lessons we have learned.

Understand what you currently measure

A useful starting point to developing your KPIs is to log and map those items that you currently measure and report on. This process will often highlight overlapping effort from one section to the next, measures that are out of date and reports that go nowhere. A client we are working with has over 800 measures that they regularly collect. An enormous amount of staff and management time goes into the collection, analysis and reporting of these measures. This simple audit exercise could save you time and money.

What should you measure?

Activity in the workplace can be measured at a range of points throughout a system such as at input, during the process, as an output or the outcome they produce. To overcome the resultant paralysis look at your strategic and/or business plan and identify your primary purpose (remember this is different to your function) and this will guide you to the right measures. Your measures need to be relevant to your short and long term goals. 

What gets measured gets done

The old adage is now more relevant than ever as it is important that the measurement drives the right sort of behaviour and effort. For example organisations invest considerable resources tracking absenteeism. Although the resultant data and information is important wouldn’t we be better off monitoring the degree employees are engaged and hence working to strengthen their connection to our firm. According to the research, if we did this then performance and quality would improve and absenteeism would fall. The right measures ensure appropriate action and better results.

What is a realistic standard?

The final piece of the puzzle is to consider what level of performance we are aiming for. We often see clients who want their measures to be perfect or in the top 10% when in fact they don’t actually know what ‘normal’ is for their business. For example, we worked with one company whose staff satisfaction was around 75%. Management of the firm were unhappy that it wasn’t in the vicinity of 85%. After tracking their staff satisfaction score over 5 years we determined that 75% was a good score and to pursue scores in the 80’s would require a disproportionate effort for only a marginal increase. Your measures need to be realistic for your business.

The bottom line with performance measures is that the process of identifying the ‘right measures’ cannot be driven by a formula or template as each organisation is different. By investing sufficient time in considered and thoughtful discussion and exploration over a number of years you will begin to identify the measures that really count for you and your business.

Please contact Scott Way or the BDO Industrial and Organisational Psychology team for more information on how they can improve your workplace.