Do your KPIs work for you or do you work for your KPIs? Here is a practical test: when your KPIs work for you, they act as discussion triggers. Key performance indicators prompt you and your team to have the discussions necessary to solve problems. Those that work for you will help you be more proactive and accelerate your progress towards achieving your goals. Conversely, if you find yourself spending more time measuring and tracking KPIs without the process evolving into discussion and problem solving, you’re missing out on the enormous value that KPIs have to offer. Now you are working for your KPIs.
Together with my team, we have worked with thousands of executives to review their KPIs and determine how best utilize them for success. Here are six key lessons my team and I have gleaned over time that will help make your KPIs work for you to drive results.
Lesson 1: Use KPIs to drive results. Begin with the end in mind and focus on the business opportunity or problem at hand. Use a KPI to track your progress in solving that business problem.
When I first started working with ImageFIRST, they had the good idea of being successful by focusing on having the right team on board, but had no KPIs to track and drive this success. We identified some KPIs to help them achieve success, such as improving the number of A-players in the company. By focusing on this priority and tracking their progress towards it, they were able to grow their number of A-players by 27 percent in just two quarters.
Lesson 2: “We will be successful if…” I often ask clients to complete this sentence regarding their business opportunities and challenges. It seems so simple, yet when our clients use this technique, they’re able to gain clarity on what they need to achieve. Not being able to articulate success gives you a fuzzy target to shoot for, which lack clarity and can slow you down. Even worse, you might get there and realize that you were shooting at the wrong target! Clarity on what you want to achieve is paramount to developing KPIs that drive you towards your goals more effectively and efficiently.
Lesson 3: Use Leading Indicators. Find a leading indicator to maintain focus and help you gain leverage in achieving your goal. Leading indicators are the KPIs that can give you some insight as to what is about to happen: they are predictive rather than reactive. These indicators are future-focused and drive future performance. Rather than focusing on yesterday and what has already been achieved, it’s important to look to the future and focus on what will drive and create the results that you are looking to get.
In 2011, I was working with the head of the Office of School Improvement (OSI) for Chicago Public Schools. OSI focuses on turning around the lowest performing schools, inner city schools with high levels of violence and homelessness. While working with one in particular, I helped OSI focus on leading indicators, not just results indicators. We identified five total KPIs: grades and test scores (results) and attendance, misconduct and freshmen on track to graduate (leading). At end of OSI’s first year working with this school, average daily attendance had gone from 53 percent to 75 percent. The percentage of students who met or exceeded state proficiency exams, increased from only 2.5 to 5.1 percent after that first year. And the number of freshmen on track to graduate jumped from 30 percent to 70 percent.
Lesson 4: Use Red-Yellow-Green success criteria. For every KPI and priority, you should have clear success criteria in order to track your progress. When discussing progress, you need to be able to ask, “As compared to what?” Agreeing upon certain success criteria up front will give your team something to look back on and compare to in order to measure success.
By establishing leading indicators for the critical priorities of your annual and quarterly plan, and comparing these indicators to prior established success criteria, you will be able to quickly and easily determine if you are on track or if an adjustment needs to be made. Good success criteria can also help you quickly communicate your progress to the entire team.
A red-yellow-green scale is a simple approach to make these necessary comparisons, where green is the goal and red is failure. Yellow, or somewhere in between success and failure, will help you identify when you’re falling off-track and need to make adjustments before it’s too late to reach your goals. In addition, I like to have a “super green,” a stretch goal that surpasses your idea of success.
A red-yellow-green scale will not only help companies reach goals, but do so in a more efficient manner. One client of mine asked me for one thing he could do to get his team more focused, aligned and accountable. I got him to use this scale before every weekly meeting to stop discussing status and instead work on solutions to priorities or tasks that were falling off-track. Thanks to this scale, the CEO shared that they had cut 45 minutes out of their weekly executive meeting and actually solved problems every week. In addition, the team became more aligned and accountable by working together to solve problems.
Lesson 5: KPIs trigger and drive discussions. KPIs should launch discussions and problem solving opportunities that are necessary to achieve your goals. KPIs do not solve problems, they highlight problems and act as a jumping off point for conversations that will lead you to solve issues as they arise.
For example, White Lodging Hospitality Management knew guest satisfaction scores at its hotels were a key leading indicator for success. But with 170 hotels, it was a challenge to get everyone focused on it. We helped the hotels’ general managers get into a weekly rhythm of discussing critical KPIs – how they could improve them as well as sharing best practices. After noticing their guest satisfaction scores were slipping, a discussion during a weekly meeting helped them realize poor Internet performance was hurting these scores and were able to make improvements before it became a significant problem – and guest satisfaction scores went back up.
Lesson 6: Make critical adjustments. This is what accountability is all about – focusing your team on solving problems so that you can make the necessary adjustments in your execution and remain on track to achieve goals. I have never been met with an execution plan that did not need some adjustment along the way for the team to succeed. You should never feel the need to change your goals, instead change your execution plan to hit the goals you’ve set out to meet.
MobilityWorks, a national chain of certified wheelchair accessible van providers, used KPIs to make critical adjustments in their execution, and ultimately to achieve success by doing so. To achieve their ambitious sales goals, MobilityWorks worked to identify and focus on two leading indicator KPIs to drive their sales results: sales appointments and the number of outbound calls.
Early in the year, the sales appointments KPI turned yellow, indicating that they were off-track. As executives discussed and explored the source of this struggle, they realized that their sales teams did not have enough resources to make the necessary number of outbound calls in order to get the number of sales appointments they were looking to get. The critical adjustment they made was to develop a centralized call center to boost up the number of outbound calls.
The company then set an aggressive priority to make 34,000 outbound calls in a single quarter. By tracking this goal on their KPI dashboard each week, MobilityWorks was able to achieve its revenue and profit targets for the year.
When you are stuck on a problem, use these simple tools to make your KPIs work for you. Determine and utilize leading indicator KPIs to drive results and hold your teams accountable to the red-yellow-green success criteria set forth. Discuss and debate different solutions and make the adjustment in your execution as necessary. With these tips, no goal is too ambitious to achieve.