“One of the overarching problems that caused performance management efforts to fail in 2013 was corporations’ lack of focus,” according to Senior Strategy Consultant, Brian Harris. The two major ways companies lack focus is by either tracking the incorrect number of metrics (too many or too few) or simply collecting the wrong metrics.
While the number of Key Performance Indicators (KPIs) varies depending on the size and industry of the company, most global corporations track between 12 and 20 metrics. Using this range as a guideline helps eliminate wasting time and financial resources spent on gathering too many metrics, while providing enough information to analyze the performance of the organization or initiative at hand. The number of KPIs may adjust slightly as your program develops and modernizes over time.
Management should focus on the metrics that best encourage the desired behaviors they want to see when prioritizing KPIs. When corporations derail from their overall business strategy, it becomes unclear exactly how the organization is performing. The predictability quality of a KPI depends on how well a corporation’s strategy is aligned to the metrics the performance indicator is trying to measure.
Once your KPIs are in place, take the selected vital few KPIs aligned with the strategy and benchmark performance against the industry to set targets. These targets should be visible to all levels of the organization to create accountability. When targets are transparent, staff members are able to compare their departmental and personal progress with corporate exceptions.
Following these precautions and best practices will help identify bottlenecks to ensure your performance stays on track. To learn Brian Harris’s 4 other KPI common mistakes, watch his webcast on “Top 5 Performance Management Pitfalls”.