KPI 101

 

It is just a small step from measuring your performance to the much more dynamic process of driving up performance levels across your business. This involves setting performance targets in the key areas that drive your business performance. Setting targets can be a helpful method to challenge the organization or a specific service area to do better.

Performance targets are a powerful management tool that can help you deliver the kind of strategic changes that many growing businesses need to make. The top-level objectives of your strategic plan can be implemented through departmental goals, and setting targets based on KPIs is an ideal way of doing this. Targets can provide a forward looking perspective and information, not only on the level of activity of a service, but also on whether objectives are being achieved.

 

Targets could be based on:

• Political  priorities
• Community and customer priorities or concerns
• Previous performance
• Internal comparison with other units within the organization
• External comparison to identify good practice with public and private organizations

 

Targets can be:

• All the time targets, which promise the level of service to be delivered all the time
• Percentage achievement targets, which are commitments to achieve a stated level of performance against the standard
• Qualitative targets, which are descriptive targets of what level of service to expect
• Time-bound targets, constituting a one off promise for a certain area
• National, regional or family targets, which are set for a demographic and/or service area.

 

Setting SMART targets

It is crucial that the targets are realistic but at the same time challenging for the organization and its individuals. The targets in other words should be SMART that is Specific, Measurable, Achievable, Relevant and Timed.

• Using KPIs ensures your targets will meet the first two criteria, as all KPIs should, by definition, be specific and measurable.
• Achievable - you need to set ambitious targets that will motivate and inspire your employees, but if you set the bar too high you risk Time-bound deflating and discouraging them instead.
• Realistic - setting realistic targets means being fair on the people who will have to reach them. Make sure you only ask for performance improvements in areas that your staff can actually influence.
• - people's progress towards a goal will be more rapid if they have a clear sense of the deadlines against which their progress will be assessed.

 

Finally, it should be clear what happens if targets are not achieved. If we have a "stick-based" approach, we may not get the benefit of KPIs which is to open up communication and jointly drive improvement. We should have a clear idea as to why scores are low and look at how to best jointly manage and resolve the problems. Shooting first and asking questions later does not help us improve.