The Seduction of KPI’s

How easily seduced are you?

I guess the answer depends on who or what is doing the seducing.

Let’s put this into context. I’m talking about the age old problem of becoming seduced by the task, at the expense of the end game, or the bigger picture.

"KPI" Tag Cloud Globe (key performance indicator data targets)The quality, or absence of key performance indicators can do that to you. We all deserve to know where we are heading, how our success will be measured, and what role we play in getting there.

I for one want to know (or at least be reminded) that I’m on the right track and focussing my effort on the things that matter, so having a quantifiable and regular measure to keep me on task is welcomed. This could be a self-imposed measure, one that is attached to the project, or one that comes from above. So long as it’s a “KEY” performance measure, I’m all for it.

nitpickingWhat really gets me distracted are those other type of KPI’s – I call them the “(K)Nit-Picky Indicators”. I’m sure you’ve experienced them. They usually manifest from over exuberant disciples of the “if you don’t measure it, you can’t manage it” philosophy. Don’t get me wrong, I’m all for measuring and managing, so long as we stick to measuring the right things, to the right degree, and using the results to inform our future actions.

If our KPI’s become a measure for measures sake, then we suffer “paralysis through analysis”. We become seduced by the task of measuring at the expense of focussing our effort on the key activities that matter.

Analysis-Paralysis3

Here’s an example – I’ve recently commenced a new job, working in a business improvement role, supporting our customers who are small to medium sized window fabricators. They purchase metal and hardware from us, glass and timber from others, apply their own labour, and convert those materials into windows and doors.

When it all boils down, our customers are adding value through the application of labour. They are selling “man hours”.  So for them, I suggest the following as appropriate KPI’s.

Financial viability measured by profitability and working capital.

Productivity measured by man hours sold versus man hours used.

Sustainability measured by staff and customer satisfaction levels.

Growth measured by the value of forward orders (dollars and man hours sold), work still to be quoted, and the conversion rate of those quotes into sales.

success graph 2

I’m sure you can think of plenty more measures, but therein lies the issue. You start to enter the realm of  “(k)nit-picking”. Let’s only focus on the key business drivers. If we get those right, the others should look after themselves. Our time is money, so we need to reach a good balance between working on the business, and in it. Our business needs us!

So….let’s continue to measure and manage the “key” things that matter, but hold strong and not become seduced, getting “nit-picky” or distracted with our efforts.

3 thoughts on “The Seduction of KPI’s

  1. Captain Australia February 18, 2016 / 8:18 pm

    Good read dad! We are working on what our KPIs are and should be at the moment!

    Liked by 1 person

  2. Phil February 18, 2016 / 8:42 pm

    Are your customers coming up with new things to make from the materials you sell them? I’d argue that this is a key component of sustainability – their own customers may be satisfied but these businesses also need to remain with or (preferably) ahead of demand.

    Liked by 1 person

    • Steve February 18, 2016 / 8:57 pm

      Thanks Phil – this is the crux of remaining ahead of the game through innovation. Creating value from a new idea. We continue to encourage it.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s