Slideshow How to Select Relevant KPIs

  • February 09 2012, 7:01pm EST
8 Images Total

Identify Target Audiences

It is especially important to find teams and individuals across the organization who have the ability to directly impact the health of the business. These are usually not the leaders and strategists, but delivery folks executing on and managing the front lines. To gain initial momentum, it can be helpful to first identify specific individuals and then extrapolate cross-functional audience types from this list.

Think Ethnography

Take a holistic approach to studying your people – observing them in their work environment to better appreciate their needs, motivations, goals, desires, constraints and obstacles. Use research methods such as participant observation and contextual inquiry to gain these insights. If these methods are not feasible, interviews and questionnaires can suffice.

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Find Business Rhythms

People and businesses have their schedules and routines. Once key individuals and teams have been identified, determine the patterns and frequency of their activities. The SMART criteria tell us that good KPIs are also timebound, so select metrics that align with these business rhythms.

Perform Affinity Diagramming

An important part of selecting KPIs is understanding where individual goals and activities are not aligned with corporate goals and strategy. Affinity diagramming (also known as the KJ method) is an effective technique for efficiently making sense of large quantities of qualitative data and unstructured content and is even more effective when executed as a team.

Conduct Gap Analysis

To move forward, it is crucial that we understand the current state. Use gap analysis to uncover misalignment between company and personal goals that can impact effective KPI selection. Another organization technique, mental modeling, builds upon the affinity diagramming strategy and clearly identifies gaps to a visual representation of its inputs.

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Consider Domain of Control

Select KPIs that fall within the actionable domain of key personnel. KPIs should be easy to calculate, clearly defined and focused in purpose. Also, they should tell a very rich story in that they take into consideration a comparable entity (versus budget, forecast, last year, variance to average, etc.). Selecting KPIs using this criteria increases clarity, focus, determination and motivation in the individual.

Align Compensation

This is the ultimate strategy to make KPIs relevant for an individual and is simple but effective. Identify metrics that are tied to the compensation (bonus or base) for an individual. If those metrics are not aligned with corporate goals or strategy, assess and adjust the compensation model as necessary. Ultimately, it can be very difficult to consistently motivate individuals to work to improve KPIs when they are not rewarded for doing so.

For more on KPI strategy

For a full article on KPI methods from author Aaron Hursman, click here. All images were used with permission from ThinkStock.