KPIs are likes jokes: if you have to explain them, they are not good!!!
What is the ultimate scope of KPIs? It is to simply translate your strategic intent into measurable goals and to airall the required resources to them – with laser-focus.
In my previous post, we talked about the number one fundamental feature of your KPIs: that they must be relevant. They have to provide the information you need to steer the business – when you need it.
But to accomplish to that, relevancy is not enough. That brings me to the second fundamental feature you must have.
Your KPIs have to be communicative. They have to fairly represent your business and be easily understood by your audience. You have to explain to your audience why you are measuring certain things, and then motivate people to contribute by showing the importance and benefits.
The communicability aspect is often left out or underestimated. Yet, any strategy or plan without awareness and execution remains just a conceptual exercise. This means in the business world: failure. Strategic plans are normally declared once or twice each year, while the KPIs are on the people’s’ desks every day. So, the communicability aspect is paramount on how people will understand the plan and then manage its execution.
When I refer to the “people” or “audience”, you must consider not only your team, but also all the stakeholders who could either support (or stall) your execution. For example, consider the units responsible for releasing specific budgets to fund your activities or units that can contribute with collateral activities, or even market influencers like analysts or investors.
So, when you’re defining a KPI, give it a communicability check by assessing the following two points:
- The “WOW!” factor – Is the KPI an exciting story? How well will it motivate people to contribute to the execution plan? Is it suitable to communicate and then to celebrate its success?
- The “WHAT?” factor – Is the KPI easy to understand? Would people easily connect the KPI with your overall plan? Can all your audience stakeholders make the same connection?
If your answer to A or B is “no” or “maybe”, you likely do not have a good KPI.
Remember, if you need to spend more than ten seconds to explain the why and how to manage a particular KPI, your narrative is not strong enough. Maybe you have a KPI at hand greatly suitable for a specific team or group of people but not for the entire organization.
Put your next KPI considerations to the proper tests.