Effective KPIs: 6 common problems in target setting and how to solve them

EFFECTIVE KPIS: 6 COMMON PROBLEMS IN

TARGET SETTING Based onhttp://www.bscdesigner.com/6-problems-in-target-setting.htm

By Levi Newman

PERFORMANCE MANAGEMENT IS BASED HEAVILY IN KPIS

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• It’s one of the most difficult tasks for any manager.

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• It’s a key factor in helping a small business grow into a big business.



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• It’s a key factor in helping a small business grow into a big business.

• It helps all businesses maintain structural integrity and efficiency.



CLEAR OBJECTIVES HELP TRACKING POSITIVE CHANGE

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6 problems in target setting



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6 PROBLEMS IN TARGET SETTING

1Goals based on the

wrong performance

measures



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2Goals are based

on past performance



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3 Unrealistic expectations



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4Placing all

expectations on financial goals



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5Using ineffective

data analysis programs



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6 No agreement on action plans



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• It goes without saying that without clearly defined KPIs you’re setting your employees and company up for failure.



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• It goes without saying that without clearly defined KPIs you’re setting your employees and company up for failure.

• That’s why managers should understand that goals that align with a company’s overall strategy benefit everyone equally.



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• The only way to reach these goals, other than what’s been mentioned, is to continually measure and analyze the results.



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• The only way to reach these goals, other than what’s been mentioned, is to continually measure and analyze the results.

• This critical link ensures that what they’re doing on a daily basis matches the needs of the company.



AN EMPLOYEE’S EXPECTATIONS MIRROR THE STRATEGIC GOALS OF A BUSINESS

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FOR BUSINESS

• Long-Term Vision -- to increase direct sales through demonstrator support



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FOR BUSINESS


• Current Objective -- put more demonstrators in front of potential customers through hosted parties and workshops



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FOR BUSINESS


• Current Objective -- put more demonstrators in front of potential customers through hosted parties and workshops

• Key Performance Indicator -- Measure amount of new parties hosted parallel to past analytics (volume and sales)



AN EXAMPLE

IN BSC DESIGNER

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DEMONSTRATOR GOALS FOR EMPLOYEE

• Hold two extra parties per 30 day period.



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DEMONSTRATOR GOALS FOR EMPLOYEE

• Hold two extra parties per 30 day period. • Increase sales by 10 percent per party hosted.



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KEY PERFORMANCE INDICATOR FOR EMPLOYEE

• Performance will be measured at the end of every month by immediate supervisor.

• Results will determine what can be done to improve, what’s working, and what can be done to improve areas for other employees.



HOW TO DEFINE EFFECTIVE KPIS

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• First understand the objectives of your company, the abilities of your employees, and the ways in which you can make a strategy into a reality.



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• That’s why you must first be able to answer what the overall vision for the future should look like, and how it can be accomplished.



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• That’s why you must first be able to answer what the overall vision for the future should look like, and how it can be accomplished.

• You have to remain flexible to the fact that objectives can and do change, so you don’t want to remain too static when it comes to developing a strategic direction.



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AN EMPLOYEE’S EXPECTATIONS MIRROR THE STRATEGIC GOALS

• Above all, you should remember that measuring these results is critical to long-term success.



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• Just because something is currently working, doesn’t mean it’ll will continue to work in the future.



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• Just because something is currently working, doesn’t mean it’ll will continue to work in the future.

• Being able to help your employees adapt to changes in the business climate will not only help you build trust within your workforce, it’ll ensure that they’re keeping up with the evolving strategy.



KPIS IN BSC DESIGNER

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• BSC Designer actually supports the Business Scorecard framework, which is consistently one of the most popular tools for executing a business strategy.



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• And not only is it a strategy map, BSC Designer can visualize business processes and KPIs and act as a base for strategy discussions, performance reviews, or as a presentation of your strategic ideas.



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• And not only is it a strategy map, BSC Designer can visualize business processes and KPIs and act as a base for strategy discussions, performance reviews, or as a presentation of your strategic ideas.

• In layman’s terms, it can see the “big picture” of your strategy, and give you the tools to measure your plans success.



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• BSC Designer can indicate which metrics adhere to your vision and strategy, and which are inconsequential to your success.



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• It can measure and give benchmarks along your goal’s path.



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• It can measure and give benchmarks along your goal’s path.

• It can even help you determine which metrics could be manipulated in a negative way, so that you can better define or monitor changing strategies.



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REINFORCE YOUR SYSTEM WITH REWARD KPIS

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• Standard setting is an important factor in a business’s success and an employee’s personal development, but is a reward system.



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• Standard setting is an important factor in a business’s success and an employee’s personal development, but is a reward system.

• Reinforce your employees’ efforts by established recognition practices that are directly tied to the original KPIs that were set.



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MORE ABOUT THE BALANCED SCORECARD

Find more insightful articles about the Balanced Scorecard in ”Articles” section at www.bscdesigner.com

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http://www.bscdesigner.com/balanced-scorecard-articles.htm



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THANK YOU!

Feel free to send us your questions using the contact form at www.bscdesigner.com



Effective KPIs: 6 common problems in target setting and how to solve them

Business

Transcript of Effective KPIs: 6 common problems in target setting and how to solve them