There is a great feeling of accomplishment when you or your management team has crafted a powerful set of KPIs to drive and steer your business unit or department towards its goals. But, it can also be very disappointing if you find that one year down the line, after implementing your shiny new KPIs, performance has not improved and your KPIs have failed to deliver behaviour change and definitive action. So, what should you do if your KPIs fail? There are several things you can and should do, and I have outlined these below.
1. Check to see if your goals are cascading down the organization effectively
Let’s start with the basics: your corporate goals can look attractive in the boardroom, but when they cascade down into the organization, are they becoming lost in translation? Have they lost relevance, realism or a sense of meaning by the time they reach the people on the ground?
If this is the case, this lack of meaningfulness about one’s goals in an organization could be a reason for the failure of your KPI initiative.
- Research presented in the Ivy League Business Journal shows that a sense of meaningfulness about one’s goals is one of the top 4 motivators of staff, even more motivational than money.
So, take a look at some of your staff performance appraisals documents or speak to staff and see if they are working to fulfil corporate aligned goals. But, also see if they understand why these goals are important to the business overall.
See if there is a sense of meaningfulness. Don’t be surprised to find that there isn’t, as research by David Norton and Robert Kaplan of the Balanced Scorecard Consortium shows that just 5% of the workforce on average understands their company’s strategy.
Facilitate cascading with BSC Designer
If you do find out there is a disconnect somewhere between staff behaviour and corporate goals, you’ll want to improve your strategy cascade and KPI implementation. And a simple way to do this is to use a computerised balanced scorecard and KPI management software tool like BSC Designer.
This tool automates or at least heavily facilitates the normally labour intensive KPI cascade process, making it easier to implement and much more likely that your goals will be cascaded consistently and company-wide. BSC Designer allows users to break goals down into sub-goals, KPIs and sub KPIs and then most importantly assign them to individuals across the organization – at the click of the button.
Download 30-day trial version of BSC Designer and try these features.
There is no doubt that using some kind of partially automated KPI management system should improve your corporate strategy cascade and KPI visibility to the troops on the ground. Learn more about cascading theory and practice.
2. Review staff performance on a quarterly basis
Many organizations sleep-walk through their appraisal process, and, as a result, are wedded to the annual performance appraisal and objective review process. But, organizations need to open their eyes as this annual appraisal performance review process is undermining the effective implementation of your KPIs across the organization.
Because, research from Bersin by Deloitte shows that companies who set staff performance goals quarterly generate 31% greater returns from their performance review process than those organizations who appraise annually, and organizations that review performance monthly get even greater results.
So, if you are finding that your KPIs are not delivering definitive action, a key corrective action to take could be to move from an annual to, a quarterly or even monthly reviews of performance against objectives.
Schedule regular performance reviews with BSC Designer
This will of course create a lot of data and labour and this is why you should use an electronic appraisal system and an electronic KPI Management system so you can manage it all effortlessly.
Download 30-day trial version of BSC Designer and try setting update interval.
In fact, BSC Designer has an excellent, complimentary feature called an ‘update interval’, which means you can assign a person and update interval (as shown in the image below), to any KPI and they will be reminded each month or quarter, (or whatever interval you set), that they need to update the KPI’s actual performance data. This will help to build momentum for and reinforce the need for regular staff appraisals.
3. Use SMART goals
A key area in which KPI implementation projects fail is down to the way in which performance goals are assigned to staff. Often managers are not trained to set goals and they assign their staff very vague objectives that don’t focus and therefore don’t galvanize staff. That’s why organizations should be coaching their managers on how to set SMART goals:
Doing this should increase the focus, motivation and strategic alignment of your staff to company KPIs.
4. Switch From SMART to HARD Goals?
If your managers are already using SMART goals, but they are not working effectively, it could be time for a change. Research from Leadership IQ has found that a potentially more effective way to improve the corporate goal driven focus of your staff is to use HARD goals. HARD goals should meet the following criteria in addition to or in place of SMART criteria:
- Heartfelt – an emotional attachment to your goal.
- Animated – goals need to be supported by a vision.
- Required – feels like you need to start acting right now.
- Difficult – goals outside of your comfort zone.
By using HARD goals in your organization you can enhance the goal driven behaviour of staff, and increase the company wide implementation of your KPIs.
5. Introduce CLEAR goals
If SMART or HARD goals aren’t working for you, perhaps you can try CLEAR goals, which according to a inc.com article are more suited to the faster, more agile environment most business operate in. CLEAR stands for:
- Collaborative – it involves your team and encourage them to work together.
- Limited – it is not infinite and is limited in time.
- Emotional – your team is connected to the goal emotionally.
- Appreciable – brake it down into smaller pieces.
- Refinable – when you have new inputs you can and should update your goal.
As you can see for a corporate balanced scored card and KPI programme to work organizations need to focus not just on design, but also on day-to-day implementation – and this article should help you bridge the gap between the two.
- ^ The Four Intrinsic Rewards That Drive Employee Engagement, November / December 2009, Ivey Business Journal.
- ^ Cascading Corporate Goals: The Missing Link in Creating Performance-Driven Organizations, Mark A. Stiffler, 2004, BusinessFinance.
- ^ Time to Scrap Performance Appraisals? 2013, Josh Bersin, Forbes Contributor.
- ^ Why do so many goals end up in failure? Lyn Adler, 2012, Leadership IQ’s.
- ^ Forget SMART Goals — Try CLEAR Goals Instead, Peter Economy, 2015, Inc.