As prevalent as key performance indicators (KPIs) are, there are just as many myths surrounding them. Conducting performance reviews as a means of progress for the future with the help of plain facts sounds quite simple. But in reality, gathering uniform, usable data through key performance indicators creates some challenging times for the managerial cadre.
Challenges surrounding key performance indicators: The arbitrary nature of human workers: The main challenge is that human workers – managers and managed alike – are prone to inconsistency. They don’t feel the same way all the time towards work, leadership, specific issues, or job families. Levels of motivation, energy, supplication towards specific causes or issues all play a part in how job roles are performed in the day to day. This inconsistency brings in unpredictability for managers as far as quantifying key performance indicators goes.
The solution: The way out of arbitrariness is to define a value system – for an organization, division, or team. Key performance indicators get more factual when the questions behind them get more specific and data-led. Examples can be ‘How motivated do you feel about working on X project in Y environment with Z colleagues?’ This feedback is specific as it gets and produces insights that can be used while forming a team, mapping competencies, and assigning responsibilities.
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How key performance indicators tell the story of progress (or the lack of it)
At the outset, key performance indicators look like they are limited. They assess ability or data in the historical sense alone. Many KPIs such as Return on Investment (business policy and strategic management), Average call Handling time (customer support and relationship management), or employee satisfaction (employee engagement) seem to capture the specific metrics for a limited time. But these past numbers denote a propensity and educated projection for future numbers.
Capturing critical data points: Both outliers and average numbers have their place in forming a pattern. Another unforgettable aspect of formulaic key performance indicators in this data-led world of work is that the numbers become more instructive with time. Each data point is an indicator that makes the overall resultant figure of the KPI measures that much more accurate.
Granularity: The secret to getting the most out of key performance indicators is by adding a range for each metric measured, and further classifying it into desirable and undesirable levels. Frequent rounds of appraisal can mean top-of-mind aspects can be logged for future reference.
Comments and numbers: Key performance indicators do not have to be entirely composed of numbers. Non-numerical, subjective commentary can add a great deal of value and all modes of performance management today are striving to include this.
Relationships and networking: Key performance indicators are markers of the quality of relationships too. Performance metrics, turnaround times, and partner satisfaction figures help contrast which associations are working out better than others. This clearly shows which contracts have fared better than others and which ones merit renewals. Documenting these key performance indicators for posterity is important. It helps future leaders take calls on the business’s history of relationships and where possible future partners and intermediaries should be sourced from.
Reference: KPIs Aren’t Just About Assessing Past Performance | Graham Kenny | Harvard Business Review | September 23, 2021
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