NUMBERS THAT COUNT

6 (cheeky) thoughts on KPIs as a management tool

Ever felt that your people did not care about those

numbers of yours?

If so, you’re missing out

on a powerful leadership tool!

“Leadership is the art of getting someone else to do something you want done because he wants

to do it”.

General Dwight Eisenhower

Here are my 6 thoughts on

KPIs as a leadership tool

http://www.flickr.com/photos/boklm/486677337/sizes/m/in/photostream/

http://www.flickr.com/photos/foradoeixo/8239441790/in/photostream/

Consider…

Customer LifeTime

Value

Net Promoter

Score

A pile of cash A human being

#2 Beware of

“Whilst Performance Management was aimed at altering policing behaviour with a view to increasing efficiency […] police officers were employing unethical practices designed to meet targets”

Performance management, gaming and

police practice, Patrick Rodger, 2009

Closing rate

Sales budgets

Reducing data registered in CRM system (prospects kept outside system until likely to close to maximize closing rate)

Avoiding competitive situations (raising the bar on when to send in tenders/take sales calls)

Discounted (too low) offers to customers towards end of month/quarter/year to fill quota

Increased spending (if costs below budget) towards end of period to avoid a reduced budget next year

Cost vs budget

Customer satisfaction

A few random KPIs… …and some gaming examples

Manipulating answers (throwing away low point questionnaires or ”forgetting” to give them to certain customers)

Manipulating customers (”if you give me anything less than full score they will think you hated me”)

The truth is that every KPI is a double edged

sword.

The good news is that gaming is easy to spot.

If you dare to look for it.

#3. Look for a clear connection between effort and outcome

http://www.flickr.com/photos/timg_vancouver/756492323/

Consider…

Sales Market share

Going slow Leading the field

Try to minimize ”noise”, i.e. factors outside the control of those being measured.

#4 Focus on a SMALL number

of numbers

http://www.styrbord.com

For the numbers to do their part, people must

think about them. Often.

To think about them, they must be able to

remember them.

”We can store only 3 to 9 chunks of visual

information at a time in short term memory”

Information Dashboard Design, Stephen

Few, 2006

Don’t expect to be able to occupy all of these seats. Go for max 3!

#5 Use Positive Wording and Visuals

In practice - some do’s and dont’s…

Good ideas…

Positive angle (net promoter

score rather than number of

complaints)

Development focused

(progression, % of target)

Action oriented (focus areas

rather than problem areas)

Relative (% change since

yesterday)

Not so good ideas…

Subjective labels

(“unsatisfactory”, “inadequate”,

etc.)

Traffic light metaphors (avoid

yellow lights, things on track are

green and things off track are

red)

KPIs that signals acceptance of

what should not be (“budget

deficit”)

Note! Positive wording does NOT mean that

problems should be swept under the rug.

Problems will arise and

should be recognized when they do.

Rationalize why a KPI is off-target once and that KPIs is

forever a dead duck

#6. Update and Communicate your KPIs. All the time. Everywhere.

“Students who thought they’d receive rapid feedback

performed 22 percentile ranks higher than students who

thought they wouldn’t receive feedback for several

days...”

David DiSalvo (http://neuronarrative.wordpress.com) on an

article by Kettle, K., & Haubl, G. (2010). Motivation

by Anticipation: Expecting Rapid Feedback

Enhances Performance Psychological Science

Continous feedback means completing feed back loops all the time instead of once a week, once a month or once a

quarter…

So. To summarize.. .

#1 Look for numbers with a bit of soul

#2 Beware of gaming

#3 Look for a clear connection between effort and outcome

#4 Focus on a small number of numbers (3)

#5 Use Positive Wording and Visuals (but don’t rationalize)

#6 Update and Communicate your KPIs all the time, everywhere

Or simpler put…

Always focus on what matters the most!

Feedback? Getting in touch?

My 6 (cheeky) thoughts on business intelligence?

http://www.slideshare.net/KristofferFredriksso/business-intelligence-6-cheeky-thoughts