PKF Carr & Stanton, Hastings, New Zealand
31 Oct 2016
The PKF Carr & Stanton team works with many businesses that go through exciting periods of growth. Often they have identified Key Performance Indicators (KPIs) as a crucial part of how they can monitor such growth and they use these to show their staff how their work contributes to the company. These help to increase staff contribution, motivation and lead to greater overall success.
It is a common practice for businesses to implement a KPI structure to create a performance oriented culture in the business. Individual behaviours and actions are the most important aspects to work on during the initial implementation process to ensure that the culture of the team as a whole is positive and that culture and goals are aligned.
For a KPI structure to work, management must acknowledge that their own behaviour may need to change too. First, KPIs require a certain level of transparency which means that new information and data must be shared with employees. That means management needs to be prepared to be vulnerable and open to visibility around their own performance. A KPI won’t always go the way it is intended, but our experience tells us that when it goes the wrong way, it’s better to address it together than try to hide it.
When management models this behaviour, then it isn’t so scary for employees to also look closely at their part in the process and make changes in their own behaviours to increase the chances of success. It creates a safe environment where everyone can accept when things are not on track and can take ownership of the tasks and projects which they must undertake in order to improve performance going forward.
These cultural transformations also affect much more than employee performance. They change the corporate culture by adding openness and visibility around the measures that matter and this type of transparency is what people now expect to thrive and succeed at work. Where KPI structures are not in place, the likelihood of experiencing higher than usual levels of staff turnover can be expected.
When looking to implement KPI structures, it is critical that the KPIs measured are the ones that really do improve contribution and effectiveness. Businesses with a strong KPI structure do these three things:
1. Ask challenging questions
2. Encourage discussion
3. Expect action
1. Ask Challenging Questions
One of the important aspects of implementing KPI structures that help businesses is simplification. With modern accounting and business systems offering a multitude of performance measurement opportunities, it is easy to get carried away trying to measure all kinds of stuff, but the key is to identify which measures make the most difference.
Within each functional area and role, there will be certain factors which offer the greatest opportunities for improvement. When looking at your KPIs, you want to be thinking, ‘What’s changed? What did we do last week and what impact did it have? What is really going on here? What is the best thing I (we) can do to move this number forward this week?’
You’ll know you’ve picked a good KPI when you become increasingly inquisitive and the answers to your questions become increasingly action oriented.
2. Encourage Discussion
It is no good asking questions if you aren’t prepared to really get into the issues and do something about them. If this is too challenging for management to really get into, it is better that they do not even open the KPI Pandora’s box.
To move a business forward, management needs to be open to strong debate to really get the best answers – and that can be tough, but exciting.
Great KPIs expose the real issues and you need to be ready for quite a range of possible answers.
Are motivational or time management factors driving activity? How are we making decisions on what should we say ‘No’ to? Is there a way to drive effectiveness by identifying opportunities for changing processes? Or do we need upskilling through training?
Robust discussion about performance is never easy but with clear guidelines about transparency and working together, these can be the most exciting times. When employees see themselves as part of the team that’s making a difference, it can have a massive impact on employee engagement and drive real, long-term results for the business.
3. Expect Action
What actions do your KPIs demand? Answering this key question is critical as it shows you are serious about improvement and provides insights on how to move the measures in the right direction.
Your business’s culture will already be on a pathway of change for the better and the team knows that the KPIs are fundamental to their role. They understand they will help measure their contribution to the organisation and alignment with the company’s strategy. They also have accountability for the KPI and the authority to take the actions necessary to start delivering.
Sometimes the democratic and transparent nature of this process needs to be tempered so that managers can bring their experience and expectations to bear, but needs to also communicate direction or boundaries around actions. The challenge here is to ensure that this is not interpreted as management being uncommitted to the direction and support of team success.
When people are clear as to why a decision is made and they know that their thoughts have been taken into account, their commitment to the KPI and to the actions required to achieve it are far more certain.
Operating a KPI structure that will really make a difference to your people and your business can be challenging, but your team actually want to have these challenging conversations and demonstrate that they can get results.
Any time is the right time to start working on your business’s KPIs. It’s easy to make excuses such as ‘I’m too busy working in the business to devote any time to working on the business’. But the reality is that if you allocate a little time each week to improving your business performance, the time investment will make a big difference to both your business and personal life.
Call us now on 06 876 8124 or email email@example.com to discuss our KPI Improvement Coaching Service.
For more information on how our services can help your business get in touch.