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Closing Thoughts

Key Performance Indicators (KPIs) are one of those business subjects that have been covered so extensively in management and leadership circles through writing and discussion, that most people believe they “have it covered.”

Here are the top 10 KPI errors, I consistently observe organizations making. Always stay away from them!

1. Not tying your strategy’s KPIs to it.

KPIs are only truly helpful if they support your plan, and assist in making strategic decisions. Anything else is only decorative. You waste a tonne of time and money collecting data that won’t help the business when KPIs are not connected to your plan.

If KPIs provide mission-critical data that is pertinent to your company’s operations, they are beneficial.

2. Measuring all readily measurable items

Sadly, there is frequently a discrepancy between what can be assessed and what should be measured. Consequently, measuring everything that is simple to measure, regardless of its importance to the business, is one of the major mistakes that people make when using KPIs.

3. Counting and measuring everything that moves.

Assuming that a lot of information is preferable to none, there is also a temptation to measure anything that moves and walks. In actuality, too much knowledge can be just as useless as not enough. Additionally, it can seriously harm the company by squandering time, resources, and attention that would be better used elsewhere.

4. Taking identical metrics as everyone else.

Another common mistake is for employees to create their KPIs by analyzing what other people are measuring. Consequently, a business leader may decide, that KPIs are something they need to take seriously but, rather than determining what data they actually need, they will look at competitor businesses or perhaps discuss KPIs with other senior executives in order to compile a list of KPIs that everyone else is using.

This may also occur if a specific KPI or measure becomes widely used in leading publications. You don’t necessarily need those KPIs just because everyone is talking about customer satisfaction surveys or employee engagement surveys. Your approach will determine whether you invest in these types of measures.

5. Failure to separate strategic KPIs from other data.

The majority of firms have an abundance of data and information, ranging from financial and sales data to customer and compliance data. The issue is that all the KPIs are frequently bundled together in one lengthy KPI report or confusing dashboard.

As a result, amid a sea of unimportant information, the ones that could actually guide strategy and enlighten decision-making are lost.

6. Connecting KPIs to rewards firmly

In business, tying KPIs to rewards (such as bonuses or salary raises) can be extremely risky because, unintended consequences are so simple to produce. The real goal of a KPI is to inform internal stakeholders, about where they stand in respect to where they aim to be.

On a sea cruise, they serve as a compass. But as soon as those KPIs are connected to rewards, they stop serving as a tool for navigation and start serving as a benchmark that must be met in order to qualify for a bonus. And as soon as that occurs, those involved can start coming up with extremely original ways to manipulate the data or their behavior to make sure they get the reward.

7. Choosing KPIs without involving executives

In my interactions with senior executives, I’ve seen that they are enthusiastic about strategy and the big picture. Designing certain KPIs may be of interest to those who are interested in numbers (the finance director, for instance), but most executives are not. Senior executives work on the strategy as a result, but assign someone else the task of choosing or creating the appropriate KPIs.

This is wrong practice. Senior executives will not feel ownership of what is created if, they are not involved in the KPI decision-making process. They won’t use the KPIs if they don’t feel like they own them. It is crucial that the senior team consider the KPIs, discuss the issues they are trying to resolve, and approve the KPIs they have selected. This makes sure that the strategy, the KPIs, and the questions those KPIs will answer are all connected in a strong, clear, and understandable way.

8. Failing to analyze your KPIs to derive insights

Another typical error with KPIs is that no one within the company actually analyses the data to derive insights that are pertinent to the business. Nobody is analyzing the data to determine how it connects to corporate or industry benchmarks, how the statistic has evolved over time, or what it might signify for the firm.

Once more, this is frequently due to a disconnect between those making decisions and those who are reporting. The analysis is frequently conducted at lower organizational levels and reported to the top. Those at lower levels may only be providing the data; they may not grasp its importance. Additionally, individuals in charge handed off the design of the KPIs to others, so they are not responsible for how the data is shown. It’s crucial that someone with the appropriate authority examines the data and determines what it all really means for the company.

9. Failing to revise and challenge your KPIs

Once the appropriate KPIs have been chosen or created, they are frequently never revisited to determine whether they are still pertinent, linked to the company’s strategy, or continue to aid in the resolution of pressing issues.

You should therefore not be averse to challenging your KPIs. If you don’t, it’s simple for KPIs to become a “check box” exercise that allows managers to claim they have them, rather than a real-time guiding tool that improves outcomes and performance.

To ensure that you are only measuring what is actually necessary and that the KPIs are still relevant and in line with the new plan, you should review and update your KPIs whenever there is a change in strategy or corporate priorities.

10. Failing to act on your KPIs

KPIs can influence strategy and support fact-based decision-making within organizations, but only if those in the organization use them. Ultimately, if your KPIs aren’t used as intended, it doesn’t matter how well you linked them to your plan or even how well you captured and displayed the pertinent KPIs. You are wasting your time and energy if you aren’t leveraging your KPIs to guide your choices and motivate performance.

You can make sure your KPIs are created, implemented, and used exactly as they were intended to be used — to support the success of your business — by avoiding these 10 problems.

Make sure your KPIs are connected to your strategy and your targeted goals before setting them up. By monitoring KPIs, you can make sure that the company’s primary objectives are clearly in sight.

2. Establish no more than 3–5 KPIs per strategic aim.

Keep in mind that it is preferable to concentrate on achieving 3–5 primary goals rather than attempting to accomplish 20. Additionally, be sure that not all of your KPIs are reliant on outside variables.

3. Make sure you put results first.

Make sure your KPIs are focused on intended results rather than the process when you set them up. What KPI would show that the plan was successful, you could wonder. You improve your chances of accomplishing strategic goals by monitoring KPIs that are centered on tangible outcomes.

4. Establish KPIs based on SMART criteria.

Make sure your key performance indicators (KPIs) are clear, measurable, doable, reasonable, and time-bound. Make careful you take into account these requirements when tracking KPIs.

5. Specify obligations

Ensure that each KPI has a designated owner. By doing this, you can guarantee greater commitment and better quality outcomes.

Today, we examined the most frequent errors people make when establishing and monitoring KPIs. We hope it was beneficial to you and, that you will now avoid committing these errors.

This is a guide. Not an instruction manual. Use this issue as a starting point to get the creative juices flowing.

And if you found it helpful, consider sharing it on Slack, Twitter, or Linkedin. I spent god knows how many hours researching this piece, so it would be nice if a few more people read it.

Thanks for reading, if this article was helpful or you learnt something new.

You can follow me here if you want to learn more about marketing, social media, and the strategies that go along with it.

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