Over the last three weeks, we have discussed how KPIs are formed from an internal perspective of a process, and then other people have their own perception of what was laid down. The result can be chaotic for a business, with the very things designed to confirm success actually steering the organisation in the wrong direction if not actively undermining the goals. That statement may seem over the top; however, last week, we mentioned AOL as a cautionary tale; they prioritised growth and equated new enrolments as growth. The result was thousands of CDs being sent out to people and lots of new enrolments for the 200, 400, 500 or 1000 free hours of internet service, then people cancelled (before maybe re-enrolling for more free service). If you are not sure of the impact of this on the business success, ask yourself where AOL is now?
So much of our work at Geordie Consulting touches on KPIs that all of our clients are looking to solve the business problem of tracking the performance of their business processes. Our conversations always start by asking those involved to consider the perceptions of those undertaking the activity. For AOL, they incentivised the signup teams, meaning they encouraged people to sign up, maybe even letting people re-enrol rather than passing them to a retention department. For our clients from Retail activity tracking, manufacturing process performance or even Onboarding / offboarding processes, the goal is always the same. To have the defined process executed consistently and efficiently. That is then expected to lead to the desired result be it profitability, zero return rate or high staff retention.
When you consider the perceptions of staff, you start to see the “loopholes” in your KPIs. There are then two options: either we work to identify the Critical Success Factors (CSFs) that will allow us to close the loophole(s), or we may even need to change the KPI.
The second element that we ask our clients to consider that really confirms if this is indeed a true KPI or not, relates to the RAG (Red, Amber Green) status of the KPI; after all KPIs should not just be a Yes or No, there should be a “This is going wrong and we need to do something about it” state the Amber in RAG, when green the performance is as expected so everything should be proceeding normally and when Red, outside process support should be being used to resolve the issue i.e. Senior Management getting involved. This means that in the Amber state, the process needs to have defined actions that can be undertaken within the scope of the business area to restore the KPI to green; this could be overtime or a “Store Manager’s Discount” to drive sales.
KPIs are intended to drive performance to maximise process performance, that performance is expected to then equate to the business moving closer to its goals. They are rarely directly business goals, although goals should of course also be tracked. Understanding how best to track and manage your Goals, KPIs, CSFs and other metrics is a daunting task, especially when considered against the landscape of modern analytics tools that allow you to visualise everything and present everything to everyone.
The team at Geordie Consulting have decades of experience with processes and their performance tracking. We can sit down with you and your team and offer simple, impartial advice on your KPIs and how best to implement and track them. So, if you are looking at your business analytics plans and are unsure what to do next, a sensible starting point would be to contact Geordie Consulting; we will have a complimentary discussion to help you get the most out of your data. Call us today on 0191 432 7330, we are confident we can keep you moving in the right direction.
