6 Principles for Developing Good Key Performance Indicators

If you make KPIs meaningful and connected, you'll get an accurate picture of performance from staff. You'll also get staff who are more motivated and clear on their work and its value.

By Chally Kacelnik

Key performance indicators, or KPIs, can be meaningless and stressful. They can also be counterproductive by driving staff to direct their energy to jumping through tenuously connected hoops rather than tending to their core work. If you make KPIs meaningful and connected, you’ll get an accurate picture of performance. You’ll also get staff who are more motivated and clear on their work and its value.

Here are some principles for developing effective KPIs:

  • Base them on an operating model (for the organisation) or service delivery model (for the service) that has account of underlying principles, how services may be received by customers, and how future trends may be addressed
  • Consider both technical and customer-oriented service concerns, to keep the focus on what needs to be delivered and how. This prevents an arbitrary or internal orientation and forces you to seek out the right data rather than the lazy version – like customer satisfaction rates rather than numbers of calls received
    • For a library, an example of a technical KPI might include x new collection items per annum, while a customer KPI might be x response time to customers from first point of contact for a y priority issue
  • Cover all your activities and services: if you don’t have a full picture of what you’re tracking, you can’t measure how effectively you’re deploying your resources. If some items are viewed as too insignificant to measure, this is an opportunity to examine them and ask if they should be eliminated or valued more
  • Design measures that can be tracked and reviewed over time using a simple and transparent visual management system: not only does this make them easier to track, but it also prompts meaningful measurement and accountability
  • Make them flow from your strategy down to service and individual planning: there should be direct links between these documents in an unbroken “golden thread”. If your activities are not linked to your strategy, it’s time for a service redesign, a strategy redesign, or both
  • Consider any legislative or safety requirements: make these a core part of your business rather than a tick box exercise

Whether you are designing KPIs for individuals or services, providing meaningful ones with a justifiable and transparent basis will go a long way to making people want to put in the work and see the value of the work for the organisation. You’ll be able to recognise successes and dial down resentful muttering about KPIs. Best of all, designing good KPIs is an opportunity to reflect on how work is organised and performed, and see on a systemic scale if it can be done in better ways.

At LKS Quaero, we help our clients to design positive and productive organisations. Visit us at lksquaero.com or follow us on LinkedInFacebook, and Twitter.