Identifying the Right Things to Measure: Measuring KPIs
What KPIs should we measure?
One thing we know to be true, and that we see living proof of in every Will It Make The Boat Go Faster workshop, is that What gets measured gets done. Measuring Key performance Indicators (KPIs) in today’s business environment is an essential part of driving performance by monitoring results – at least in the minds of many CEOs and Team Leaders.
However, if we take a step back and actually ask ourselves what it is that we should measure, and why, we stand a better chance of identifying KPIs that matter in our business, and, as a result, we can ensure we are doing the right things to effect the outcome we desire.
Change Management & Performance
Identifying what will drive changes will change performance. This is the crux of much of the work we do with our clients looking to align team behaviours and actions with the outcomes they want.
When you then implement regular measurement and reporting of these critical gauges – your KPIs – you are able to use that information to make decisions that improve performance – and the results will follow. This is another tenet of the Will It Make The Boat Go Faster approach. Our experience shows time and again that if you want to win, you need to forget about winning and focus on what is going to generate results.
Any change management programme will often start with identifying the critical and concrete goals – these usually exist in the form of numerical targets. These Key Performance Indicators are necessarily measurable, objective, and, of course, actionable. strategic touchstones for your team.
Measuring the right habits
According to this article at People, Process and Profit, “most organisations have no idea of how to implement Key Performance Indicators (KPIs)”. So, how do you ensure you are measuring the right habits?
A very good example of a company that has stepped away from the “measure everything that moves” KPI mentality is South West Airlines. They decided that the success of their operation is based on a quick turnaround time of their planes, once their planes reach the gate. They concluded that this allows them to fly fewer planes and have more on-time departures, which allows them to lower prices and gain more customers, ultimately making them more profitable. Whenever a Southwest plane touches down, every person who works for Southwest is doing their part to turn around their planes in thirty minutes or less.
Everyday Actions around the ONE number you must know
We like this second example from Southwest Airlines of defining a key performance indicator that cascades down into the performance of meaningful everyday actions. As the article at Loomview explains, the Management teams track one number.- “Flights in the Air.” Their job is to make sure the number of flights in the air is increasing. They may need more planes, more gates, or more airports. That is what the executives focus on. From measuring this one key indicator, they are able to identify whether other teams in the company are performing as they should be. Southwest may be unique in the airline industry – it’s been profitable every year for 40 consecutive years and that has not come about by accident.