Change is never an easy journey. And it’s fairly easy to get stuck in a routine. After all, routines become routines in the first place because they've proven to work in the past, right?
In order to keep up with the fast-pace, constantly evolving world of business, change is necessary. And it's time you make a big one, especially if your Key Performance Indicators (KPIs) are a little stale.
We recently published a post defining both KPIs and OKRs and after comparing the two, we realized there's really no competition.
For years, KPIs have been the ultimate buzzword in measuring performance. What are your KPIs? How did you reach your KPIs? Have your KPIs on my desk by 2pm. This has been the standard way of creating goals and tying together operations with strategic decision-making.
One of the biggest challenges with KPIs is actually aligning them with business objectives. Most companies adopt KPIs simply for the sake of measuring something, then fall short when it comes to creating a strategic plan to meet those product management metrics.
Here's why it's time to re-do your KPIs:
1. They're [probably] outdated.
It's probably been awhile since you performed a goal-setting makeover. Sure, you might have bumped up the numbers and increased expectations year after year, but what about the purpose behind those numbers?
According to Alex Moyle, Co-Founder at Nurtureit.io, KPIs should represent the following:
- A simple framework of “The Way Success is Achieved Around Here” to support organizational values.
- A way for newer or mid-level employees to plan and structure their day so they can grow towards hitting company targets.
- An objective way for managers to look at the effectiveness of their team's performance.
Your company is likely not the same business as it was two years ago. Maybe not even the same as it was a year ago. So it doesn’t make sense to simply take those KPIs, slap on some inflated numbers and call it a day. What worked two years ago or one year ago isn’t relevant to where you are today as a company.
If your KPIs are outdated, this is a good opportunity to perform a health check on your goals and not only find ways to personalize them, but also find ways to incentivize your team to accomplish even more in the new year.
2. They're uninspiring.
Too often, KPIs aren't implemented properly and end up either being too ambitious (to the point where it's unrealistic) or not ambitious at all. This provides very little fuel to the team who's expected to meet these annual goals. With little to no understanding behind each KPI, you'll find you're left with a deflated and unmotivated team.
Instead, sit down with your team and collaborate on their individual KPIs. First, list out a set of business objectives that your team is contributing to. Next, write out goals that are fairly manageable and ones that would be tough to reach. Once those are written down, come up with a healthy balance of a realistic, yet ambitious, set of goals. After those are set, sit down and repeat the steps as a team. You'll find your team will be more eager to accomplish something when they feel they had a voice in creating it.
3. There's no rhyme or reason.
The main problem with KPIs is there's a common lack of understanding why they exist. They seem to be the necessary evil that exists mainly because measuring performance is a general business best practice that leads to success. The failure to successfully translate and implement those KPIs across an organization stems from a lack in understanding their origin... the "why."
Establishing a strong purpose will not only help your team wrap their head around the KPIs but help you come up with the best strategies to meet them. Understanding that they're apart of a larger objective will also encourage them to share their ideas, get creative, and brainstorm different ways to meet their goals. Creating objectives and key results (OKRs) will help your team understand the overarching vision tied to these KPIs and why it's important to reach those goals.
Ready to set some OKRs? We've got you covered: How to Use OKRs in Wrike: A 6-Step Guide + Templates
Now, we’re not saying go and dump your current KPIs. According to Tony Yang, VP of Marketing at ConversionLogic, a leading marketing attribution, measurement, and analytics provider, "OKRs are a framework for achieving your set goals/objectives, while KPIs are metrics that you care about. Together, they work as a powerhouse for executing key business objectives. OKRs provide a purpose and structure to KPIs, that otherwise would just be meaningless numbers."
Check out this image that illustrates how using both KPIs and OKRs can be effective:
Transforming Your KPIs
You're always looking for ways to improve your performance so you can boost numbers and scale, but when was the last time you looked at the process for measuring that performance? As proven as KPIs are, they need to evolve as your business evolves and to support the ever-changing landscape of performance metrics. Only after you make the adjustments to create ambitious yet realistic goals with clear objectives, can you expect to shift the perception of goal-setting from a necessary evil to a necessary tool for success.