“If you aim at nothing, you will hit it every time.” — Zig Ziglar
When the cost of managing and measuring your performance is less than the tragic risk of hitting nothing, it pays to get your KPIs right.
KPIs, or key performance indicators, can prove that success is a result of not just one huge undertaking but a series of actions. These actions are taken by decision-makers that consistently rely on data rather than guesswork.
In this guide, you will learn the basics and benefits of KPIs and beyond. Explore the top articles, webinars, reports, and other materials produced by The KPI Institute, a leading global research institute specializing in business performance and KPI research for over 17 years.
Topics include:
What Is a Key Performance Indicator?
Why Companies Should Use KPIs
KPI Examples
Applying the KPI Best Practices
The KPI Measurement Framework
What Is a Key Performance Indicator?
The definition of a KPI, according to The KPI Institute, is “a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity.”
“If a decision support system is put in place, users need the right data granularity and the guidelines or context for making the right decisions. All of these reasons have an underlying story, and top-performing organizations are able to clearly communicate that story to their employees.”
“As performance management & measurement is shaping up as a fundamental capability for organizations across the globe, there are still multiple challenges to be overcome.”
“Nowadays, the challenge is not about accessing information, as most companies are managing large volumes of data. The challenge is to decide which data is the most important for decision making.”
“What have been some of the changes that the Performance Management field has experienced over time? What are some one-size-fits-all style KPIs that any company can employ?”
Discover the role of KPIs in designing a rigorous Performance Management System (PMS) to ensure an optimized implementation across all organizational levels.
Compare KPIs and other performance evaluation criteria, identify the common KPI pitfalls, and discover how to use KPIs to create synergies between departments.
“In many cases, the key performance indicators (KPIs) monitored do not seem relevant as they are not connected to the strategy. To better understand how this problem can be addressed, we must first identify its possible causes.”
“What are the most important guidelines to follow when selecting KPIs for strategic objectives? What are the most efficient KPI Selection techniques, most recommended KPI selection environments, and some Value Flow Analysis technique examples?”
“A KPI implementation project plan provides a structure for the implementation of an organization’s performance management system. Once the project plan is set, all types of activities would have a clear deadline and designated responsibilities.”
“When formalizing and implementing a performance management system (PMS) based on key performance indicators (KPIs), there are multiple activities to be considered and many stakeholders to be engaged in the process. Therefore, you’ll need a project plan to make performance management an ongoing process within your organization.”
“An important component of performance measurement is represented by the data collection capability. However, when applied in the organizational context, this process is neither easy nor lacking obstacles, as practitioners often discover.”
“KPI selection is a process which seems simple, yet is inherently complex, due to the interdependencies involved. Here are 15 things to consider before embarking on this journey.”
“Just reporting performance data will not ensure the improvement of results. Improvement is only possible when decisions are made based on the insights provided by data.”
KPIs are not just about understanding and working with numbers. Using KPIs requires stakeholders to fulfill a vision and commit to ensuring success across all levels of their organization. If you would like to learn how to select the right KPIs for your organization, sign up for The KPI Institute’s Certified KPI Professional and Practitioner live online course today.
Organizational culture is the unique environment of an organization that is formed through shared beliefs, values, experiences, specific rituals, behavior, interactions, language, and norms. These elements of the culture are developed over time in both visible and invisible ways, such as the organization’s output, interactions, goals, branding, company policies, reward systems, among others.
It is possible that most of the members of an organization are not aware of the origin of their rituals and why they are expected to behave in a specific way. Or they may know exactly what they are doing for what reason and can explain everything with facts. Which of these contradictory approaches characterize your organizational culture more?
Is it a cargo cult organization or “The Credible Hulk”?
Cargo cult thinking in organizations
Cargo cult refers to the belief that a real achievement can be realized by simply imitating visible behavior. This belief exists even without understanding the correlations between the different steps of a process and the consequences of actions.
The origin of this terminology goes back to the first half of the 20th century, when some remote-island-based tribes saw American cargo planes landing on their island. The tribes tried to recreate the different tools and instruments they saw from the cargo planes without knowing how those goods were manufactured. They made radio from stone and wood but without getting the same effect.
This phenomenon can be observed even in advanced 21st century cultures, particularly in the modern corporate world.
Many organizations are adopting the same practices they observe in other companies, such as workplace habits and the design of an office, without fully knowing their impact on the organization. For instance, some companies would place bean bags in the office even if they are hardly used. Some do not observe the business casual dress code on Fridays. And some have ping pong tables.
The paradox is that it is also a rational strategy to follow organizations or people who seem to know what they are doing. When used responsibly, cargo cult thinking can be really useful when making decisions because it saves management a lot of time.
Oversimplification versus overcomplication
Have you seen the meme “The Credible Hulk”? Inspired by the film and the character “The Incredible Hulk,” “The Credible Hulk” is a monster that backs up anything with facts and documents.
The opposite of cargo cult thinking is supporting new initiatives or practices with facts and research. Organizations with this kind of practice are deemed more credible in terms of their innovation practices.
These companies are the ones that look beyond the surface in order to analyze the successful elements of the other innovative organizations, such as Amazon, Apple, and Netflix. They do not just use transparent glass doors because they look good, but also because they want to promote transparency and improve communication in the organization.
However, such an approach is time and resource consuming. Organizations have to justify everything with research, leaving little to no room for instincts and creative innovations that could drive success in the long run.
Cargo cult thinking cannot be completely eliminated. The only way to exclude it from the organizational culture is to learn and know everything, and that is, apparently, impossible. Therefore, organizations could either find the right balance between the two opposite poles or customize their approach based on their goals, the company size, or the nature of their business.
It is undeniable that the growth of the water utility industry has been remarkable in the recent decades and it still maintains a strong pace in terms of increasing turnover for water utility organizations, as well as when it comes to investments aimed towards water distribution network improvements and treatment plants.
Join us in our journey to interview some of the most extraordinary individuals that continue to make The KPI Institute a role-model for others to follow. In today’s edition, we will be featuring September’s Employee of the Month, Silvana Bădiță.
1. What is your role at The KPI Institute and what makes it special?
I have been working as a Research Analyst at The KPI Institute, for about a year. Some of my main responsibilities are to document KPIs, to conduct primary and secondary research on performance management-related topics, to provide support in the form of research customization for different functional areas, as well as provide assistance in consultancy projects.
This variety of tasks contributes to creating a special dynamic in my daily activities, which opens up a great opportunity to develop my skills and competencies, and to acquire more expertise in different functional areas & industries.
A truly special feature of my work is that I’m guided by inspiration and creativity, which gives me tremendous satisfaction.
Moreover, another aspect that makes my job special is that I’m encouraged to think outside the box, in order to find the best solutions to today’s organizational challenges. This provides a valuable perspective on discovering the things that really matter in the field of performance.
2. What do you find most challenging at The KPI Institute?
A particularly important aspect of my work is translating the theoretical side of research into practical changes, which can then aid an organization’s development and performance.
This is equal parts challenging and riveting, for the same reason – it’s not often easy to see how an idea on paper can be transposed into reality. However, when you do manage to do it successfully, it offers an exhilarating sense of success.
3. What would be the three main career lessons that you have learnt thus far?
Never stop learning – do not become complacent – this is very important to always keep at the back of your mind because otherwise, you will not be able to adapt to the requirements imposed by today’s constantly changing society.
Set clear and measurable results – it is important to understand how your activity contributes to the organizational results, so do not overshoot your markers – aim for pragmatism, not grandeur.
Work as a team – I think this aspect is often underrated and it is a great shame because goals become more aligned when you work as a team. Teamwork leads to a greater chance of achieving your common goals.
4. If you could interview one person, either from the past or present, who would it be and why?
Considering that I am passionate about creating organizational cultures that are based on the continuous employee commitment to achieving higher levels of performance, I wish I could interview Daniel Pink, to learn more about people’s intrinsic motivations and what drives us.
Join us in our journey to interview some of the most extraordinary individuals that continue to make The KPI Institute a role-model for others to follow. In today’s edition, we will be featuring July’s Employee of the Month, Alexandru Podariu.
1. What is your role at The KPI Institute and what makes it special?
I am currently employed as the Head of IT, at The KPI Institute. My day-to-day work includes anything and everything that has to do with ensuring our digital footprint, services, and websites are updated and run smoothly.
I enjoy my role here because we work on extremely eclectic projects, which always provide me with something new to achieve or put together. Things never get boring working in IT here.
2. What do you find most challenging at The KPI Institute?
Since we tackle so many different projects, there’s a never-ending source of new things to do every day. It would be nice sometimes to be able to plan tasks in advance, but I cannot complain too much – the constant shift in tasks keeps me on my toes.
What’s more, due to this, I get to expand my knowledge and use many different tools, gadgets, instruments, and technologies in various work endeavours that I get assigned to.
3. What would be the three main career lessons that you have learnt thus far?
Never call it quits – even when a situation looks dire and you have no idea whether there’s a light at the end of the tunnel, keep going. You might need to pause for a brief moment and rethink your strategy, but as long as you stay focused, you’re golden. Also, never forget about the IT rubber ducky!
Keep learning new things – knowledge doesn’t end when a project is finished; knowledge ends when you cease to be interested in perfecting your craft. At least in my area of specialization, there is no finish line. We keep going and going. Each task is something new – either an update to an old solution or a completely novel discovery altogether.
Continue to optimize everything – the biggest “sin” I see people in IT commit is not giving optimization its due respect. Your website’s loading slowly? Optimize it! Your game’s not loading correctly? Recheck optimization! Your program’s stuttering? Optimize the code! Optimization is the difference between a choppy and smooth interaction.
4. If you could interview one person, either from the past or present, who would it be and why?
I think the person I’d be most inclined to talk to would be Elon Musk. The man has no chill. The man perseveres, trudges on, and never gives up regardless of how many naysayers he encounters.
In my opinion, that level of determination is incredible, and I’d like to know how he managed to inculcate in himself such an attitude.