Measurement is an activity which emerged thousands of years ago, driven by the human curiosity to know more about the environment and to understand how the world works. In time, our world has evolved to become more and more complex, pressuring us to constantly refine our measurement tools and techniques.
Today, we see organizations as ecosystems and we act accordingly to our desire to know more and to better understand this environment. Nowadays, challenges are not about accessing information, as most companies are managing large volumes of data. The challenge is to decide what data is the most important for decision making? In this context, key performance indicators (KPIs) are very useful tools to provide:
Clarity
KPIs provide a detailed numerical view the desired results. Based on their selected targets, KPIs clearly reveal the state of performance. Furthermore, alignment is facilitated by mapping contribution to success across all organizational levels. Key performance indicators showcase what must be achieved, and at what levels, in order to achieve the organizational strategy.
Focus
In a business world flooded by data and information, knowing on what to concentrate is essential. KPIs, through their own nature, reflect what is relevant for the organization – what matters the most. This way, resources can be allocated more efficiently.
By monitoring KPI results, managers are able to focus on those area that are underperforming and even to have a proactive approach by taking corrective actions to keep results close to targets.
Improvement
The first step towards improvement is acknowledging the current state of performance. KPIs allow an objective evaluation of the performance level and outline the necessity to take actions that ensure targets are achieved.
Engagement
KPIs drive engagement through a sense of ownership and responsibility for reaching targets. By assigning accountability for each KPI, employees become more committed and motivated to achieve the desired performance levels. Engagement also contributes to building a performance culture which has a significant contribution to the success or failure of any performance management system.
Communication
Providing a common understanding of the organizational performance is essential to efficient business management. KPIs can be regarded as communication tools that help bring all stakeholders on the same page and enhance transparency. Deploying KPIs also demonstrates the interest and ability to use state of the art management concepts, thus providing credibility.
Learning
By measuring and analyzing KPI results, managers gain a better understanding on how business works. KPIs enable the comparison of results in time, they reflect trends, identify patterns and maximize the value of data through predictive analytics. Comparisons can also be done between competitors through benchmarking studies.
As the society is becoming more mobile, international and diverse, businesses face an emerging need for proper cross-cultural management that enables them to handle relationships between employees.
Personal life is that area in which one should benefit from the greatest amount of freedom, where choices should be made according to one’s pure preferences and desires.
As the decision-making process is significantly influenced by the performance data provided in monthly reports, providing unreliable information might seriously damage your business, by influencing you towards making the wrong decisions.
The following recommendations are meant to assist professionals in their efforts to optimize the data gathering process.
Assign Data Custodians
Identify those employees who will become responsible for gathering data. The profile of a data custodian should include experience in measuring, reporting metrics/KPIs, skills to work with technology (it can be business intelligence tools or Microsoft Excel), knowledge in regard to the assessed processes, the sense of integrity and ethics.
Some companies may hire specialized professionals, such as data analysts, while other organizations might choose to assign the data custodian roles to existing employees.
Develop a Data Gathering Process Map
A flow chart will provide data custodians with more visibility regarding the data collection steps, as well as with the clear deadlines that need to be respected.
Provide Guidelines Through the KPI Documentation Form
This document will ensure consistency in measuring each KPI, by presenting details such as KPI definitions, calculation formulas, data sources and measurement limitations.
A well-documented KPI library will significantly influence the quality of the KPI measurement.
Train Data Custodians
For many companies, hiring a specialist, such as a data analyst, may not be an option and they have to rely on existing resources. In this context, it is highly important for people to be trained on this matter.
Developing this internal capability can be done through several initiatives, from formal training events to internal learning and sharing.
A Community of Practice for data custodians can be established, where different challenges are discussed and solutions are identified. Participants can exchange experiences and come up with initiatives to improve the current data gathering process.
Conduct an Internal Audit
From time to time, auditing the data gathering process leads to improvements by identifying critical issues that may be altering the quality of the data produced.
Build a Modern Infrastructure
Use technology in order to ensure an efficient data gathering. Having automated processes improves both the accuracy of data and its availability in due time.
By having these six tips in mind when collecting data for KPIs, managers can streamline the data gathering process and provide reliable data for decision making.
For professionals looking to strengthen their data gathering, analysis, and KPI measurement capabilities, The KPI Institute offers the Certified Data Analysis Professional and Certified KPI Professional courses, providing practical knowledge and tools to improve the quality of performance data and support more informed decision-making.
