Myth #13: Monitoring Monthly Performance Measures Will Improve Performance
Show me a monthly performance measure and I will show you a result indicator, a key result indicator or a performance indicator. It will never be a KPI! How can it be key to your business when you are looking at the measure well after the damage has been done? It is as useful as telling a trainer that his prize race horse escaped the stables, sometime last month.
If you want something to happen, something to change then measurement has to be timely. Imagine saying to your teenage son, once a month, “You had an untidy room 28 out of the 30 days this month”. All you would achieve is an argument. Instead, a clever parent says “Pat, an untidy room equals no allowance”. When the room tidy on Saturday you can get the pocket money. A constant weekly behavioral change program will win through. Soon they will say, “Dad, Mom come and look at my room”.
Staff are no different than a wayward teenager. Sometimes they could be worse. To get a change a chief executive officer needs to focus on the critical success factors, and act on the KPIs that will align the appropriate behavior.
Myth 14: KPIs Are Financial and Nonfinancial Indicators
Financial measures are a quantification of an activity, we have placed a value to the activity. Thus behind every financial measure is an activity. I call financial measures result indicators; a summary measure. It is the activity that you will want more or less of. It is the activity that drives the dollars, pounds, yen, thus, as I argue in Key Performance Indicators, 2nd editon, financial measures cannot possibly be KPIs.
We need in our organization to find the activities that support the critical success factors and find appropriate measures that we can focus on, such as “late planes in the sky two hours late.
Myth 15: The More Measures the Better
The traditional balance scorecard approach is to cascade measures down from an organizational measures such as return on capital employed. This process, along with balanced scorecard applications, leads to a myriad of ill defined measures that at best will do no harm, at worse take the organization on an expensive journey to oblivion.
British Airways was reportedly turned around by Lord King in the 80s by focusing on one KPI, late planes in the sky, the story is one that certainly changed my life as I realized it’s significance to the development of performance measures that drove change. I have analysed this measure in Chapter 6 “Introduction to KPIs”.
You might like to order my new book “Key Performance Indicators For Government And Nonprofit Agencies”