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Common KPI mistakes
Developing, actioning, and measuring KPIs is a long process that can involve a lot of hard work and effort. If you don’t see the results you expect or desire, it can be incredibly disheartening for both team and owner.
Often, the problem is external. But occasionally it will come down to something you have done wrong in the KPI planning process. Here are the most common KPI mistakes made by businesses, so you can avoid the pitfalls and maximise your chances of success:
KPI overload – essentially tracking too many data points – is a real issue that can end up wasting thousands of pounds in spent resources on metrics that are irrelevant or inconsequential.
When deciding which metrics to measure, concentrate on the most important business activities that drive profits and cash flow. Try not to have more than two high KPIs, and seven or eight low KPIs.
- Setting KPIs that are not aligned with goals
This is the ‘R’ of the SMART goal framework. If your stated KPI is not relevant to your business strategy, it will be more of a hindrance than a help.
Ensure that whoever is setting your KPIs – whether executive team member or a lowly junior employee – is aware of what you are trying to achieve. Have someone review the draft KPIs to ensure they are striving towards the same, common goal.
- Not reviewing KPIs regularly
KPIs must be regularly reviewed by accountable parties to monitor performance, spot issues and opportunities, and make informed decisions.
For high KPIs, with a macro-outlook, how often you do this depends on factors like the company’s age, market influencers, data availability, and stakeholder feedback (see below).
Nonetheless, it’s important for the business owner to review high KPIs at least once a month. Low KPIs can be appraised by the team carrying them out, with less transparency required as they have less of an impact on overall business performance.
It’s also a good idea to have a KPI owner who can monitor each metric daily. They are essentially the security guard for your KPIs, ready to flag any issues as and when they arise, and respond accordingly to threats.
- Not working closely with stakeholders
Updating others on the status and progress of KPIs is also a fundamental part of stakeholder management. Performance reporting needs to involve anyone who is interested or affected by the project’s outcome.
Firms can use a project management system to communicate regular updates on KPI data via dashboards or charts in a clear, concise, and visual way. Similarly, solicit and roll out feedback given to build trust and encourage their commitment.
- Not acting on KPI results
KPIs can tell you what you need to know about business performance – but if you don’t execute these learnings, you can’t expect to achieve your objectives.
Use project management software to produce a clear report of your company’s performance, to be shared with every stakeholder. Encourage the team to use this data to make decisions that push forward your strategy.
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