Latest / Enhance.training / How to Develop Key Performance Indicators – 6 Steps for Great KPIs

Transcript

How to Develop Key Performance Indicators – 6 Steps for Great KPIs · Enhance.training

• 0:00
  SPEAKER_00: How to develop key performance indicators is a very important process to allow you to effectively manage greater amounts of activity.
• 0:08
  SPEAKER_00: How you use KPIs will help you drive the right behaviours and activities, which in turn drives better results.
• 0:16
  SPEAKER_00: Select the right key performance indicators and use them well and you increase the chances of reaching your goals.
• 0:22
  SPEAKER_00: Select the wrong KPIs or only partially effective KPIs and you create distractions or cause your team to focus on the wrong areas.
• 0:32
  SPEAKER_00: Many companies are good at writing strategy.
• 0:35
  SPEAKER_00: Only a few are good at implementing their strategies.
• 0:38
  SPEAKER_00: Developing key performance indicators is a vital step in implementation.
• 0:43
  SPEAKER_00: Nearly every manager will use or create KPIs, especially when thinking about how to measure team performance.
• 0:49
  SPEAKER_00: To help you understand and choose performance-enhancing key performance indicators, we're going through these six steps.
• 0:57
  SPEAKER_00: Firstly, always start with your goals.
• 1:00
  SPEAKER_00: Secondly, define the questions you need answering.
• 1:03
  SPEAKER_00: Third, identify the data to support your KPIs.
• 1:06
  SPEAKER_00: Fourth, create ownership of the KPIs.
• 1:09
  SPEAKER_00: Fifth, building visibility, accountability and discussion of KPIs.
• 1:14
  SPEAKER_00: And then sixth, interpret the results and take action.
• 1:18
  SPEAKER_00: Peter Drucker's quote, you can't manage what you can't measure.
• 1:22
  SPEAKER_00: Holds very true if you want others to focus on what is important to you and the business and deliver the results you need.
• 1:29
  SPEAKER_00: My name is Jess Coles and I've had a 25-year management career in corporates and household names through to SMEs.
• 1:36
  SPEAKER_00: Learning how to develop key performance indicators massively helped me successfully manage increasingly complex projects and bigger teams.
• 1:45
  SPEAKER_00: If you're new to this podcast, Enhanced.training shares business and people management expertise to help you improve your performance and that of your team and business.
• 1:54
  SPEAKER_00: And do visit us at enhance.training and take a look at the courses and resources for you to improve your management skills and the outcome your team delivers.
• 2:03
  SPEAKER_00: KPIs are used to create and measure progress towards your most important goals.
• 2:09
  SPEAKER_00: What you spend your time looking at, talking about and checking as a manager is what is going to be important to your team and what they will focus their time and efforts on.
• 2:19
  SPEAKER_00: When thinking about how to evaluate team performance, project performance, business performance, good KPIs are an invaluable tool.
• 2:28
  SPEAKER_00: The first step in how to develop key performance indicators is always start with your goals.
• 2:34
  SPEAKER_00: Using KPIs properly drives team behaviour and effort.
• 2:39
  SPEAKER_00: Focus and attention on the important goals increases the likelihood of reaching those goals, which is obviously good for everyone.
• 2:47
  SPEAKER_00: This could be implementing the company strategy, or it could be realizing departmental medium-term goals, or it could be day-to-day goals.
• 2:56
  SPEAKER_00: Always start with the goals that you're trying to reach, the result that you intend to get to when developing key performance indicators.
• 3:04
  SPEAKER_00: Define the goal or objective clearly.
• 3:06
  SPEAKER_00: Make it as specific as possible.
• 3:09
  SPEAKER_00: A good test, will a stranger understand exactly when you've reached your goal?
• 3:15
  SPEAKER_00: Always write your goal or objective down.
• 3:18
  SPEAKER_00: Writing forces you to think about and articulate your goal more clearly.
• 3:22
  SPEAKER_00: I would share your goal with your manager and other important stakeholders.
• 3:26
  SPEAKER_00: Writing it down and then circulating your goals or objectives will reduce future issues such as goal creep or changing expectations.
• 3:35
  SPEAKER_00: And this step will also ensure your goals tie into the bigger picture goals of the company and other departments.
• 3:41
  SPEAKER_00: Always start with clear, smart goals or objectives.
• 3:45
  SPEAKER_00: The second step in how to develop KPIs is to find the questions you need answering.
• 3:51
  SPEAKER_00: Once you have a clear goal defined, written down and circulated, then you can start working out how you're going to get to that goal.
• 3:59
  SPEAKER_00: Plan out the different routes or series of steps, if you like, available to reach your goals if you haven't already.
• 4:05
  SPEAKER_00: When you've chosen your preferred route and you know the steps and the outcomes you're seeking from each step, you can start to think about the behaviour you want to encourage using KPIs.
• 4:16
  SPEAKER_00: An example of the question you might ask when developing KPIs is what is the top two or three activities or projects we need to consistently undertake so we meet our goals and deliver the financial results needed.
• 4:29
  SPEAKER_00: A straightforward example.
• 4:31
  SPEAKER_00: The goal is to drive an extra 5 million in sales at a recruitment company.
• 4:36
  SPEAKER_00: The steps in general terms could be, you know, first to do more and better quality prospecting activities.
• 4:42
  SPEAKER_00: Secondly, it could be improving the number of calls and meetings held with clients following the prospecting activities.
• 4:49
  SPEAKER_00: Third, it could be to increase the number of vacancies given to fill by our clients, and then fourth, it could be to improve the success rate of filling those vacancies.
• 4:58
  SPEAKER_00: Measuring employee performance through these four stages and improving it will help you earn the extra 5 million targeted.
• 5:05
  SPEAKER_00: You might decide that prospecting is the most important activity as the rest won't happen without it.
• 5:11
  SPEAKER_00: Your most important KPI to drive volume and quality of prospecting might be the number of prospecting phone calls made.
• 5:19
  SPEAKER_00: Decide exactly what questions you need to answer to drive progress to your goals.
• 5:24
  SPEAKER_00: The third step in how to develop key performance indicators is to identify the data to support your KPIs.
• 5:31
  SPEAKER_00: Don't start this step by looking at what information you have.
• 5:34
  SPEAKER_00: This is the wrong approach and often leads to settling for okay rather than great KPIs.
• 5:40
  SPEAKER_00: Work out exactly what data you need to track progress on the KPIs that you have selected.
• 5:46
  SPEAKER_00: Make sure the KPIs drive the right behaviours and thus the right results.
• 5:51
  SPEAKER_00: Get your finance team to help work out how to capture and collate the data needed.
• 5:56
  SPEAKER_00: Think about what additional inputs might be needed.
• 5:59
  SPEAKER_00: Taking the previous example we were talking about, it could be recording outbound call volume and length on the CRM system.
• 6:07
  SPEAKER_00: If capturing this data is too hard or too expensive, ask the finance team, your manager, or your team members or anyone else you can think of if they can come up with alternative measures which will drive the same behaviour and results.
• 6:21
  SPEAKER_00: Using KPIs to drive actions will need data that is quick and relatively easy to collect.
• 6:28
  SPEAKER_00: If you can also make the collection of the data perfect.
• 6:31
  SPEAKER_00: The fourth step in how to develop key performance indicators is to create ownership of the KPIs.
• 6:37
  SPEAKER_00: One of the best ways of creating ownership of KPIs is involving specific team members in designing the KPIs and setting them up.
• 6:45
  SPEAKER_00: Then handing over the collation, review, and reporting of those KPIs is a pretty easy step.
• 6:51
  SPEAKER_00: Getting others to manage KPIs of course reduces your workload.
• 6:55
  SPEAKER_00: You'll need to regularly review the KPIs which we'll talk about in a second.
• 7:00
  SPEAKER_00: Always give ownership of a KPI to one specific person.
• 7:04
  SPEAKER_00: Their responsibilities are to ensure the KPI is produced accurately and reported on time, not necessarily to do all the work to put those KPIs together.
• 7:13
  SPEAKER_00: Explain the importance and the context of the KPI and how you're going to use the KPI to the person you're assigning it to.
• 7:21
  SPEAKER_00: This will increase the likelihood they will own it.
• 7:24
  SPEAKER_00: Ask one specific person to own each KPI.
• 7:28
  SPEAKER_00: The fifth step in how to develop key performance indicators is to build visibility, accountability, and discussion of the KPIs.
• 7:36
  SPEAKER_00: Having a nice set of KPIs is pointless unless you use them to drive behavior and action.
• 7:42
  SPEAKER_00: A key step to achieve both is building visibility of the KPIs.
• 7:47
  SPEAKER_00: Here are six ideas of how to do this.
• 7:50
  SPEAKER_00: Firstly, send around a weekly KPI email to team members and stakeholders.
• 7:55
  SPEAKER_00: Secondly, talk about the KPIs in team meetings and on one-on-one meetings.
• 8:00
  SPEAKER_00: Third, meet to go through KPIs with stakeholders and your manager.
• 8:04
  SPEAKER_00: Fourth, put the KPIs on a whiteboard in full view of the team or use a TV screen.
• 8:10
  SPEAKER_00: Fifth, hold HUDL meetings each day or week and get team members to update the KPI they own on a scoreboard.
• 8:17
  SPEAKER_00: And sixth, hold planning meetings to work out how to improve the results the KPIs are tracking.
• 8:23
  SPEAKER_00: In short, do everything you can to keep the KPIs visible and in the front of people's minds.
• 8:30
  SPEAKER_00: Visibility helps create accountability as everyone likes to be seen to be doing well and no one wants to be lost.
• 8:37
  SPEAKER_00: Utilising peer pressure is a powerful tool combined with team performance tracking.
• 8:42
  SPEAKER_00: Any group member will feel the need to contribute and do their share.
• 8:47
  SPEAKER_00: Take every opportunity to discuss the KPIs you are tracking.
• 8:50
  SPEAKER_00: Keep asking, are these still the right ones to drive us towards our goals?
• 8:55
  SPEAKER_00: As more complex projects progress or improvements are actually implemented, change the focus of KPIs is common.
• 9:02
  SPEAKER_00: Focus on what is most important.
• 9:04
  SPEAKER_00: Build visibility and accountability by communicating the progress using your KPIs.
• 9:10
  SPEAKER_00: The sixth step in how to develop key performance indicators is to interpret results and take action.
• 9:17
  SPEAKER_00: You must take action or get your team members to take action.
• 9:21
  SPEAKER_00: Taking action is where the value is created and how you progress more quickly towards your goals.
• 9:26
  SPEAKER_00: Using key performance indicators is a great way to find the trouble spots quickly and then dig into the detail around these.
• 9:33
  SPEAKER_00: Increase the activities which speed up progress towards your goals and reduce what doesn't appear to be working.
• 9:40
  SPEAKER_00: Keep asking yourself, you know, why is progress where it is?
• 9:44
  SPEAKER_00: Secondly, what can I do to increase progress being made?
• 9:48
  SPEAKER_00: What can I do to anticipate possible problems and sidestep these problems to keep progress on track?
• 9:53
  SPEAKER_00: And all similar questions.
• 9:55
  SPEAKER_00: Keep looking and planning ahead.
• 9:57
  SPEAKER_00: If you are behind, plan out what actions you can take and will take to get back on track.
• 10:02
  SPEAKER_00: If you are ahead, what actions can be taken to get further ahead?
• 10:06
  SPEAKER_00: Use KPIs to make it easy to spot good or bad performance and take action accordingly.
• 10:13
  SPEAKER_00: How to develop key performance indicators is a very useful skill to develop for any manager.
• 10:18
  SPEAKER_00: Managing what you can't measure is a lot harder.
• 10:22
  SPEAKER_00: Measurement of progress is a core tool for every manager.
• 10:26
  SPEAKER_00: When you have your KPIs, work hard to make sure the team, stakeholders, and your manager are aware of progress and you and your team are focused on actions that are practical and sensible to take to improve progress.
• 10:38
  SPEAKER_00: To recap, the six steps for how to develop key performance indicators are firstly always start with your goals.
• 10:46
  SPEAKER_00: Secondly, define the questions you need answering.
• 10:48
  SPEAKER_00: Third, identify the data to support your KPIs.
• 10:52
  SPEAKER_00: Fourth, create ownership of the KPIs.
• 10:55
  SPEAKER_00: Fifth, building visibility, accountability and discussion of the KPIs.
• 10:59
  SPEAKER_00: And then sixth, interpret the results and take action.
• 11:03
  SPEAKER_00: And if you have any questions, please drop me an email at support at enhance.training and I'll get back to you.
• 11:09
  SPEAKER_00: Thanks for listening, and I look forward to speaking to you again soon.