There are two problems with choosing too many KPIs. Number one, you chose the KPIs. Number two, you have too many of them! Let me elaborate:
Don’t start with KPIs
It’s a common mistake, but a big one in Performance Measurement. You want to improve your business, so you select a Key Performance Indicator which will show you if you’re improving. Let’s say ‘number of satisfied customers’. Within a year, your number of satisfied customers increases, therefore, your business is growing – right? Wrong. What if your total customers double, but your number of satisfied customers only grew by 3%? Then you’re in trouble and your KPI didn’t alert you to anything.
Too many companies track KPIs because they’re interesting rather than valuable. Your first question should not be “what should we measure?”, it should be “what results matter to our business?”. Choose something worth measuring, by first starting with your goal, and then figuring out what you need to improve to reach that goal. Unless you know what performance results you need to achieve, you’ll choose too many measures that aren’t useful.
Don’t choose too many KPIs
There isn’t a magic number of KPIs that every business should choose – but if you’re overwhelmed by the number you have to measure then you have too many. Here are my three tips to check if you have too many:
1: Check your KPIs against your goals
KPIs are evidence of progress towards your goals, so they should all be attached to a goal – make a list of your goals, and a list of your KPIs and link them to each other.
2: Choose no more than three priority goals.
Performance Measurement is a process, you don’t have to achieve everything on day one. To ensure your goals are achievable, try and choose just three at a time to focus on.
3: Choose no more than three KPIs for each of your three goals
Sometimes one KPI will do, but if you think you really need four or more KPIs to see if you’re moving towards a goal, there’s a good chance that your goal is not very well defined.
For more information on choosing goals and selecting KPIs that matter for your business, get in touch.
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