KPIs - should we change the term from ‘key performance indicators’ ...
If you’ve worked in a team at any point in the last twenty years, you may well be fed up hearing about KPIs. What is intended to be a useful organisational tool to help keep a company and its employees on track towards bigger goals, can become time-consuming and unclear.
In theory, KPIs or key performance indicators are meant to make it easy for employees to track progress towards goals and keep focused when strategising, but, in practice, how often are they followed once they’ve been set?
The question is, should we change the term ‘key performance indicators’ to ‘keeping people interested’?
What are KPIs?
KPI stands for key performance indicator. They are a set of quantifiable measurements which are used to track progress and help the company work towards long-term goals. They allow stakeholders to track the progress of certain projects and assess whether the business is on track.
For example, the social media department might have a goal of increasing brand awareness so they will likely measure and set targets for follower count and post reach.
Other KPI examples might include:
- Number of sales
- Prospect to customer conversion rates
- Revenue growth
- Monthly website traffic
- Customer retention rates
- Net promoter score
Advantages of KPIs
There is a reason that KPIs have been so widely used for so long. They can be incredibly useful tools to understand a business’s progress towards its goals and to highlight any problem areas that should be addressed.
Using KPIs has lots of advantages.
Measurable results
First and foremost, KPIs are quantifiable. They give tangible, measurable results which help to track progress even towards more generalised goals such as ‘brand awareness’.
This helps communicate the impact of a department’s work to other departments, more senior employees and other stakeholders who might not otherwise have oversight of the progress being made.
Future planning
When it comes to planning future strategies in any department, it’s beneficial to understand what has worked well in the past and what hasn’t. If a time-consuming and expensive campaign did not bring in the results you had hoped for last year, it would be unwise to carry out a similar campaign this year.
Conversely, other projects might have had unexpectedly positive results which would suggest that you might want to continue this work or look to replicate elements of it.
Measurable KPIs allow you to pinpoint exactly what is working well and what needs to be reconsidered in the future.
Rewards
Another significant advantage of KPIs for employees is that they can help to highlight the value of an individual or department’s work which can then more easily translated into rewards and bonuses.
This is especially valuable in instances where the impact of someone’s work isn’t always clearly understood.
For example, you might see that your Community Manager set a target to improve engagement rates across social media channels, they planned to increase the time spent replying to comments and responding to posts from customers and used KPIs to measure the results. This might correlate to improved net promoter scores, increased brand awareness and better customer satisfaction in general, all of which can be seen through KPIs tracking these metrics.
Usually, it would be difficult to quantify the impact of a Social Media Community Manager’s work on sales and customer retention but using KPIs allows you to see how their work supports these wider business goals. Being able to recognise and thank these employees for their efforts means that they will feel a greater loyalty to your company and will continue their great work.
Disadvantages of KPIs
However, it’s not all plain sailing and KPIs also have their drawbacks, especially when it comes to employee satisfaction.
It can take time to see results
When you start using KPIs to record progress, it’s easy to expect to see results overnight, but this won’t be the case.
When rolling out a new sales strategy, marketing campaign, or internal process, it can take time for teams to adjust and for accurate results to be seen. It’s important not to act on data generated by KPIs too quickly as this may create a tendency towards knee-jerk, reactive decision-making that will ultimately inhibit progress and create frustration amongst employees.
Requires behavioral adjustment and a steep learning curve
On top of this, introducing KPIs may require a change in the way your teams work together, plan, and measure success. If not sufficiently supported through these changes, employees may start to feel dissatisfied with their work, confused, and irritated.
As with any changing process, your team must understand why you are making these changes, how they will benefit the company, and how they will impact their role. KPIs can be invaluable when tracking progress but if employees feel that they are being overly monitored or expected to hit unachievable targets, this will negatively impact their job satisfaction.
Misses small wins
KPIs work great when the right metrics are being measured. Unfortunately, it’s common that the spk,ecific metrics that were chosen to represent the success or failure of a project don’t always tell the full story and small markers of success can be missed along the way.
If you’re not careful when choosing which KPIs to track, it can lead your team to feel like they’re working tirelessly with no results.
Not aligned with wider business goals
KPIs work best as a tool to break down wider, more long-term business goals into manageable and measurable chunks.
However, a crucial mistake that is sometimes made is not considering how the metrics you’ve chosen to track as KPIs will drive your company towards its long-term goals. Or for teams and individual employees to be unaware of these wider goals and their role in helping to achieve them.
When setting KPIs it’s vital that team members of all levels are aware of the bigger picture and how they will all work together to get there, otherwise reaching these goals will be an impossible task.
Want to work for a company that ‘keeps people interested’?
If you’re tired of unreasonable expectations and misused KPIs, or looking to hire someone who will breathe fresh air into your company’s processes, speak to a member of the Conquest team today.
