Performance Management

Organizations must have a clear focus on managing performance. Central to this is the need for an organization to have key performance indicators (KPIs). These are used to rally the entire organization behind the common causes and can act as a motivator or stimuli to greater performance. However having too many KPIs can militate against the very purpose they are intended to achieve. Organisations must have few simple and clear KPIs, which are then cascaded and blown out at functional, departmental and individual level.

I would argue that at business level, the following KPIs are sufficient: market share, revenue, profit margin, cash flow generation and 2 sustainable development KPIs. Anything else can be tracked at functional, departmental and individual levels, eg productivity, customer service, employee satisfaction, learning and development, etc. this approach does not, in any way, make the other issues any less important but allows for more focus and clarity for employee mobilization.

The same principle of fewer KPIs must be followed at any level, be it functional, departmental or individual levels.

I have seen situations where a maximum of six KPIs are permissible and this works well, provided the principle is not circumvented by having even more sub KPIs under each main KPI.

Comments

  1. Johnathan Shoniwa1 November 2014 at 00:44

    "Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs" — Peter Drucker

    ReplyDelete

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