CEOs and business leaders often ask me about how to measure performance in their organisations.
My response is to imagine their car dashboard. A car dashboard comprises those critical indicators about your car’s performance and driver safety. Not every piece of information about your car makes the dashboard. For example, you know your car colour is black and you have 4 tyres and a spare but you do not need to track that every week or daily because car colour is not a performance criteria. It does not depict your car’s performance today nor does it predict how your car will perform in the future.
Your car dashboard has indicators such as fuel gauge, speedometer, thermometer, odometer, engine check etc. Some of these indicate your car’s current status or can predict future performance. Features like seat belt warning help protect the driver and passengers’ safety.
Same with your KPIs. They are important metrics that should be on your dashboard as a business leader. Consider carefully which metrics should make your dashboard. Don’t collate data just for the sake of it. All data are not equal, some are nice to haves, and others are just available like option features of a car. Do not fall for the Data Trap by collating all that it collectable as KPIs.
So, what should be on your dashboard? Check the sheet above but more importantly, examine the unique internal and external context of your organistion. Ask yourself, what do I need to keep track of that will provide me insights to our current performance or predict our future performance. Mix lagging and leading indicators, which are really business results and critical activities that lead to the desired business results. Mix financial and non financial, many leading indicators of performance are not financial. E.g. having a committed and engaged workforce, your emotional wellbeing etc. Consider those critically.
A team can more easily connect with the activites they perform that lead to the bottom line results. E.g. engaging with 20 customers per week versus revenue or profit.
In your dashboard, you must keep score of some financials but remember they happen after the activities and are not in every employee’s line of sight. Identify your critical activities. Ask your team which activities are critical to moving the scoreboard.
Show your team how they move the scoreboard by engaging in critical activities. Hold employees accountable for the role they play in the game. It is easier for everyone to connect with overall business goals this way.
Create your dashboard and thank me later.
Have a great week.
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