Link Business KPIs to your Strategy

September 21, 2018adminMedia

In today’s market, where businesses are busy with digital transformation and processes are being redefined, it has become essential to measure deliverables. The Key Performance Indicator (KPI) has emerged as much more than a generic baseline way to evaluate performance.

The KPI is now a measurable value that demonstrates how effectively a company is achieving critical business objectives, these objectives are created in order to accomplish the company’s strategy.

Traditionally, the KPI has been widely considered to be mostly used to gauge the performance and input/ contribution of individual employees and departments.

But there is no denying the valuable role that KPIs play in any-sized operation today.

They determine whether or not a business is being managed effectively, if it is going in the right direction or not, and if every aspect is aligned.

It is because of this strategic importance that the SMART (Specific, Measurable, Attainable, Relevant and Time-bound) principles are used to establish what KPIs should be.

This is the best way to establish the criteria for KPIs and link them to the business strategy.

This will ensure that the indicator is based on more than the job function or role, and immediately connected to the requirements of the business.

Unfortunately, it often happens that managers just assign the responsibility of establishing employee KPIs to the Human Resources function and then Human Resources simply puts together a general set of KPIs in line with the job function without considering the big picture strategy.

When using SMART, KPI criteria are easy to establish – but many companies fall short in terms of relevance criteria. In order to fix this the process has to be reversed, in other words first define the strategy, establish the outcomes of the strategy, establish objectives to achieve the outcomes and finally establish KPAs measured with relevant KPIs.

A good example of this in the architectural space would be to define a business growth target and develop your strategy around this target or outcome. Thereafter, you can establish objectives or certain mile markers to achieve the ultimate outcome and, lastly, this is filtered down to each employee, for instance each draughtman must complete a certain number of drawings per month in order to achieve the optimal business outcome.