Developing KPIs Executives Use

Developing KPIs Executives Use
Written by Heather L. Cole, June 16th 2022

Key Performance Indicators (KPIs) can be more challenging than people think.   You create a Cognos or IBM Planning Analytics dashboard with the KPIs the company has been measuring and no one uses it.  People convince you to change the dashboard and someone else complains that it’s not meeting their needs.  As an analytic professional you start to feel like you are caught in the middle of a tug a war.  Today we will share Lodestar’s recommendations on developing KPIs executives use so you don’t get caught in the middle.

KPIs and the Strategic Goals

In last week’s blog, Create Support for KPIs Across the Organization we discussed that when defining KPIs you need to first start with the strategic goals of the organization, then ensure that you are engaging the right stakeholders from the very beginning and finally communicate the WHY.  If you did not read it go read it now, so you understand why strategic goals are so important in defining KPIs.

Steps for Developing KPIs for Cognos or Planning Analytics

  •  Start with Understanding the Strategy Goals and Initiatives of the organization
  • Define the stakeholders, the people that the organization needs to have strong relationships with to succeed. 
  • Facilitate a KPI discovery session (Facilitating Analytic Discovery for Success)
  • Define what you can monitor to make the relationship with the stakeholders stronger
  1. Ask the stakeholders themselves
  2. Engage your end users so they feel part of the process
  •  Identify your data needs & evaluate if you already have it
  1. IBM Planning Analytics can be a useful tool for calculating and collecting data you might need.
  •  Validate the measurement definition, calculation, and frequency
  • Share the WHY for the KPIs with the organization
  • Define how to communicate your KPIs 
  1.  Cognos and IBM Planning Analytics could be useful tools
  •  Review your KPIs quarterly to ensure they help improve performance

Common KPI Mistakes

Now that you have the basic steps, I want to share the common mistakes that can jeopardize your company’s future.

Not Evaluating Your KPIs Regularly

In the last 3 years the world has changed, your business has changed, and yet so many companies are still using the same dashboards and measures they defined years ago.  KPI’s are not intended to be static they should change as your business changes, as your employees change, as your suppliers and customers change.  At Lodestar Solutions, we coach our clients on hosting quarterly or at least semi-annual strategy sessions to identify how your Cognos Dashboards, KPIs and Planning Analytic models should change.  To learn more about hosting meetings check out our blog, Facilitating Analytic Discovery for Success.  

“What got you here won’t get you there!” 

Measure Everything

Another mistake is to create too many KPIs.  Hint the name says it all, they are Key performance indicators.  Not All performance indicators.  Start with what you believe best monitors the relationship with your stakeholders (as described in previous blog).  We are looking for the needle movers.  Things our teams can take actions on to improve the performance.  When you measure too many things, people don’t pay attention to any of them.  Remember if you are hosting regular strategy sessions you can change them.  Less is more.

Tying Bonuses to KPIs

Be very careful if you tie bonuses and incentives to performance on KPIs.  According to technology thought leader Bernard Marr, “The true purpose of a KPI is to help people inside the business know where they are in relation to where they want to be.  They act like a compass on a sea voyage.  But, once those KPIs are linked to incentives, they stop being a navigation tool and become a target an individual has to hit to secure their bonus.” 

I have seen this firsthand.  Prior to the real estate bust, I was working with a large Chicago home building designing an IBM Planning Analytics model.  Just prior to the crash we noticed that the number of spec homes was increasing significantly, which was odd as spec homes are the models used to help sell houses.  When we asked the CFO about it, he said, oh yeah that’s because we have had people back out of closings.  He then added we pay our project manager based on completions, so they keep building.  Fast forward the billion-dollar home building is no longer in existence.  I believe the warning signs were there, but the company didn’t act fast enough to change how people were paid.  Foundation Crumbles on Kimball Hill homes.

Get an Analytic Success Coach

Success leaves clues and there is a methodology of developing the KPIs executives use.  The above gets you started but if you want rapid success you may want to consider getting a coach to guide your thought the process.  Yes, there are analytic success coaches!  At Lodestar Solutions we work with clients to empower you and your teams to successfully facilitate analytic strategy sessions.  If you would like to learn more about how a coach can help you achieve success in weeks not years, email us at services@lodestarolutiosn.com.

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