by chiefstaff

September 18, 2014

I came across the following picture on the blog of Thaku Huni and the thought struck me about a situation I encounter quite frequently:

KPIS-post-imgIf you asked any objective person about the KPIs of the group of six men above – most people will agree that at least on quality (meeting customer specifications about the rails) this team will rate 0%.

Yet, if you asked this team, they might in all honesty, claim that at least one rail is meeting the opposite side – so their quality rating should be 50%.

Time and time again I encounter this situation. Let me give you one example. I have to fly frequently for client assigments, and Qantas our national carrier rates its on time performance quite highly. Yet, numerous times they have just cancelled my flight and moved me to the next flight, or done many similar things to meet their publicly declared on time performance targets.

QantasAnd, Qantas is not the only airlines to do this. Over the years, I have noticed that the tricks employed by airlines have included blaming mechanical failures, blaming weather, moving the departure times in case of delay, coming up with a plethora of ‘exclusions’ to maintain their impeccable on-time departure record.

Almost all KPIs are suspect till you get to the depth of how they are defined, how they are calculated, how the data is collected and analysed. A quick example to make it real.

A large logistics company was the preferred supplier for our clients – a multi-billion dollar fast moving consumer goods company. The logistics company would every month send reports proudly claiming on-time delivery track record of close to 100%. When our team delved into the details it because clear that the due dates/times for any deliveries likely to not meet the target would be quietly changed to indicate the new delivery times. Voila – near 100% track record.

ManamocBoatsObviously, the deliverables must be pre-agreed and held firm barring exceptional circumstances. KPIs must not be allowed to be doctored to shore up the numbers, lest they become meaningless exercise in data collection and analysis.

BAD KPIs are WORSE than no KPIs. I would rather navigate a ship without a gyro compass, than with a faulty gyro compass – because I can do better with a reasonable magnetic compass than with a faulty gyro.

Now, I am sure that I am not the only one who has come across these type of incidents. In fact most experienced business people will have their own experiences – some more colourful than others. If you want, share your favourite tricks in the comments section below. You might even win the best entry get a prize – my latest book.

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chiefstaff

MORE INTERESTING READING
  • With the ease of data collection in today’s technological landscape, it’s easy to get bogged down in performance metrics. But “more numbers” doesn’t always translate into a better understanding of what your company needs.

    I am not much aware of this KPI’s But one thing I would like to ask that is very pointing out in my mind is…

    How should you go about selecting KPIs for a startup?

  • Absolutely right Mr. Vivek. Life and our work full of incidents. We can say it can be done lack of knowledge or less experience or technical faults. I agree to say it’s good for nothing to have bad results.

  • KPIs are the first and essential step in tracking and evaluating your progress and thereby allowing you to focus on activities that are important to your business. Though most business people understand the value of key performance indicators (KPIs), they often fail at the execution. In fact, 90% of business measurements collected is rarely used for the decision making process.

  • Well, I think KPIs should be directly related to your major goals. If you don’t have your goals written out, you should start there. Don’t try to bite off more than you can chew. In other words, stay away from measuring everything that moves. The secret sauce is to focus your effort and resources on collecting and reporting the data that really move the needle – data that leads to action and drives positive results.

  • Key performance indicators (KPIs) are powerful, yet they come with a cost. That said, it’s critical to keep the list short and sweet so you can invest your time and resources efficiently. I recommend you start with measuring your number of leads, lead conversion rate, average sales, number of transactions, and margins. The remaining 5 should be operational measurements and tied directly to your goals.

  • After a period of experimentation, you will be able to differentiate the key performance indicators (KPIs) that are helping your business from the ones that aren’t. As your business grows and changes, so should your KPIs. Hence, be willing and open to tailoring your list of measurements. Choosing the right KPIs is not always a straightforward process. Every business is different and unique in their own way. With that said, take the time to arrive at the KPIs that are best aligned with your goals and offer valuable insights into how you can drive your business forward.

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