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Top Five KPI Mistakes & How to Avoid Them

By Jenna Sedmak - April 14, 2019

While each part of the strategic planning process is important, a little extra attention may be needed when developing your key performance indicators (KPIs). By this stage in your strategy development, you’ve already revised your organization’s vision, mission and Strategic priorities; you’ve worked through your SWOT and PESTLE analyses; and you’ve discussed scenarios and risks that your organization or industry may encounter in the future. You’ve done a lot of great work, but it doesn’t end there.

A well-developed plan must also be an actionable one that can be tracked and implemented across your organization. When KPIs are not adequately developed, you risk having a plan that looks great on paper, but may be difficult to monitor and execute.

Your KPIs are tied to your organization’s strategic priority areas and are what you will use to move the needle towards your goals and to measure your success along the journey. If thoughtfully designed, your KPIs will guide your team towards the vision you've set for your organization. 

Use this guide to avoid some of the top mistakes businesses make when setting their KPIs, and learn how to use our best practices to develop SMART goals within your strategic plan. 

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  • Mistake #1: KPIs are not specific or measurable

Sometimes KPIs fall short because they are mistakenly believed to be the same as goals. Rather than setting a measurable target, some “KPIs” are too general. For example, increasing revenue, obtaining more clients, or having less employee turnover all fall short of being effective KPIs.

Instead, think “SMART” (specific, measurable, actionable, realistic & time based) when setting KPIs. Rather than general ideas about what success looks like, KPIs should demonstrate what your specific indicators of success are. These can be monitored and measured over time will better serve your organization.

Effective KPIs built from the examples above could look like: 

  • Increasing revenue: Increase our annual revenue by 10% by May, 2020 (lagging indicator) OR increase service capacity by 10% by May, 2020 (leading indicator).
  • Obtaining more clients: Increase online sales to$800,000 by July 2020 (lagging indicator) OR enroll 500 past clients in referral program by July 2020 (leading indicator).
  • Less employee turnover: Have an annual staff turnover rate no higher than 10% per year by June 2020 (lagging indicator) OR hold one employee engagement event each month during work hours over the course of the year to by tracked by June 2020 (leading indicator).  

  • Mistake #2: You have only selected metrics that you cannot influence
To have the ability to effectively execute your plan and influence your outcomes, both leading and lagging indicators should be included in your KPIs. While leading indicators are Input oriented tasks or activities that are within our control, lagging indicators are output oriented, easier to measure, but harder to influence or control.

It’s important to have both leading and lagging indicators when setting KPIs so that your organization can do what is within its control to help influence the outcomes that are less within its control.

For example, with staff retention rates, your organization cannot always control whether people quit or remain in their roles. Employee turnover will happen regardless of your industry or organization. Though important to consider, turnover metrics alone will not help your organization change or address its employee retention issues. However, developing and measuring internal processes that are aimed at reducing turnover, in addition to tracking the output measurements, will help your organization influence this key area. 

Learn more with our guide on Strategic Goal Examples.  

  • Mistake #3: Too many items are being tracked and monitored

While it is important to set enough KPIs to develop an actionable plan, a common error is setting too many. If there are too many areas to monitor and tasks to implement, there becomes a risk that your organization may spread itself too thin. Instead of doing “OK” at many things, it’s better to excel at a few things.

To keep things both implementable and manageable, we recommend having three to five strategic priority (SP) areas per planning cycle. For each SP, we then recommend developing three to five KPIs that can help your organization achieve success in each area.

If possible, try setting short, medium and long-term KPIs for each area. This can help you adopt a more agile approach to strategy, recognizing what is working and not working, throughout various stages of your implementation cycle.

  • Mistake #4: KPIs are not owned or championed
When it comes to strategy execution, it is important that each SP and associated KPI has an owner or champion who is responsible for its tracking and implementation. If no one is responsible for an area, it risks inaccurate measurement or haphazard implementation.

If it is clear who is responsible for what early in the planning process, accountability is fostered, and your strategic plan has a better chance of successful implementation. Your people will know what they (or their team) are responsible for and exactly what needs to be developed and monitored.

Interested in learning more about developing accountability when goal setting? Visit our guide on How to Improve Accountability When Implementing Your Strategic Plan.

  • Mistake #5: KPIs are developed without team input

We recommend team inclusion throughout each stage of the strategic planning process, from initial stages of pre-planning, through the development of your mission, vision and values, right through to the development of SPs, KPIs and implementation plan. 

The more aligned your team is, the better equipped they (and their teams) will be to implement your plan across the organization. When it comes to KPIs development, it’s important to consider the input of those who will be responsible for carrying out the associated actions. Rather than using a top-down approach to set metrics and targets, a communicative approach with a team consensus can help to your organization develop realistic and attainable KPIs, while fostering team buy-in for the initiatives.   

For more information on the importance of team alignment when developing SPs & KPIs, listen to our podcast episode: Developing Strategic Priorities and Improving Organizational Communication.


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