Most organizations have a vision, a mission and can clearly articulate their values. Organizations hang these carefully crafted words on the wall, create posters, employee handbooks and badge cards to reinforce why they exist and what success looks like. All of these efforts are valuable, in fact fundamental to any performance management framework; however, none of these activities generate results. Action is needed.
A strategy must be translated into a strategic plan that includes specific Key Performance Indicators (“KPIs”) anchored in monitoring financial, operational and people performance. The most effective KPIs have a focus on leading indicators of business results versus rearview metrics. For example:
Grow Revenues by 10% Annually
- Leading: Launch 2 new lines of business
- Lagging: Return on Investment (ROI)
KPIs are not volumes of reports, but vital few metrics to indicate the health of a business. Once clearly defined and cascaded to teams and individuals, they are routinely discussed, analyzed with corrective action taken when required. Think of Deming’s Plan: Do, Check, Act cycle.
By doing the “Checking” and the “Acting”, KPIs tell a story and create a sense of urgency to unlock solutions at all levels of the organization. Creating this performance-oriented culture requires discipline with relentless focus on accountability. Specifically, this includes:
- Action through Leadership: Management must create transparency and line of sight to organizational KPIs. Leaders can promote the strategy by modeling decision making based on data rather than “gut feel”.
- Action through Participation & Ownership: When teams and individuals participate in the goal cascade and monitoring process, they have stronger ownership of the outcome. In turn the organization has a bias toward action, where communication routinely flows and decisions and actions are taken at the right level.
- Performance Management: Individuals at all levels of the organization should be evaluated based on how well they meet their performance goals. The link between strategy and the individual becomes clear where they can identify what skills and knowledge are required to make the strategy successful.
In summary, don’t check the box and call it done when you have defined your strategy. Keep a relentless focus on developing, communicating and monitoring KPIs at all levels of the organization. Otherwise, your strategy is just a pretty poster on the wall.