How to avoid TOXIC KPI’S

Performance management is without question, an important aspect of any business. ⁠⠀
⁠⠀
Key Performance Indicators (KPI's) can be an amazing tool in your performance management toolbox, they (as the name suggests) give you an indication as to how successfully you are performing towards your organisational goals and objectives. They drive your business.⁠⠀
⁠⠀
But what if they are driving you in the wrong direction? What if they are being ignored? What if you are measuring the wrong things?⁠⠀
⁠⠀
KPI's can easily become T O X I C ☠☠☠☠☠⁠⠀

What constitutes as a T O X I C KPI?

• When there's a contradiction between actual performance and the numbers

• When you mindlessly chase 'numbers'

• When they stop being indicators and become targets

• When they don't inform decision making

• When they are imbalanced

Recognise any of this? Yes? Thought so!

So, we know what makes KPI’s toxic. But how do we avoid that? How do we ensure our performance management suite is doing its job?

Simple. Think CUSTOMER.

The more your attention is focused on outcomes important to your customers, the better you will perform on outcomes important to the business

It’s true. Your customers are one of your most important assets, without them, you would have no business. If you ensure your performance measures indicate how consistently you are achieving outcomes important to your customer you will, in turn, be positively impacting performance in other areas.

Let me give you an example.

You work in the leadership team for a customer call centre and you determine that the outcomes important to your customers are:

• They want a friendly, competent person to pick up their query

• They want a solution before they put they say goodbye

• They want a reasonably fast solution, they don’t have all-day

So, you cultivate a happy, skilled workforce, you empower them to take initiative and provide them with the tools they need to do their job well. You create some customer KPI’s that directly indicate how successful you are in achieving your customers’ outcomes, they look like this:

• Friendly, competent person to pick up their query >>> Agent ‘friendliness rating’ KPI

• Solution before they put they say goodbye >>> First Time Resolution KPI

• Reasonably fast solution, they don’t have all day >>> Average handling time

*Remember, these are indicators, not targets.

You monitor your KPI’s and see that your team are doing AMAZING! Agent ratings are great, first time resolution is high and average handling time is within what your customers are happy with. But, it’s not just that, you also see that your customers have no need to make follow up contact, your CSAT scores are soaring, complaint rates are low, your customer retention rates are great, your customer lifetime value looks fantastic, your employee satisfaction is great and as a result your staff turnover is low. Wow, what a month!

OK, if only it were that perfect but you see my point. Customer-focused KPI’s have a knock-on effect across the business and positively impact other important KPI’s. I’m not saying you should ONLY measure customer KPI’s, but I am saying they should be high on your agenda.

The best approach is to utilise the Balanced Scorecard. First seen in the Harvard Business Review in 1992 it creates a strategic overview of your business performance, whilst it considers the traditional financial performance measures, it also takes into account development and innovation measures, operational measures and the holy grail, customer measures.

Avoid TOXIC KPI by rebalancing your approach and injecting a big healthy dose of customer-focused KPI’s into your strategic overview.

⁠⠀