Summary
KPIs can indeed drive companies in the right direction if they are well-designed, aligned with strategic goals, and used as part of an overall performance management system. They should be balanced, provide actionable insights, be achievable and be regularly reviewed and adapted to remain relevant. However, careful management is required to avoid the potential pitfalls such ~as short-termism, exploitation, misalignment, overcomplication, and lack of context. By addressing these considerations, companies can harness the full power of KPIs to achieve sustained success.
How can Hatmill help?
Hatmill can help identify and implement new KPIs or evaluate a company’s existing KPIs, assessing if they align with the company’s overall strategy and goals, ensuring each KPI supports the company’s objectives and contributes meaningfully to them. Checking that all KPIs are:
- Specific, Measurable, Achievable, Relevant, and Time-bound (SMART), covering all critical business aspects without overemphasising any single area
- Using reliability and consistency of data sources
- Providing insights that help management make informed decisions and prompt corrective actions.
- Communicated and if there is clear ownership and accountability, checking the frequency and effectiveness of KPI reviews and adaptation mechanisms.
- Avoiding potential pitfalls like short-term focus, metric manipulation, departmental misalignment, and overcomplication.
It is very easy for companies to fall into a false sense of security that their KPI’s are driving them in the right direction, having an independent review can confirm that they are, or provide recommendations that will.
We’ve supported a variety of businesses in implementing KPIs in relation to their supply chain and logistics strategy. Please contact Ross Hudson to discuss further.