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Why most KPIs don't work and how to solve this dilemma

by , 23 June 2014
Key Performance Indicators (KPIs) are crucial in any work environment. They're the best tool for measuring how well your business and your employees are performing.

If KPIs are so important, then why are so many businesses coming up with KPIs that don't work?

Continue reading to find out why most KPIs don't work and how to solve this problem.

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These are the reasons why most KPIs don't work

Most of the time, KPIs don't work because they aren't aligned with specific business objectives, says Aleksey Savkin, a balanced scorecard expert.

Don't fall into the same trap. Align each KPI with a business objective.

Another thing that causes KPIs to be ineffective is that managers fail to translate KPIs to their team.

Savkin says you must translate a KPI to your team by explaining to employees the 'why' aspect. For example, why or how a KPI is aligned with a specific business objective and how that business objective helps to execute the company's strategy.

Overall, poor implementation contributes to KPIs not working as they should.

The moment you start ensuring your KPIs are effective; your employees will stop treating them as a 'necessary evil'.

So use these methods to ensure your KPIs are effective.

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Here's how to ensure your employee's KPIs are effective

You need a sound approach that will help ensure employees buy into KPIs as a business tool.

Savkin says a sound approach for better KPIs starts with having a clear objective.

You must:

  • Have an action plan. (Ask yourself what you're going to do to achieve a specified business objective);

  • Define a KPI (It can be a KPI for monitoring performance or for tracking progress);

  • Translate your KPI to a team (Explain the context and involve your team when you develop the KPIs); and

  • Monitor KPIs (KPIs need constant monitoring).

Now that you know why most KPIs don't work, use the solutions we've outlined to ensure your employees' KPIs are effective.

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