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I hear from many sources that we should keep a KPI simple and easy to understand. We do agree with it, but with a sense of caution. The level of simplicity of KPIs reduces as you move higher into an organization. The KPIs for foot soldiers are simple, but not for Colonels and Brigadiers.
As a principle, the KPIs at the lower level are:
- Focused entirely on 'what?'
- Limited to the work done by the person.
- Short term. Can be improved in a short-span
- Operational in nature
The KPIs at higher level of hierarchy are:
- Place as much emphasis on 'how'?
- Include the linkages to other KPIs- For example the KPI of a sales manager will be the level of sales revenue along with an increase in the sales productivity.
- Leading KPIs- For example creating a healthy sales pipeline so that we have higher confidence on sales performance in future months.
- Balanced KPIs- Increase sales revenue while maintaining the sales profitability.
In-Brief: As one moves higher in hierarchy, the KPIs (or group of KPIs), need to more holistic, strategic and enable sustainable performance.
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