How to set actionable KPI targets
Key Performance Indicators (KPIs) are probably one of the most over-used and little-understood terms in business and analytics. A key performance indicator is a measurement of activity that reveals how a business, team, or individual are performing against their goals. Many fall short of their KPI targets because they lack proper definition and are not actionable.
So, how do you set actionable KPI targets?
Analyse your current performance
Analysing your current performance will give you the basis to set your KPI targets. Avoid qualifying your results! You wouldn’t need to set KPI targets if you were exceeding all your goals. Therefore, by evaluating your current performance, expect to get a dose of reality.
Establish goals and objectives
Based on your analysis, set the goals and objectives you want your business to achieve. The goals and objectives should encompass the company’s stated business mission, not just revenues alone. Make sure to be realistic here. Setting realistic goals and objectives is a common challenge when setting KPI targets.
Establish Critical Success Factors (CSF)
Critical Success Factors (CSFs) are a limited number of key activities that an individual, department, or organisation should focus on to be successful. A CSF must be measurable and include a specific time frame within which business goals and objectives will be met. You can look at CSFs as the critical activities that, properly executed, will be reflected in improving figures for KPIs.
Set short and long-term KPI targets
Now it’s time to determine your actionable KPI targets. The operative word is actionable, so you want to establish KPI targets that are tangible and relevant. You also want to set both short and long-term KPI targets. The short-term KPI targets keep everyone focused on the long-term ones, and the long-term ones determine the future of the business.
Review targets with your team
Take your KPI targets to your team and review them in an open, honest environment. Encourage feedback and act on it. If your team is telling you they can’t hit your targets, then you must listen to them. KPI targets ought to be challenging and a bit uncomfortable, but they must be achievable as well.
Review progress and readjust
Part of success is the continuous review of your KPI targets. Keeping a direct line of sight on performances and talking about them helps everyone stay on track. And sometimes, you’ll need to make the tough decision to adjust KPI targets, to keep them actionable and relevant.
Setting actionable KPI targets seems like a daunting task. However, if you utilise the process laid out here, you’ll have a stable framework for setting actionable KPIs for both your business and your team.