Understanding KPIs: Correct Usage for Effective Performance Management (Full Transcript)

Speaker 1: Yo, some of you are not using KPIs the right way. So what are KPIs? KPIs or Key Performance Indicators is a term that gets thrown around a lot in management and leadership, but it can often be used incorrectly. To ensure your performance management, your goals, your expectations are clearly being communicated to employees, it's important to understand how KPIs fit into this larger equation. In any organization, you should have a mission that is rather static, meaning it doesn't change much. From that, you would have priorities tied to the mission and these will often change and adjust over time. These are typically identified by your executive leadership. This senior leadership team will then determine strategies to work towards those priorities. Part of implementing those strategies is having a way to measure success. This will be your key performance indicators, essentially indicating if you are succeeding at your strategy. So let's say a priority is to increase brand loyalty. It's determined that part of the strategy to increase brand loyalty is by improving customer experience when contacting the organization. The organization does have customer satisfaction surveys that they gather a few times a year. The organization's contact center also measures the quality of different aspects of contact including communication. Contact center staff have been trained and are measured on specific behaviors that have been determined to lead to a better contact experience. The KPIs for this strategy of improving customer experience could then be satisfaction surveys and quality of communication. Now the contact center measures all kinds of other areas of performance. Quality of information gathered, quality of information delivered, following procedures and policies, productivity, call wrap-up time, average handle time. These are all still important areas of performance to measure and deliver to employees, but they are not all KPIs. If your organization is calling every area of performance a KPI or only measuring KPIs and neglecting all other areas of performance, or if you can't tie a KPI back to a specified priority and strategy, then most likely KPIs are not being used correctly and calling them such is probably causing confusion for your staff. So back to the example. We've identified two KPIs, customer satisfaction surveys and quality of communication evaluations. We can use this to benchmark where we currently are performing and then use KPIs to measure progress. Our strategic leaders would like to improve the performance in these areas. Our plan is to review the identified communication behaviors with our staff and hold some practice sessions to model and role play these communication behaviors. We feel confident that this will help staff feel more comfortable and confident with communication, thus creating a better experience with our constituents. We can measure progress using the specified KPIs. So after some communication review and practice sessions, we look at how our staff are performing in quality of communication and satisfaction surveys and we see clear progress. Those KPIs indicate that our strategy is successful. KPIs are helpful for strategic leaders to focus on and measure the success of specific priorities. They may not mean as much to your frontline employees as what's important for them is to know what is expected of them overall and how they are performing to these expectations. You should have standard performance expectations for individual employees and for the organization that are relatively constant and consistent. As priorities and strategies change, your KPIs often pull from the larger list of performance expectations and measurements will shift to match the corresponding strategy. I hope this helps to clarify the difference in use of KPIs over performance standards.