Chapter 4

Organising Your KPIs

In This Chapter

arrow Identifying KPI frameworks and their relevance

arrow Exploring the most popular framework – the Balanced Scorecard

arrow Exploring alternative frameworks

Business leaders and senior executives usually understand the importance of KPIs as navigation tools. They appreciate the value of relevant and timely information and yet most of the focus is on indentifying and designing the KPIs themselves with little regard for how they are organised. This is a mistake.

To help rectify this situation this chapter is about performance measurement frameworks and how best to organise your KPIs for maximum effect.

Understanding the Need for KPI Frameworks

Information is everywhere. Every business holds a vast amount of information. The business may hold it in different places or in different formats, but it is there. If anything, we now have access to too much information and data. Without some type of framework around which to organise that data we simply end up with a huge list of KPIs that we could, should or may measure.

Ultimately KPIs are only really commercially relevant and useful decision-making and navigation tools if they are used, and they will only be used if they are organised clearly and constructively around critical business areas.

Weighing the options

Like the number of potential KPIs that exist there are also many possible frameworks that you could use to organise your KPIs.

KPIs are equally relevant to government and not-for-profit organisations as they are for commercial businesses. But the focus and goals of each organisational type are very different and need to be considered when deciding the best framework for your KPIs.

If you run or are involved in a commercial organisation then there are a number of important areas to consider that are consistent across all for-profit businesses. Those areas may be called different things in different businesses but they cover finance, operations, staff and customers. It follows, therefore, that you , need a framework that includes those areas so that you can measure performance across them all.

If you run a government department or are involved in a not-for-profit organisation then you may still be interested in those areas, but the relative importance within different organisations may be very different and the framework you choose needs to reflect those altered priorities. A government department, for example, will be more focused on delivering services to the community than on financial performance. Financial performance is still vitally important to any government or not-for-profit organisation, but it is not the ultimate goal.

It’s therefore important that you weigh up the options of potential KPI frameworks from the perspective of what your business already looks at and pays attention to. There is no point re-inventing the wheel and making additional work for yourself by deciding on a KPI framework that bears no resemblance to the way your business is organised.

Selecting the right framework

Selecting the right framework is crucial in achieving buy-in and acceptance for KPIs in your business. And that means selecting the right framework for your business or organisation, not just the first one you come across that looks like it might do the job.

The framework you choose needs to represent your organisation, so the people you want to use it will understand it and resonate with it. For example, you may like the Balanced Scorecard (BSC) – which we’ll explore in more detail in the next section – but find your business doesn’t call ‘Internal Processes’, by that name, instead referring to that perspective as ‘Operational Excellence’. If that’s the case, then change the terminology to match what your business already uses and is comfortable with.

The last thing you want to do is introduce another framework, process or methodology that people have to learn and use. The idea is to make the transition into regular KPI reporting as easy and painless as possible so that the KPIs become useful immediately.

So if you are already using a particular framework, or running a quality framework like the EFQM, for example, and that methodology is happily embedded into your business, then use that framework. It will probably already cover all the key areas or considerations that you will need KPIs to measure, so just piggy-back on what’s already working in the business.

If the framework doesn’t quite cover everything then adding a couple of additional KPI perspectives that the business and the employees are already familiar with is much more likely to succeed than introducing a completely new framework with new perspectives and new terminology.

remember.eps The KPI framework is really just a way to organise your KPIs around areas that your business already considers important. Those areas will already be present in your business. The trick is to choose a framework that essentially wraps a KPI reporting structure around those areas to provide a meaningful way to present the KPIs and deliver only the information that is relevant to those important areas. Designing and creating the right framework for your business very much depends on the nature of the organisation.

Introducing the Balanced Scorecard

The Balanced Scorecard (BSC) is a widely used strategic performance management framework that allows organisations to identify, manage and measure their strategic objectives.

remember.eps Business leaders need real- time, relevant information about the past and present in order to predict and manage the future successfully. The BSC provides a brilliant, simple and logical solution to that challenge.

Like most great ideas, the BSC is conceptually simple. Its inventors, Kaplan and Norton (see the nearby sidebar ‘Finding the point of balance’ for more on them and their brainchild) identified four generic perspectives that cover the main strategic focus areas of any company. The idea is to use this model as a template for designing strategic objectives, measures, targets and initiatives within each of the four perspectives, thus providing a more balanced scorecard - hence the name of the tool.

In a Balanced Scorecard approach you first define your most important business objectives across 4 perspectives, which are depicted in a strategy map that shows the interdependencies between the objectives. You then define the performance measures and targets for each objective before you finally create an action plan that outlines the initiatives you need to perform to deliver the objectives (see Figure 4-1 below).

The four perspectives explored by the BCS are:

  • Financial: Focuses on performance from the financial perspective. It covers the financial objectives of an organisation and enables managers to track financial success and shareholder value.
  • Customer: Focuses on performance from your customers’ perspective. It covers the customer objectives such as customer satisfaction, brand experience and product and service attributes.
  • Internal Process: Focuses on performance from the perspective of the internal processes required to deliver your product or service. It covers internal operational goals and outlines the key systems and processes necessary to deliver the customer objectives.
  • Learning and Growth: Focuses on performance from your employee’s perspective. It covers the intangible drivers of future success such as human capital, organisational capital and information capital including skills, training, organisational culture and leadership

Getting a grasp of the four BSC perspectives

Most business leaders, senior executives or managers are and perhaps always have been acutely aware that running a successful business is not just about income and expenses. But it wasn’t until the BSC gained popularity that these insights and understandings were formalised in a meaningful framework that allowed those same business leaders to guide their businesses from a variety of business perspectives.

Even if business leaders appreciate their strategy and performance targets are skewed around the financials, the drive to deliver shareholder value and the constant pressure to perform in that numbers-driven environment can make the task much harder than it may, at first, appear.

As a result many businesses still end up measuring performance in an unbalanced way. You need to think of the four perspectives of the BSC like the legs of a table. Most businesses have a strong working knowledge of their financials and a thorough knowledge of their internal processes. But two legs won’t support a table _ at least not without a bit of luck. The table may stay upright for a while, but it will not be strong and it certainly won’t survive any commercial knocks or bumps.

The balanced scorecard encourages you to measure, analyse and improve all four legs together so as to create a very stable platform. Like a table with four legs, a business that focuses on, and measures around all four BSC perspectives is considerably stronger and much more stable. Ironically, the only way to really deliver financial performance is to extend your focus beyond financial performance to include the other three BSC perspectives.

Tackling the financial perspective

One of the reasons that the BCS is so popular is that it is very easy to understand and is applicable to almost all organisations.

If you consider a commercial business, for example, then clearly making money is a primary goal of that business. But finance is also a very important area for not-for-profit companies or government departments. Their strategy may not be focused around how to make more money, increase shareholder value or initiate growth into new markets, but that doesn’t mean that money isn’t important. Far from it: Not-for-profit organisations or charities must be extremely vigilant and transparent around how they spend money – constantly seeking to make what they have go further. Government departments or organisations must also be fully aware of their financial performance and measures so they can control costs and be accountable to taxpayers for the money they receive or generate. And this is especially true in times of cutbacks and austerity.

Regardless of the type of organisation in which you are involved, you have to know how much money you make, where the revenue comes from and how much you spend to achieve those results. In the commercial world, it’s important that you know the level of shareholder returns your company will deliver as well as revenue growth, profit margins and cash flow positions. But taking a financial perspective alone can be dangerous and short-sighted. It can lead to decisions that are not in the best interests of the business, the community it serves or the wider economy. If, for example, you brush away the rhetoric and scratch the surface of the global financial crisis you will see individuals and businesses hell-bent on the financial perspective and only the financial perspective.

Lots of different financial metrics exist, including cost of goods sold, market share, price-to-earnings ratio (PE) and return on equity, that are used by stock market analysts to measure performance and predict future share price movement. In fact the number of potential financial metrics alone can be utterly overwhelming.

It makes sense therefore for you to seek to organise your financial KPIs around your financial objectives. Consider what you are trying to achieve financially:

  • Are you seeking revenue growth?
  • Do you plan to improve profit margins?
  • Are you aiming to be number 1 in term of total shareholder returns in your sector?
  • Do you plan to maximise shareholder value?
  • Are you aiming for long-term sustainable income?

Once you know what you are trying to achieve you can then ask yourself what information or data is going to help you know where you are in relation to that objective? At this stage, don’t worry whether you have the data or could get the data - just think about what you would like to know in an ideal world.

The ultimate outcomes

Some say business exists to make money. Certainly making money is crucial to business success, so it’s hardly surprising that much of the focus of commercial organisations is on the financial perspective.

This is especially true of publicly-listed companies that have to measure and report their performance to the stock market every quarter. This information can and does have a profound effect on the share price of the organisation, so it’s easy to see why CEOs, CFOs and Financial Directors are so consumed by the financials of a business. In many respects their careers depend on being able to demonstrate positive and upwardly trending financial performance.

How do you look to your shareholders

The critical question that financial measures should help you answer is ‘How good does your business look to your shareholders?’

Analysts and investors will be poring over your financial statements to decipher whether you are growing, stagnating or contracting, and they will use that information to decide whether to buy, hold or sell your stock.

Often you have no choice about your financial KPIs or priorities because you are being judged purely on financial performance. As a result you are in competition with every other company on the stock market.

Making sure you’re delivering to your customers

Although traditionally business has focused on financial performance and has been pretty good at organising and reporting KPIs from this perspective, without an equally sharp eye on customers, the financial performance of any company can very quickly deteriorate.

After all, if your customers are not happy with the quality of your product or service, or the way you treat them or market to them then they won’t buy from you or they certainly won’t buy from you again. And if you can’t find and keep customers then it won’t matter how creative you get with your financial KPIs, you won’t make money.

You need to know what your customers really want. You need to know whether you are delivering to meet their expectations. You need to listen to what they are telling you – either verbally through feedback or via their buying behaviour. You need to know what they are happy about and what they are unhappy about. And you need to access this information so that you can better anticipate what they are going to want tomorrow.

And yet, the reality is that most business don’t really know. Senior executives may sit in round table discussion and make assumptions about what their customers want, but they rarely involve the people in their business who may actually know. Customer service employees, for example, are rarely asked about their insights, and yet they are the ones on the coal face of the business who are probably best placed to provide information about customer needs.

The information locked up in a business about customers is often significant, but unfortunately it is often stored in different places, departments or databases that never speak to each other. And yet this data when unlocked can transform performance.

For example if you know exactly who your customers are, where they live, where they shop and what they read you can tailor your message to them and find more customers who will also like your product. If you know what they want and what they expect then you have a far better chance of delivering loyalty-generating service and creating raving fans who will happily recommend you to others.

The customer perspective of the BSC ensures that you stay focused on this critical area of performance and organising KPIs around your customers will ensure that you really know what’s going on from your customer’s perspective.

Understanding how your customers see you

The critical question you are seeking to answer with customer focused KPIs is how do your customers see you? Not how do you think they see you, or suppose they may see you but how they actually see you.

And there is no way of getting this information without interacting with your customers and measuring what they actually do.

In the customer perspective you define and measure your customer objectives, which can relate to your market position (e.g. your market share or industry performance), your product or service attributes (e.g. are you delivering in terms of price, quality, availability or functionality), the relationships you have with customers (e.g. customer loyalty) as well as the brand image (e.g. brand perception).

Assessing the impact of the internet and social media

There is little doubt that the customer perspective has taken on new and increased importance since the advent of social media and smart technology.

It is now likely that a great many of your customers are almost constantly connected to the internet via their computer or mobile phone. Every whim, irritation, surprise, delight or frustration is a click, tweet or status update from being in the public domain.

Customers are increasingly asked to share their experiences and rate companies either by the company themselves or via blogs, specialist websites, or social media platforms. This presents both a serious opportunity and a serious threat depending on how well you look after your customers.

remember.eps Your customers now have a clear and constant connection to the worldwide web which allows them to share every thought and experience with the world – including having a good rant about a perceived or real lack of service or quality.

Looking at your internal processes

Although called internal processes in the BSC, this perspective basically explores the operations of a business. How does what you do get done, created and delivered, and how well.

This perspective is probably ignored the most in business. The relevance of customers is obvious as is their impact on finance. But internal processes are often discounted from measurement and assessment because they are either non-core processes such as paperwork, database design, purchasing protocols, warehousing and distribution or they are just taken from granted as part of doing business. Plus they often just evolve over time as the business grows and develops. They need to get done so someone does them, but we rarely stop to consider whether the way we are doing something is the best way to do that thing and whether or not there is a better, cheaper, easier or more efficient way of doing it.

And yet because they have often evolved or been cobbled together when needed they are often ripe for improvement and can yield significant cost and time savings.

It is so important to take the automatic pilot off when it comes to internal processes and operational efficiency. And in order to do that you need to incorporate a suite of operational KPIs that can help you to work out what’s really going on inside your business – including policies, procedures and quality protocols. Internal process KPIs can allow you to identify where the gaps and opportunities are for increased efficiency, which can in turn increase value inside the business.

Implementing KPIs around internal processes can also allow you to anticipate the future so that the operational part of your business is best equipped to meet the changing needs of your customer.

Knowing what you should be best at

The critical question you are seeking to answer with KPIs focused on internal processes is ‘What should we be best at?’

Just as customers are connected to finance, internal processes are also connected to both customers and finance. Armed with more customer insight from customer-focused KPIs you are better equipped to know what you need to be best at – according to your customers. And if your internal processes are robust and efficient, able to flex and adapt to changing market conditions, then your financial KPIs will also indicate a strong healthy business.

Paying particular attention to quality

Quality is obviously very important in business but it is relative. What makes the BSC such a powerful KPI framework are the interconnections and balance that it provides between the different perspectives cover in the earlier sections in this chapter. For example, unless you know what your customer actually wants then you could be wasting time and money perfecting quality that the customer doesn’t even care about. You need to match your quality needs to what the customer wants, not what you think they want.

There is little doubt that poor quality can be costly not just financially but to your brand as well. But so can excessively high quality or seeking to raise the bar for a particular part of the offering that the customer doesn’t appreciate.

If for example you run a hotel, you might decide that you are going to change all the sheets in the hotel to 100 per cent Egyptian cotton. That may cost you a lot of money, but was anyone complaining about the sheet quality in the first place? And even if they love the new sheets are lovely sheets really enough to entice that customer to tell others about the hotel or book again? Unlikely! It would probably be a better use of money to employ more restaurant staff or a better chef.

Improving and driving future value

The final perspective of the BSC is learning and growth, which seeks to ensure that your business maintains focused on how you are developing and improving. This perspective is critical in modern business because the status quo is rarely the status quo for very long. Business is much, much more competitive than it used to be – even a couple of decades ago – so paying attention to how your business will grow and develop over time is essential. Again the links between this perspective and the other three are obvious with each impacting on the other – either negatively or positively.

Shining the light of KPIs, measurement and assessment into learning and growth will allow you to flag potential areas for concern. For example, do you have long serving employees who are critical to your business?If you do, have you downloaded what they know to others in their team, or is it all still stored between their ears? What happens when that person retires, or if they leave the business?

But it’s not just about people.

The 1992 HBR article that introduced the BSC to the world actually labelled this perspective as ‘Learning and Innovation’. By the time the first book was published in 1996 this perspective had been renamed ‘Learning and Growth’. Early implementation demonstrated that innovation was a better fit in the internal process perspective, but organizational experience has found that even the term Learning and Growth has proven problematic and open to various interpretations. For instance, it is not unusual for companies to call this perspective a ‘Human’ or ‘People’ Perspective, to only focus on staff satisfaction, training, turnover or other ‘employee’ objectives and measures. The danger in just focusing on people is that companies miss out other important enablers of future performance, which is what the Learning and Growth perspective is really about.

To address this problem, Kaplan and Norton have articulated what they consider to be the principal components of the Learning and Growth perspective, namely:

  • Human Capital
  • Information Capital
  • Organisation Capital

The following sections cover each of these components.

Looking at people and their skills

Assessing your people is the most obvious component to consider from the learning and growth perspective. Here you might want to assess staff satisfaction and engagement as well as what’s actually happening with your employees, what skills, knowledge and experience they have and whether or not those skills are hardwired into the business or remain in the individuals who posses them.

Developing KPIs around the people side of learning and growth will help ensure that you are not held to ransom by individuals who know a lot about your business. It will also allow you to work out how engaged your people are in their work and the strategic objectives of the business. Do they even know what they are? These people focused metrics can help to identify knowledge gaps, identify training needs and help to foster and develop talent within the business. All of which is essential to ensure you deliver what you need to deliver, keep customers happy and make money.

Looking at information and systems

The less obvious component of learning and growth is information and systems.

Developing KPIs around this increasingly important area will help you to work out whether your information systems, databases, networks and technology infrastructure are sufficient to meet your strategic objectives now and into the future.

Looking at leadership and culture

The final component of learning and growth seeks to deliver answers around leadership and culture.

Developing KPIs in this area help you to work out how aligned people inside the business are to each other and the corporate objectives. Plus they can help to shine a light on organisational culture, leadership style, teamwork, productivity and knowledge management.

Putting it on paper and mapping it out

It’s worth nothing that the BSC has evolved significantly since its original presentation in 1992 and this has been well documented in a number of further Harvard Business Review articles and five books by Kaplan and Norton. These additional resources do not, however, represent a step-by-step approach to implementation but rather an evolution of the authors’ thinking based on experiential learning. As a result there is still a great deal of confusion around the BSC and the term is now used to describe several different things!

Some executives and even management consultants are still using the old terminology and see it as just a measurement and reporting tool. It’s not. It’s much more than a measurement tool. Kaplan and Norton’s updated thinking very clearly positions the BSC as a strategic performance management framework that puts strategy front and centre, in effect wrapping the four perspectives around the corporate strategy so that the business stays aligned to the strategy and measures only what is relevant to that strategy.

Today a typical Balanced Scorecard framework has three key components:

  • A strategy map
  • Strategic KPIs with targets
  • Strategic initiatives in the format of an action plan.

Each component is laid out according to the performance perspectives that the organisation uses. So, for example, objectives that appear on the Strategy Map, such as excellent relationships with key stakeholders, will be supported by appropriate initiatives, KPIs and targets.

Kaplan and Norton suggest that the process of strategic performance management consists of four critical processes:

  • Clarifying and translating the vision and strategy
  • Communicating and linking the strategic objectives and measures
  • Planning and setting targets, and aligning strategic initiatives
  • Enhancing strategic feedback and learning

Whatever KPI framework you decide to use organising your KPIs effectively absolutely must start with your strategy. It is imperative that you articulate your strategy clearly, put it on paper and map it out, ideally in form of a strategy map.

Strategy maps and cause and effect maps

The creation of a strategy map is the most important element of a modern BSC. It describes the key business objectives on a single page. All too often business executives feel compelled to create long strategy documents. While they may look impressive, few people read them and even if they are read in the business the strategic objectives are often hidden or lost in extraneous information.

Strategy maps solve this problem by identifying the few (usually 2 to 5) key objectives for each BSC perspective that if achieved, will result in the successful implementation of the strategy. The BSC strategy map therefore makes the definition and communication of the strategy easier by creating a visual representation of the key objectives boiled down to a single page diagram. This one page map outlines the strategic aims and priorities of an organisation and is the central element of a modern Balanced Scorecard that helps to ensure everyone is pulling in the same direction. Figure 4-1 shows a sample strategy map.

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Figure 4-1: Sample strategy map for a commercial organisation

The capitalisation of ‘Balanced Scorecard’ and Strategy Map is currently inconsistent. Is there a key reason why either should have initial caps?What the strategy map does is put all four perspectives on a single page, which encourages everyone involved to see the cause and effect relationship between them. Otherwise the danger is that the perspectives are seen in isolation, so the Sales and Marketing Director owns the customer KPIs, the Finance Director owns the financial KPIs, the Operations Director owns the internal process KPIs and the HR Director owning the learning and growth KPIs, and they often compete with each other. The strategy map helps to prevent this because it allows all these people to really appreciate the relationship between the four perspectives and their role in them. A strategy map is a brilliant, easy to digest tool for breaking down competitive inter-departmental politics and avoiding the temptation to see the perspectives as boxes that need to be populated with metrics. Instead it’s clear that all are linked, and that everyone can see what the business is trying to achieve and how everyone is connected to that objective.

Once you have defined, agreed and understood the strategy, you can use the Balanced Scorecard to align the whole organisation with the strategy and ensure it gets executed. The scorecard helps organisations define and prioritise the activities, projects and programmes necessary to deliver the strategy. Moreover by making sure that processes and activities are aligned to the strategy and the understanding of that strategy is cascaded down through the business the scorecard helps to ensure that everything the organisation does is focused on its agreed strategy. Plus when you add relevant metrics and KPIs you facilitate better decision making and performance improvements.

Get the map right and it becomes much simpler to select meaningful initiatives, measures and targets. The Strategy Map describes the performance enablers and drivers from learning and growth and internal process perspectives that will deliver successful outcomes within the customer and financial perspectives.

Strategy Maps therefore outline what an organisation wishes to accomplish (financial and customer objectives) and how it plans their accomplishment (internal process and learning and growth objectives). This cause-and-effect logic is one of the most important elements of modern best-practice Balanced Scorecards. It allows companies to create a truly integrated set of strategic objectives.

Figure 4-2 shows an example strategy map for a commercial company while Figure 4-3 shows an example strategy map for a not-for-profit or government organisation.

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Figure 4-2: An example strategy map for a commercial company.

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Figure 4-3: An example strategy map for a not-for-profit or government organisation.

Customising your BSC and Strategy Map for maximum impact

When implementing the BSC, strategy map and KPI framework you need to customise them to fit your business. That means changing the labels to ones that better fit your internal terminology and also shuffling the hierarchy of the strategy map to fit your organisation. As you can see from Figure 4-1 each strategy map is presented as a hierarchy. For a commercial organisation finance is often at the top, but not always.

If, for example, a business has a very strong customer culture then the strategy map may position the customer perspective at the top. Obviously most businesses exist to make money and deliver returns to their shareholders, but without their customers they can’t usually achieve that. More and more of my clients now want to represent the importance of their customers by placing them at the top of the map. This not only sends a strong message to the outside world but also speaks to employees who are usually more excited about delivering to customers (who they deal with every day) than delivering returns to shareholders. Actually, most of those put customers and finance next to each other at the top. This way, you can still make the point that both are vital but one feeds into the other.

The strategy map for a public sector organisation is almost always different from that for a commercial organisation because finance is not the driver, so customers or stakeholders are often assigned the top position. For most not-for-profit or government organisations it makes sense to have the finance perspective running along the side (as shown in Figure 4-4).

Feel free to move the perspectives around, add new perspectives that are important to your business and change the terminology that describes the various perspectives to resonate more authentically with your business.

truestory.eps When I was working with a pharmaceutical company to help them create a KPI framework that was appropriate and meaningful to them it became clear very quickly that they were very conscious of not wanting to put finance at the top of their strategy map.

Far from just not wanting to look too mercenary or commercial, the executive team felt very strongly that it was not an accurate representation of their focus and would not resonate with their employees – many of whom were with the company because of their strong and focused research into cancer treatments.

Their strategy map therefore put finance alongside the other three perspectives – in the same way that government or not-for-profit organisations would do. The difference was that the content of this perspective was much more commercial, with a focus on revenue growth and sales margins. This felt much more authentic to the senior executive team and their employees. As such it was much more likely to get traction and engagement moving forward.

Looking at Alternative KPI Frameworks

BSC is not the only potential framework around which you could organise your KPIs. It’s well known and used largely because it comes ready-made and is already relevant to every organisation. All organisations whether commercial, not-for-profit or government departments share the four perspectives of finance, customers, internal processes and learning and growth. They may call them different things or prioritise them differently but the elements are always present.

That said, you can create your own or find a framework that is already used or familiar to your business.

remember.eps What you want is a framework that supports what you already do and are already using. Don’t go re-inventing the wheel.

Using Quality or Lean Frameworks

If your business is already running a quality or efficiency initiative such as the European Foundation for Quality Management (EFQM), Baldridge Award in the USA, Lean or Six Sigma, then these frameworks already cover the critical areas of business that you need to measure.

For example if you look at the EFQM model in Figure 4-4. you will see the framework identifies five areas referred to as enablers including:

  • Leadership
  • People
  • Policy and strategy
  • Partnerships and resources
  • Processes

There are also four results areas:

  • People
  • Customers
  • Society
  • Key performance results

Innovation and learning run parallel to both enablers and results.

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Figure 4-4: The EFQM model

If your business is already using the EFQM framework then it makes sense to organise your KPIs around this already familiar framework. The same is true for other existing frameworks as they might already cover, in one form or another, all the main business areas that need to be measured, monitored and analysed in order to improve performance and hit strategic targets.

Using Project Management Frameworks

Although it’s very important to design and identify KPIs that will allow you to monitor where you are in relation to where you want to be, often it’s also necessary to design KPIs on a project level to ensure that the strategy is executed.

So again, if your company already uses a project management framework like PRINCE2, that framework already allows for the project owner to identify milestones and outcomes and connects the dots about how that project fits into a bigger strategic picture. So organising KPIs around this type of framework can also be very beneficial, not only because it’s familiar to the business but also because it sits one level below the strategic level and that can often help in delivering that strategy. When the KPIs are clustered around what actually needs to get done it’s easier for people to see the connections.

So while a business may have a BSC approach at the top of the organisation if you were to look inside that business you would see that lots of the actual deliverables of the organisation, or the way the strategy is delivered is in projects. So if you are already using a project management methodology then it would make sense to organise KPIs around that.

The Risky Side of Business

Finally the last option is to organise your KPIs around an established risk management framework. Some businesses have spent a great deal of time and money on risk management and they will know what could or may go wrong. This is especially powerful when it’s complimentary to the BSC and risk is assessed from all four BSC perspectives.

What makes this combination so useful is that if you assess risk from a strategic perspective it too could potentially offer a familiar way to organise your KPIs.

KPIs can be daunting, so finding a framework that is not too much of a stretch from what the people in the company already know and use will always improve implementation and use.