As the end of 2019 approaches, companies prepare for their year-end shut down and finalize their plans for the coming 2020. Evaluations are done, decisions are made based on evaluations and recommendations by the people in charge. And everybody prepares for the final push before the end of this week arrives. Employees check their bank accounts for the upcoming Christmas bonus, only to wonder if the company’s 2019 performance was fairly reflected in their paycheck.
That brings us to a question: How are employees evaluated?
That’s always the question in everybody’s minds. And a three-letter acronym pops up in
everybody’s mind: KPI.
Let’s explore the three letters that keep every corporate executive on their toes, namely Key Performance Indicators (KPI). It is a measurable value that demonstrates how well the company is doing in terms of achieving its primary business objectives. I would love to quote Klipfolio in their steps for defining KPIs:
- What’s your desired outcome?
- Why does this outcome matter?
- How are you going to measure progress?
- How can you influence the outcome?
- Who is responsible for the business outcome?
- How will you know you’ve achieved your outcome?
- How often will you review progress towards the outcome?
In essence, KPI is a form of communication. And the phrase “communication is key” is an often-repeated cliché at the office, but how often are we putting in conscious efforts in ensuring our communication is done right?
More often than not, organizations tend to be “trend followers”; they love to adopt the KPIs of the “Great Players” in their industry, hoping to be like them. However, that’s probably their biggest point of failure – because they fail to understand that KPIs are only as valuable as
the action it inspires. Too often, organizations blindly adopt industry recognized KPIs and then wonder why that KPI doesn’t reflect their own business and fails to affect any positive change.
The bottom line is, KPIs are not just “boxes to be ticked” – something to be done just for the sake of doing it.
Rather, a KPI is a way to communicate the company’s direction. It’s supposed to set the tone and align everyone in the company to achieve the company’s set goals.
One well known method for evaluating KPIs is the SMART criteria – your KPIs must be Specific, Measurable, Attainable, Relevant and Time-bound. And after achieving that, you could be even SMARTER about it – by Evaluating and Re-evaluating them.
Of course, as much as everyone wants to aim for the stars, let us not forget a very important point – that we are all human beings with feelings, emotions and motivating factors; which now leads us to the part of KPIs that everybody fears but usually do not speak about in any board or management meetings: unrealistic, inhuman and demoralizing KPIs.
Imagine being given an unrealistic high sales target to be achieved and having a stressed up Sales Manager reviewing your sales daily, expecting you to make significant increase in sales.
The most significant impact this would have the people would be stress, because of the fear of being reprimanded or losing their jobs if they do not achieve their KPIs. Repeated experience of such stress lead to the same common conclusion – physical and mental health issues, burnout, demoralized workforce, low productivity, and high staff turnover. The supposed solution of setting higher targets is backfiring on them instead of pushing the organization to achieve more.
Here is where two things could be put together – meaningful communication and KPIs – and how can we make the business more human. If we really think about it, there’s no point having KPIs without meaningful communication, or the other way round. Again, quoting Klipfolio on their further explanation of KPI:
“One of the most important, but often overlooked, aspects of KPIs is that they are a form of communication. As such, they abide by the same rules and best-practices as any other form of communication. Concise, clear and relevant information is much more likely to be absorbed and acted upon.”
With the above, add meaningful communication into the mix along with a manager with great people skills and motivational abilities. The result would not only help the company to achieve their set goals, but also for their people to know what is being expected of them and how they could achieve it together. And sometimes, the “why” is also an integral part of the equation.
In recent times, meaningful communication has become increasingly important in so many aspects of the business and corporate world. As the workforce becomes more educated and smarter along with the times, the method in which we manage performance too has to evolve. With what is increasingly becoming an employees’ market, employers will need to put more attention to retaining the best talents within the organization in order to stay ahead of the game. Managers will need to be very mindful of the method in which they manage performance. Draconian methods need to give way to constant and meaningful communication within performance and KPI management – it becomes a game of how management is able to win over the top talents of the company from defecting to its competitors by embedding meaningful communication within their performance and KPI management into their culture.
To sum it up, these aspects of communication would always need to be kept in mind: What we say (the content) is important, what we do (the action) is more important, but the one that trumps it all is HOW we do it (the method or the way).