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7 Steps to Better KPIs

7 Steps to Better KPIs

Mar. 15, 2022

One of the many changes the pandemic brought is the requirement for leaders to re-think their key performance indicators and how they are tracked. As many employees return to their old office, they find that it resembles more of a time capsule than the collaborative environment they left. The metrics we used – last decade – are often as outdated as the dusty post-it note barely clinging to our old monitor.

In February, we contacted over 100 medium-sized businesses across 9 industries. They operated using a variety of in-person, virtual, and hybrid work environments. We were interested in how companies planned to attack their strategic objectives. Our interviewees included stakeholders from the frontline worker to the CEO.

Leader updating their business KPIs


We had one question:

Which performance indicators are you using in today’s work environment?

Of those interviewed, 88% of respondents stated that performance indicators were not available or tracked within the organization. Yikes! Broad phrases like “we are growing nicely” were often referenced and undefined.

Now what? For this article, let’s assume you have a robust Strategic Plan with clear objectives and goals. Use the following seven steps to create and document your key performance indicators.

     Step #1: Identify a shared problem.

Asking a broad question of “what keeps you up at night” often generates an ideal starting point. Of those we interviewed, 67% identified supply chain issues as the #1 cause of sleepless nights. Amazingly, the supply chain issue was identified in every industry we spoke with, from healthcare to manufacturing. The “headache” is real – regardless of the industry.

     Step #2: Capture your value stream. 

Value Stream: A set of actions generating value for a customer, member, or recipient of your organization’s product or service.

Every business has a series of actions that create value for something else. When mapped, this series of actions, the value stream provides a visual of areas where you can integrate performance indicators.

Let’s use the supply chain as our shared problem, as identified in step #1. For example, manufacturing companies need to produce a quality product. Obtaining the raw materials from the supply chain is often the first step in this value stream. Document this finding and proceed to step #3 below.

     Step #3: Create a baseline metric. 

Metrics associated with the supply chain value stream could include any or all the following:

    • Number of issues in the past 24 hours, week, month, or quarter
    • Supplier Diversity
    • Supplier on-time delivery
    • Fill rate

     Step #4: Track your results.

This step is assigned to one individual or a department within your organization. Tracking can include manual processes but are most effective and secure when automated. However, don’t let a lack of automation stand in your way! A starting number in any baseline metric category is always better than not having a number at all.

     Step #5: Report.

Individuals perform on what is tracked and reported. For example, if you have 6 raw material issues in 24 hours, alarms should go off. If that alarm goes unreported, the problem will likely continue. When that alarm is reported to a supervisor, the issue will probably be addressed and hopefully solved. Nobody likes to fail, but failure is part of the experience and is beneficial in creating workplace relationships!

     Step #6: Incentivize.

YOU ROCK! Doesn’t it feel good to hear a compliment? Any variation of an incentive, from public praise to a celebratory lunch or bonus, drives enthusiasm in the value stream. Like the baseline number, pick a number that aligns with success, then reward the achievement. You’ll notice the little things just happen when you give genuine praise.

     Step #7: Document the Standard.

Now that you have performance indicators in place, capture the details. How did you create the metrics? Who is embedded within the processes that contribute to the metrics? These details become your Standard Operating Policies and Procedures for repeat success and scalability in your organization.

While we focused on a supply chain example, every business can benefit from mapping its value stream. Working as a team to set KPIs and celebrate when they’re met is very 2022. Give us a call today to work with one of our specialists.