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Ken Koenemann

Management

Transforming Performance Metrics Into Motivational Scoreboards

Do KPIs really tell everyone if they’re winning or losing?

Published: Monday, December 15, 2014 - 11:31

As a business leader, you spend a lot of your time figuring out how to win. With good reason: The most crucial job of every executive is to align efforts at every level of the organization to deliver wins for the week, for the quarter, and for the year.

The people at the front end of the business—the salespeople, the customer service reps, the machine operators, warehouse staff, and IT specialists—work deep inside everyday business processes. They often have no idea if they are winning, or what the score is, let alone how their actions affect the company’s overall success.

Failure to make such connections can dramatically hinder the performance of the entire business. Without support from the front lines, no top-level plan has a chance. That’s why you need to have a structured process for communicating current performance in ways that empower everyone to strive for wins every day.

That process, like so much else today, begins with data.

The right data for the right job

We all love our metrics. We love to show off our progress. You may have performance boards displaying safety, quality, delivery, cost, and other key metrics all over your factory. But just reporting today’s status or progress isn’t enough; you have to make sure that the key performance indicators (KPIs) everyone is focusing on will drive future success.

Look closely at your performance boards. Are the KPIs leading or lagging indicators? Are they predictors of overall process and business performance, or are they just reporting what’s happened at the end of the shift, like a box score in the sports section of the newspaper? Do the numbers that you call out and discuss with employees make it easy for them to identify and work on the immediate priorities of the business?

In other words, do the metrics encourage everyone to look at their processes, at what they’re doing today, and consider what they need to do to win at the end of the day, the week, or month? Do the KPIs tell them that they’re ahead or behind?

Having the right conversations

What exactly happens around the performance boards during your morning huddles and daily management meetings? You should be focusing most of your attention on current issues on the floor, about the challenges you are facing and how you are going to address them.

The numbers start the conversation, but getting too hung up on them can become a rote and pointless metrics tally. You need to talk about each process. Discuss why the line was down for 10 minutes yesterday, for example, and the true root cause of the problem. Don’t forget to examine what needs to be addressed to prevent it from happening again.

Part of this comes down to hiring and training. You need to develop leaders with problem-solving skills and a process-oriented focus who can translate the KPIs and performance reports into meaningful actions. You have to develop people who will look at each process and help others see what is really going on, and then work with their teams to leverage that insight into daily victories.

Focusing on active, leading indicators transforms performance boards from passive data logs into motivational scoreboards that will keep every area of the organization aligned with high-level goals and drive future wins. When companies get their KPIs and review processes right, it flips most of the day-to-day decision making away from upper managers and gives front-line workers the feedback they need to take responsibility for winning every day.

First published Nov. 4, 2014, on the TBM Consulting Group blog.

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About The Author

Ken Koenemann’s picture

Ken Koenemann

Ken Koenemann is vice president of business development and marketing at TBM Consulting Group, which specializes in maximizing clients’ enterprise value and growth potential through operational excellence. Koenemann developed and launched TBM’s Lean Value Chain practice, and he coaches executives on growth-focused improvements. Before joining TBM, Koenemann was director delta at American Greetings and led internal strategy and consulting for transformational projects, and he led the redesign of its seasonal card business. He also served as director at Bearing Point and at KPMG Consulting, and as general manager of the Toyota Production System at Toyota Gosei North American.

Comments

Motivational KPI's

Ken, Great article, do you have any examples of active, leading indicators that you have had success motivating operations in the past?  We utilize efficiency, safety, on time delivery . . .which are all great, however, seem to lose their motivational effects after a few weeks of reporting.  Thanks in advance.