Strategic KPIs

23/2/2015

What 'strategic KPIs' do you use for leadership and organisation development interventions that are measurable and meaningful? How do you do it in practice? I'd love to hear from you!

28 Comments

Edwina Love Lawrence

24/2/2015 02:22:29 am

When I was working for Transport for London there was a Leadership development framework which was useful. Not sure if it's still current -TfL folks can you advise?

Nick Wright

27/2/2015 03:16:47 am

Hi Edwina. Did the TfL framework include impact of leadership development interventions on organisational performance at a strategic level? I would be interested to hear more. With best wishes. Nick

Edwina Love Lawrence

2/3/2015 08:26:57 am

Hi Nick - I wasn't involved in the design, but as far as I recall it was built around behaviours that had been identified as being needed by leaders to achieve organisational outcomes - we certainly used it operationally to that effect. Will connect you to a couple of people who will/may know more!

Nick Wright

2/3/2015 08:28:02 am

Many thanks, Edwina. Much appreciated! Nick

Eugene Fernandez

24/2/2015 02:23:57 am

Nick, can I ask what do you mean by strategic? In a sense all KPI's have a strategic dimension depending on their ambit- for example if it is related to a broader strategic/corporate document and process it naturally covers a broader umbrella - as opposed to a work group or a team's operational plan whose mandate is narrower, within the team framework their KPI's could also be construed to be strategic.

From an AR perspective, it is the framework that you co-design and agree with that acts as the enabler, irrespective of how savvy the KPI's may look. I tend to follow both an outcomes focused and program evaluation methodology when helping organisations think through their KPI's. This is usually not done in isolation but forms part of a futures and strategic thinking process. KPI's in my framework underpin Key Result Areas KRA's also known by many other terms.

One of the limitations I encounter in my consulting practice is the lack of rigor associated with the process both from a methodology and process aspect. KPI's are usually lumped together with limited thought given to where they are located in the chain. Ultimately its the richness of the dialogue and conversations that lead to agreement and shared accountability.

Nick Wright

27/2/2015 03:25:39 am

Hi Eugene and thanks for the comments. Your question, what do I mean by strategic, is a good one. In the organisation I am working with where this is an issue of interest and concern, 'strategic' is being used in the sense of high level measures of organisational performance against an agreed strategy.

I agree with your comment that 'richness of the dialogue and conversations lead to agreement and shared accountability'. This helps to counter the risk of focusing too much on mechanistically creating stats for a KPI chart. Having said that, have you found any indicators that work well for impacts of leadership development?

With thanks and best wishes. Nick

Eugene Fernandez

1/3/2015 10:55:30 am

Nick, I am not avoiding your question as it is reliant on the context of the program, the agreed objectives, the expected outcomes etc. The inputs vary for example you could be linking it to Lominger competencies or using Gallup's 12 questions to measure progress. Kirkpatricks model is also effective as you can ascribe indicators linked to reactionary level 1. Learning - Level 2 this is where process indicators can come in handy, i.e through case study, role plays etc. Level 3, behavioural - indicators that capture the application of Leadership learning within their contexts or within groups and Level 4 - Results - the domain of Outcome indicators ( Key part of your impacts) - improvement in Leadership skills, capabilities- Pre- and post Lominger competencies, Gallup scores 6 months down the track, 360's etc.

Dr Billy Coop

27/2/2015 03:12:22 am

Hi Nick, I agree with Eugene's comments relating to "lack of rigor" (especially discipline) associated with the process and methodology..........but even more so with regards to the critical thinking that underlies the initial development of KPI's and their impact on both individual leadership development and that of the organisation. I believe that often too much emphasis is simply placed on the organisation achieving its bottom line, and "leadership development" is secondary to the organisation's achievement of profit.

Eugene Fernandez

27/2/2015 03:13:07 am

And that bottom line drive at all costs tends to focus the KPI's that are predominantly quantitative and input/output focused very little real though is usually given to qualitative and process related KPI's.

Deidre Seeto

27/2/2015 03:13:54 am

Agree with Eugene's last comment. I'm going to this upcoming workshop which will enable me to practice this authentically. It's in Brisbane and is facilitated by Bob Dick Collaborative performance improvement http://www.aral.com.au/wshops/wscp.html.

Nick Wright

2/3/2015 02:49:39 am

Hi Deidre and thanks for the note. I had a glance at the link you shared. It will be interesting to hear more about how they link individual performance with organisational performance...and what they identify as indicators of performance/improvement and how they measure them in practice. All the best. Nick

Deidre Seeto

3/3/2015 01:23:50 am

Hi Nick. Watch this space - I'll keep you posted!

Elyssebeth Leigh

1/3/2015 10:53:25 am

I was recently sent an invitation to a 'Business Success' seminar promising to give me access to 'the unfair advantage' in my business. I did not get a response to my reply suggesting that such an offer appeared both dishonest and unethical. It appears that the owners of the seminar have KPIs which do not include 'old fashioned' components of honesty, fairness, truth and ethical measures of behaviour.
Coles recently accepted that, as an organisation, it had engaged in 'unconscionable conduct'. See
http://www.theaustralian.com.au/news/latest-news/coles-poised-to-settle-accc-court-case/story-fn3dxity-1227156367095
In that case someone/s KPIs were apparently devoid of measures of 'indicators that work well for impacts of leadership development'. Or, alternatively, if such measures did exist in print, they were being blithely ignored in practice.
It can be fearful to face the demands of honesty and fairness in contexts where they are no longer respected. The behaviour of CEO Thody at Telstra is an example of facing up to the damage done to an organisation by greedy, grasping actions which yet - apparently - met KPIs. His predecessor had KPIs and could demonstrate that he met them. And just consider how his way of doing that damaged the brand, emotional health inside, and business positioning externally of the organisation!
Consultants don't usually have a KPI suggesting that 'feel the fear and do it anyway' is an essential component of the role. Few texts mention the deep dread of knowing that you face the prospect of speaking the truth you see in bad behaviour (however much it is supported by KPIs) and thereby possibly losing the business.
However when this is done the kinds of KPIs you may be seeking, will emerge from within, or you will face the need for a new client, and trust that you will find ones who can deal with your honesty and take it on board.
EL

Eugene Fernandez

1/3/2015 10:54:24 am

Excellent points Elyssebeth about the inherent dangers of focusing on KPI' in isolation of the broader system in which they need to be embedded. I really like the examples which highlight the need for a Values framework to underpin Vision. The balanced scorecard, triple bottom line and a resource based view are frameworks to locate what an organisation does within a broader canvas. KPI's are a subset of a broader process and as Elyssebeth's example highlights there are real dangers of developing and rewarding KPI's in isolation. Take Baring's bank and Nick Leeson for example where there was a systems failure around risk mitigation strategies, inadequate supervision, inexperience and a disregard for ethical practices. The KPI's that mattered were around profit at all costs. In fact Leeson contributed up to 10% of the bank's profits before it started to unravel.

Nick Wright

2/3/2015 02:57:33 am

Hi Elyssebeth and thanks for such thoughtful comments. Yes, I agree that KPIs that only measure bottom line performance (which I think is Billy's point above) without reference to a wider ethical principle or framework can drive all sorts of questionable or unethical behaviours. Have you seen any examples of where adherence to agreed ethics/values features on an organisational dashboard, along with indicators that show what it looks like in practice, thereby ensuring appropriate accountability? With best wishes. Nick

Rob Woodward

4/3/2015 03:06:39 am

Hi all, there's certainly some great insight expressed above. Experience suggests to me, and much of this has already been expressed, that Leadership KPIs need to address both 'the what' and 'the how' of leader activity: building and delivering direction; building the engagement and commitment of others; and, facilitating timely and responsive change. Yes, many KPIs will include quantitative business deliverables but, in many ‘enlightened’ businesses, such KPIs include measures of 'what' was done to enhance the social and environmental contribution of the business. Possibly more importantly, these KPIs address 'how' activity has been carried out, demonstrating: high ethical standards; care for employees, the community and the environment ; long-sightedness in decision making … and the list goes on. Both 'the what' and 'the how' can be outlined in positive behavioural terms which enhance both community and business well-being.

Nick Wright

6/3/2015 03:03:27 am

Hi Rob and thanks for the comments. I really like your emphasis on looking at leadership and OD in light of ethical behaviour and wider social and environmental contribution.

This is particularly important in the charitable organisation that I'm working with. It exists to ensure personal and social benefit through influencing the experience of individual beneficiaries, both by providing direct products and services and seeking to create more enabling environments.

How to measure all of these things in quantifiable terms that are valid and meaningful can be the tricky part. With best wishes. Nick

Bob Dick

6/3/2015 02:17:45 am

Hello Nick, and others

I came here to comment on your original question about meaningful and measurable strategic KPIs. And I found a rich discussion.

Nick, I don't know if by "measurable" you mean "quantitative". Numbers are valuable, I think. They are easily portable, comparable and trackable. The issue is, do they leave out anything important? It can be hard to put numbers on the old-fashioned virtues Elyssebeth mentions, such as honesty, fairness, truth and ethics.

Some important dimensions of organisational life are not easily quantified. I don't think that makes them worthless.

I'm also reminded of Marilyn Strathern's version of Goodhart's Law: "When a measure becomes a target, it ceases to be a good measure". Or, in Dave Snowden's version: "Anything made explicit will sooner or later be gamed for survival purposes and that need will corrupt practice and people".

I assume that one key purpose of KPIs is to allow the tracking and improvement of performance. To my mind, the most important part of this occurs when individuals and teams use feedback (that is, their KPIs) for this purpose, moment by moment and day by day.

Also important (though less so) is the informal interaction between managers and their teams. This may be day by day or week by week, or thereabouts.

And again important, though again less so, are the formal planning and monitoring programs. Their purpose (in my approach) is to set up and maintain the two more important processes above.

As I say, these are my assumptions. I'm speaking only for myself here. I don't necessarily expect everyone to agree with them. Their effectiveness depends to some extent on the culture of the organisation or team.

My response to the "what strategic KPIs" part of your question is, it depends. I prefer to have the KPIs defined by the people who will collect and use them. To that end, I facilitate their use of a participatory evaluation model.

(Described briefly at http://www.aral.com.au/resources/snyder.html)

It's one of the processes we'll be examining at the workshop Deidre mentioned.

I usually do this work with an intact team, at any level of the organisation. My aim as facilitator is that they define a set of KPIs that mostly provide feedback on the immediate effects of the team's activities.

At the same time, I think it's important that the KPIs relate to the team vision, and the whole system vision. In fact, the process attempts to derive the KPIs from the visions. It then designs the processes for collecting and using those KPIs on a very regular basis.

That will do for now. It's more than I planned to say.

Cheers -- Bob

Nick Wright

6/3/2015 02:54:46 am

Hi Bob and thanks for offering such rich and thought-provoking comments. Yes, by 'measurable' I am meaning quantitative. Thank you - that's a helpful clarification.

I absolutely agree with you that not everthing that is important (and, perhaps, in some cases most important) can be measured quantitatively. This means that when seeking to monitor and understand performance and development in its widest sense, we cannot use quantitative KPIs alone.

The challenge I am finding is how to create meaningful quantitative KPIs that both ensure leadership and OD appear in the organisation's strategic KPIs/dashboard (thereby, in that organisation, asserting the importance and value of these areas) and are meaningful/possible to measure in practice.

I agree with you wholeheartedly that KPIs should be derived from and reflect back on the whole system vision. This is where, in charity organisation, a theory of change (akin to a strategy map) can be useful to describe (and, therefore, make available for testing through, say, action research) critical causal relationships.

With thanks again and best wishes. Nick

Brian Dominguez

6/3/2015 02:18:44 am

Love the thoughts Bob! Nick, as a practical example, employee turnover is an excellent KPI to measure effectiveness of leader development. We know that measures drive behaviour, sometimes perversely if we are not careful, and you can imagine what values have to be engaged by the leader to have people stick around (ex. Empowerment, ,job expansion, etc.). Bob discussed a good approach to getting KPI but remember they should not be set in stone and should result in the desired behaviour. The trick will be to determine if failure is due to a perverse measure or failed leadership development.

Nick Wright

6/3/2015 03:10:58 am

Hi Brian. Interesting thoughts! I've been wondering, along similar lines, if a proxy indicator for leadership and OD effectiveness and impact can be derived from 3 classic indicators of engagement that can be measured quantitatively through a staff survey (advocacy: 'I would recommend working here to a friend'; retention: 'I hope to still be working here 12 months from now'; discretionary effort: 'I'm willing to go the extra mile because I believe in what we are trying to achieve'). The idea is that healthy leadership and culture ought to be evidenced in inspired and engaged staff. It's a measure of contribution rather than attribution and is by no means water tight! I'd be interested if you have used or come across any other indicators. With best wishes. Nick

Brian Dominguez

8/3/2015 01:24:55 pm

Hi Nick, in my experience I've mostly broken the rules on KPIs because they are often outdated or perverse without creating the intended behavior. I've done that by implementing measures at several levels that align with the the organizations espoused theory to create the behavior I'm looking for. So, I'm going to mostly echo Eugene by saying that multiple layers are necessary to achieve the goal. I assume that KPIs are different than performance indicators, such as short term targets, or indicators such as 360 reviews. I agree with Eugene's reference to balanced scorecard as an example of using these layers. The survey you mention is a great start but remember Chris Argyris's theory of action, the survey will let you know what people think they do, espoused theory (lets call that indicator), to which you can identify ways of measuring what people believe is actually happening, theory in use (call it performance indicator), and finally a bottom line, key performance indicator (call it Eugene's "outcome indicator") tells us what actually happened. Looking at it from this perspective means the silver bullet KPI that the senior management team is hoping for (pretty typical, right?!) is more like a machine gun battle. That might be where your work really begins?

I think the key message here is as Bob said, "it depends" and there is no acceptable single use indicator without several layers being developed beneath it. I would entertain a conversation about polarity in answer to Elyssebeth's isolation concern, mixing something like labour cost reduction while increasing employee satisfaction (Eugene noted the quantitative measure only problem) would be a remarkable measure of good leadership! Any thoughts on that as a ratio or some kind of mixed-measure? Fun!

Pip Bruce Ferguson

7/3/2015 02:17:14 am

Hi all - a fascinating conversation. I particularly liked Elyssebeth's call for "old-fashioned" values that can be so hard to aim for in some pressured, full-on businesses. That's the kind of thing that leads people to argue that "business ethics" is an oxymoron.

I'm now working in Ireland, and there have been many recent court cases trying to call those whose failure to look out for the common good, led to the downfall of the Celtic Tiger and ongoing misery for many here. There is still a preponderance of short-term contracts in higher education - one of which I'm on - which make it hard to encourage overworked teachers to engage in ongoing projects. They don't know if they'll have continued employment so why would they put energy into something they may not be able to see through to completion?

Recently our larger unit's manager, also a Kiwi, was negotiating a set of high-level goals for our unit. I'd not call them KPIs but they certainly drive the KPIs. One was worded something like, "we are a high-performing team who strive to meet all institutional strategic goals". That's not the exact wording but you get the gist. I argued for the inclusion of a subsequent phrase, "taking into account a healthy work-life balance". There was a sharp intake of breath from some of the Irish, who thought I was sticking my neck out rather, but the boss accepted this as legitimate and included it, with reference to a University policy regarding the same.

So, I'm with Elyssebeth on the values. I do think we need to ensure when KPIs are being negotiated, that they include sound values. What do others think? Has anybody been "slapped down" for taking such a position, or have senior management accepted it, as ours did on this occasion?

Cheers,

Pip

Brian Dominguez

8/3/2015 01:26:05 pm

Fascinating Pip! As a manager of people I have always been concerned for their personal health and growth but never imagined to measure it in any way, even though I know it impacts their performance. In Canada, I think measuring work/life balance might be like measuring their diet at lunch or sleep at night, an invasion of privacy. Both variables impact performance but would be scary to even propose! I now wonder why that would be the case?

Pip Bruce Ferguson

8/3/2015 01:27:04 pm

Hi Brian - I don't know that it's measured, except through stats such as absences, ill health, perhaps visits to EAP counsellors, that kind of thing. But having the statement included alongside the 'high-performing team that strives' stuff, enables employees to go 'hang on a minute, some of this striving is impacting negatively on my health and is in breach of our stated commitment to a sound work/life balance.' In fact, in our team we have a small traditional Irish music group, and our immediate boss has sanctioned us having fortnightly practices for an hour in work time, recognising the contribution this makes not only to OUR healthy work/life balance, but to the enjoyment of the wider group, for whom we occasionally perform! Now THAT's what I call a good work/life balance!

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20/4/2015 08:26:51 pm

I have always been concerned for their personal health and growth but never imagined to measure it in any way, even though I know it impacts their performance.

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20/4/2015 08:27:25 pm

I do think we need to ensure when KPIs are being negotiated, that they include sound values.

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20/4/2015 08:27:55 pm

Now THAT's what I call a good work/life balance!

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