CREATING EFFECTIVE KPIs
Challenges to Creating KPIs
Some of the challenges with creating effective KPIs include process nuances, activity measurement, accurate calculations and lifecycle management.
Process Nuances, The problem with many KPIs is that they do not accurately capture the nuances of a business process, making it difficult for the project team to figure out what data to capture and how to calculate it.
For example, executives at Direct Energy requested a repeat-call metric to track the efficiency of field service technicians, but it took the project team considerable time to clarify the meaning of the KPI. For example, field service technicians primarily repair home energy equipment, but they can also sell it. So, is a repeat call a bad thing if the technician also brings literature about replacement systems or makes a sale? Or what if a homeowner only lets a technician make minor repairs to an aging system to save money but calls shortly afterward because the home's furnace broke down again?
Most business processes contain innumerable nuances that must be understood and be built into the KPI if it is to have any validity, especially if the KPI is used as a basis for compensation. The worst-case scenario is when employees discover these nuances after the KPIs have been deployed, which stirs up a hornet's nest of trouble and wreaks havoc on both the performance management system and compensation policies.
