42 Degrees - Business from a different angle

Five do's

1. Set targets based on organisational imperatives, not negotiated figures. Use comparative industry and benchmark data or your organisation will not survive.
2. Remember KPIs are Key Performance Indicators. They are not the actual performance itself, only an indication of levels of performance. This results in people simply managing the numbers rather than focusing on the object to be achieved.
3. Always keep the objective in mind. Ask for the evidence that we are moving towards meeting our objective rather than what the score is.
4. Measure what you want to measure not what is easy to measure. Too many measures and targets are set because the data is easily available, rather than because it is what we want to achieve.
5. Be patient. Sustainable improvement takes time. Targets met quickly are usually as a result of people learning how to cheat the measures or cheat the system and don't create real or sustainable gains.

Five don'ts

1. Set targets in isolation. You should know precisely the current performance limits of your existing processes. If the target is outside the current capabilities, ask how you are going to change the processes to meet the targets.
2. Be over prescriptive on how the targets are to be achieved. Motivation comes from knowing the goal and then having some influence on how it is delivered.
3. Negotiate reward contracts based on achieving a single fixed target. This will result in employees negotiating down the target to ensure they can comfortably achieve it. Then they will not over perform to ensure they don't increase expectations for next year. The long-term effect is falling standards and persistent organisational underperformance.
4. Automatically punish failure. Most failures are the result of the business system rather than individuals. Punishing failure kills risk taking, prevents honest feedback and takes everyone's eye off the performance to be achieved.
5. Forget your people. Communicate incessantly about the objectives, goals and targets for your organisation. Get feedback on what is working and what is not. Learn and react to these conversations. Setting stretch targets in a board meeting doesn't change performance, people do – so don't ever forget them!