Dear CFO – Are your KPI tracking Initiatives failing? Here is why.

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The crucial thing for the long term success of any performance management & measurement effort is the commitment of the senior leadership to the institutionalization of measuring performance at all levels of the organization. But it’s important to know that the system must be built together with middle management in a top-down process. Therefore a combined effort must be put in and if people do not feel they are part of the KPI setting up process, the performance management system will be ineffective. So togetherness brings effectiveness and unity brings strength.

The ultimate buy-in occurs naturally when the right things are being measured, interpreted correctly by decision-makers, and a decision is made based on the KPI that reaps significant positive results for the stakeholders.

KPI’s should do two things: build the business and build a winning corporate culture that facilitates execution towards the right areas. KPIs should be aligned to the business vision, should be actionable, should be easily manageable and should be communicated throughout the organization.

There are 5 aspects to consider in every business

  1. Basic financial health
  2. Statutory requirements and demands
  3. Operational efficiency and effectiveness
  4. Business strategy & vision
  5. External operating environment

Business analytics should be focussed around these five aspects. The first 3 items ensure hygiene and also uncover blind spots. The next two help build the business for the future. Keeping a keen eye on the external operating environment is will help us be aware of the change happening all around us. If we are not cognizant of what is changing around us, we will not even know that our business may be becoming irrelevant with changing times, choices & priorities. In KPI terms, this is possible by benchmarking our business with the best in the industry.

KPI initiatives fail because of all or any of the reasons above: lack of buy-in from impacted stake-holders, unclear strategy around KPI definition, ineffective measurement, no analysis of KPI results & not taking corrective actions. Using this structure, you may want to evaluate if you are facing similar challenges and act on them without losing time.

Karthik Ganeshan

Co-Founder and Director, BeyondSquare Solutions.