Reasons why KPI projects have failed so frequently

From my observations the failure rate for KPI and balance scorecard projects is off the scale.  There are a number of contributing factors that have led to this failure rate.

Organizations, in both the private and public sectors, are being run by management who have not yet received any formal education on performance measurement. Unlike accounting, and information systems where rigorous processes have been formulated, discussed and taught, performance measurement has been left as an orphan of business theory and practice. To make matters worse, organisations are being led by poorly trained CEOs. Feb 2018 ICAEW  For  the article.

Creating a performance dashboard for the Board

There is a major conflict in most organisations that have boards, as to what information is appropriate for the Board.  Since the Board’s role is clearly one of governance and not of management it is, I believe, totally inappropriate to be providing the Board with KPIs.  To me, KPIs are the very heart of management, used properly many of them are monitored 24/7 or at least weekly.  Certainly not measures to be reported monthly or bimonthly to the Board.

We need indicators of overall performance that need only be reviewed on a monthly or bimonthly basis.  These measures need to tell the story as to whether the “liner” is being steered in the right direction at the right speed, whether the customers and staff are happy, and that we are acting in a responsible way by being environmentally friendly.

These measures are called, in my terminology, key result indicators (KRIs). Typically, a Board would need to see between six and twelve graphs covering the critical success factors and ensuring all six BSC perspectives are covered.

See an extract of my Chapter 14 Reporting Performance measures from Key Performance Indicators 3 rd edition.

Do not cascade measures down from strategic initiatives

An organization not knowing it’s critical success factors (CSFs) is like going to soccer’s World Cup without a goalkeeper or, at best, an incompetent one. The term critical success factors does not appear to be addressed by some of the leading writers of the past 30 years. Peter Drucker, Jim Collins, Gary Hamel, Tom Peters, Robert Kaplan, and David Norton all appear to ignore the existence of critical success factors. Yet, in my mind, this is a missing link in management theory, for CSFs may be the El Dorado of management.   See chapter from 3rd edition

How To Implement Winning KPIs In 16 Weeks Not 16 Months

Kaplan and Norton, in their groundbreaking book The Balanced Scorecard: Translating Strategy into Action, indicated that 16 weeks is sufficient time to establish a working balanced scorecard with KPIs. However, organizations of all sizes and complexity stumble with this process, and 16 weeks easily turns into 16 months.

Click here for an extract from Chapter 15 from Key performance Indicators 3rd edition

Implementation Variations, Small To Medium Enterprises, Not For Profit Organisations

When I first wrote about the twelve step process I set out an indicative implementation Gantt chart, showing twelves steps taking twelve weeks.  Attendees from small to medium enterprises (SMEs) have often requested my advice on a simpler truncated process, which I consider to be able to be completed in 8 weeks.

Click here to see Chapter 9 from my 2nd edition.  Click for  Implementation of winning KPIs in an SME  article

Key Performance Indicators – an Interview of David Parmenter by David Creelman

David Parmenter was recently interviewed by David Creelman, a Chief Correspondent, at The Human Capital Institute. Click for interview.

Situations When We Should Abandon Performance Measures?

I have been working with performance measures for over 20 years, and in that time I have witnessed minimal progress in the right direction. Deriving measures is often viewed as an afterthought. They are regarded as something we fill into a box to say we have achieved a goal. However, I firmly believe that performance measures exist for a higher purpose; helping align the staff’s daily actions to the organization’s critical success factors”.

After twenty years of presenting and writing to advocate the proper use of performance measures I am now convinced, that in many cases, a more radical approach is necessary. The medical profession, for centuries, has realized that …… click here to access pdf

Reporting Performance Measures

There is a major problem with reporting. The writers often do not understand enough about the science of reporting. In addition, too many reports have been prepared monthly, which is far too late for prompt action.

The reporting framework used in an organization must accommodate the requirements of the different levels in the organization (board, senior management team, middle management, and the various teams) and the reporting frequency that supports timely decision making.

See an extract of my Chapter 14 Reporting Performance measures from Key Performance Indicators 3 rd edition.

The myths of performance measurement

Before we can enter into the discussion of implementing KPI we need first to examine why you want performance measures in your organization.  There can be many reasons and some will most certainly lead to failure. Thus, I would like at this point to look at some of the myths around performance measurement.

Read  Abolishing the myths

This information has been extracted from David Parmenter’s Key Performance Indicators (4th Edition) which is the highest rated KPI book on Amazon.

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