KPI Software – 8 KPI Selection and Measurement Mistakes to Avoid

8 KPI Selection and Measurement Mistakes to Avoid

Using appropriate KPI software for the selection and application of measurement metrics is essential for your business’s performance management. However, companies should take note of common KPI selection mistakes, and how to avoid such to maximise the potential and functionality of their KPI software. We take a look at the most common mistakes which should be avoided, since KPIs not set correctly cannot deliver the right value and are thus useless in business performance management.

1. Choosing Only One KPI to Measure

One KPI does not give insight when used alone. It is important to monitor a range of connected KPIs to get an accurate picture of performance. A standalone KPI cannot give the clear picture required, because it is not sufficient for monitoring trends. The company must implement a range of interrelated and relevant KPIs on the various levels of the organisation.

2. Failing to Link KPIs to the Organisational Goals

The overall strategic goals of the business must be kept in mind when selecting KPIs. The KPIs must be linked to the organisation’s goals, and align the individual departmental goals with the overall company goals. KPIs must be relevant to the larger picture and as such, the selection of KPIs must be from the top level, through to the departmental and individual level. Only if the KPIs at the departmental level are offshoots of the organisational KPIs, can these KPIs have relevance and thus provide the necessary insight regarding the organisation’s performance.

3. Not Having the Right Benchmarks

If the focus is too much on the measurement, without knowing what the benchmarks must be, then the measurement becomes useless. The organisation must set reasonable and relevant benchmarks and metrics. It is not possible to manage something that cannot be measured. The organisation must clearly define what “performance” means for each job, in order to ensure that the employees can be measured against the right benchmarks.

4. Selecting KPIs which Cannot Be Measured Accurately

Companies often choose impossible to measure KPIs, and as such, they work without proper parameters. This creates a subjective focus, which causes the measurement to lose any real relevance. It is essential to have an accurate process in place. It is essential to set time limits and correct parameters.

5. Not Measuring Regularly

KPI software makes it possible to measure performance regularly. KPI graphics, as are possible when using our software, can help employees understand their roles and contributions to reaching the company goals. With the help of the software, it is possible to align the individual performance goals with the organisation’s strategic goals, and at the same time, be alerted to opportunities to improve.

6. Measuring the Wrong KPIs

Measuring how neat an employee’s desk is, if the focus should be on performance that drives business results, is wasting opportunities to gain real insight into an individual and the company’s performance. Measurement should be relevant, such as measuring how well the employee fits the corporate values and what their real contribution to the reaching of the corporate goals is.

7. No Follow-Up

Measuring an employee’s performance just for the sake of data collection or to determine salary increases is a waste of resources. The management should follow up on the areas where improvement is needed, and this may include additional training for employees to improve on their weak skills. They need to follow up on the results of the appraisals. The same holds true for departmental appraisals and overall company performance.

8. Performance Measurement is Only Done When There is Trouble

Performance measurement is often only applied once the company is in trouble, when a specific department fails to deliver sufficiently, or when something goes wrong. It should not be done in reaction of an occurrence. Performance measurement must be done regularly. This is made possible and streamlined with the implementation of our KPI software. Annual reviews only measure part of the performance. Instead, a system should be implemented that makes it possible to review regularly, and thus to ensure that employees and the company stay on track towards reaching the company’s objectives and long-term strategic goals.

KPIs give insight into current performance, and the relationships between activities and performance results. However, KPIs also show where and how results can be improved. Make use of our expertise in this field, and benefit from using KPI software that helps to measure the right indicators.