KPIs and Growing Pains: What They Can Tell You

When your business is experiencing challenges, you might think that your KPI’s will be able to clearly tell the story about where things went wrong. This is possible, but the approach that is needed here is more along the lines of taking a step back and thinking through things. Remember that numbers tell the story, and it is possible that the story they are telling you is one that you need to stop and think through.

For instance, what happens if you see a KPI that, by all previous metrics, is off the charts? How would something like this be indicating that your company is going through growing pains? Wouldn’t a more logical approach be to see KPIs that are underperforming? Of course, what if you have a situation where one KPI is off the charts and another might be underwater using established metrics? Remember, KPI’s are indicating performance. If you have a really high number, it is distinctly possible that your workforce might be getting slammed with work. This could be causing focus on a certain area, resulting in another area to be neglected. 

A better way, then, to approach things when it comes to KPI’s and growing pains is much like we would approach a vehicle that has one low tire PSI reading. The result of letting this go on for any period of time will likely be having uneven tread on your tires along with your vehicle requiring an alignment. At this point, you need to address the tire situation (either plugging a slow leak or replacing the tires entirely) followed by realigning the vehicle. This is because in the above described scenario the KPI’s are completely out of alignment resulting in readings that are way off.

At this point, I would recommend looking at the previous article in this newsletter on procedures. This has a process that will help you review and address the procedural issues in play. However, what is helpful here with KPI’s is that we can very quickly pinpoint which procedures (as well as potentially processes) need to be addressed to solve the problem. Simply put. Use the KPI’s to identify the affected processes or procedures and determine where the issues there are causing the problems.

As can be imagined, this is more of an art, not a science. Most likely, it will require meetings involving not only the leadership but also your analytics teams. The numbers here are telling a story, and it is a story that is unique to your organization. While it is quite likely that there are similar situations you are facing that can be used as benchmarks, there is a good chance that your situation will have unique considerations. Use the knowledge that you can, but realize it has limitations that your team will most likely need to figure out on your own.

Possibly, one way to view your KPI’s in order to head off problems are ways that the Federal reserve views metrics such as inflation and the unemployment rate. One of the biggest balancing acts that they had in the year following the COVID pandemic was balancing the unemployment rate with runaway inflation. In order to bring things into alignment (and help them reach their target inflation rate), the Fed purposefully raised interest rates, holding them high until inflation slowed substantially. Unemployment did rise, but once it hit a certain benchmark, cuts came. Decisions here were made based on ranges, with the objective being to get things into the proper ranges.

As it relates to your KPI’s, viewing an acceptable range might be best. If your KPI’s are looking out of whack, then you need to adjust them just like the Fed in the above example above. Keeping everything properly balanced will ensure that your company functions smoothly. It is possible that this will help you get out of your growing pains phase, as well as prevent issues like these from causing future issues. At the very least, it can help your address quite a few of the issues that are causing pain at this time.