I have visited several companies in the past and many of them have asked me about how to make their performance management system one that reflects strategy. They all wanted to go from a KPI/ operational focus, to a more strategic focus and asked for help. My advice was to not even think about what they had in their current Performance Management system. Even if they had good data that was hard to collect, they must just leave it all for a while when structuring a Strategic Balanced Scorecard. This process of “emptying your brain of your beloved KPI’s” is hard for many. Here are my steps on how to connect strategy to your performance management system:
- You need to have a strategy to implement – show me your strategy
- You need to translate your strategy / structure it
- Establish your strategic objectives
- Establish your strategy map
- Connect your initiatives
- At the end you see if any of the KPI’s you had in your performance management system can function as an expression of strategic objective achievement or not
Your Strategic objectives decides/ tells you which KPI’s you should use, for the KPI’s should indicate if you can achieve your objectives or not. That is the purpose of the KPI’s in a Strategy focused Performance Management system (Balanced Scorecard).
Some of the KPI’s that you have left out after this process probably represents interesting aspects of performance, but they are not strategically relevant. They might still be important. You can use these KPI’s as additional performance information – but not on the front page of your most important objectives and strategic KPI’s.
So you might find yourself with a lot of extra KPI’s that you haven’t been able to put into this structure. What should you do with the left over KPI’s? Probably send them “down the elevator”. To the KPI grave yard. It’s a quiet, empty place. ☺