Insights / Checklist / Operating model design
ChecklistDesigning KPIs that leaders actually use
A good performance framework has few measures that people understand and can influence. A checklist for linking KPIs to strategy, assigning owners and retiring reports nobody reads.
Most organisations do not lack measures. They have dashboards with dozens of indicators, monthly packs running to many pages and reports that arrive in inboxes every morning. Yet when leaders are asked which measures they actually use to make decisions, the list is usually short, and often different from the official one.
A good performance framework has few measures that people understand and can influence. The checklist below helps leaders build one from scratch or prune an existing set. Work through it with the leadership team, one section at a time.
Link to strategy
Each measure should trace back to a priority. If it does not, question why it exists. Measures that are not linked to a priority tend to absorb attention without improving anything that matters.
- List the organisation’s three to five strategic priorities before choosing any measures.
- For each priority, choose one or two measures that show whether it is being achieved.
- Include at least one leading measure for each priority, something that moves before the results do.
- Check that every measure on the dashboard maps to a priority or to a legal, safety or financial control.
- Remove or move to an operational report any measure that does neither.
Consider a typical logistics business whose priority is to improve delivery reliability. Its lagging measure might be on-time, in-full deliveries. A useful leading measure might be the share of orders picked by a set cut-off time, because late picking predicts late delivery a day or two before it happens.
Make each measure clear
A measure that people interpret differently produces arguments rather than action. Clarity matters as much as relevance.
- Write a one-sentence definition for each measure, including exactly what is counted and what is excluded.
- State the data source and how often it is updated.
- Set a target and a date, and show the trend, not only the latest figure.
- Check that the people responsible can influence the measure through their own decisions.
- Test the definitions with two or three managers who did not write them.
Watch for gaming
Any measure tied to targets will be optimised, sometimes at the expense of the outcome it was meant to track. Pair measures that can pull against each other, such as speed and quality, or cost and customer satisfaction, so improving one at the other’s expense becomes visible.
Own and review
Every measure needs an owner and a regular review slot. Without both, measures are reported but not acted on.
Ownership is not the same as blame. The owner’s job is to understand why the measure is moving and to lead the response, drawing in other teams where needed. If owners expect to be criticised whenever a measure dips, they will explain rather than act, and the reviews will become defensive.
- Name one owner for each measure, a person rather than a team, who explains its movement and leads action.
- Set a review rhythm that matches how quickly the measure changes: weekly for operational measures, monthly or quarterly for strategic ones.
- In each review, focus on measures that are off track or moving the wrong way, not on those that are fine.
- Record the actions agreed and check them at the next review.
- Limit the leadership dashboard to around ten to fifteen measures in total.
Retire the unused
If nobody has used a report in a quarter, stop producing it. Reports accumulate because it is easier to add one than to remove one, and each consumes analyst time every cycle.
Retiring reports often meets resistance, usually from the people who produce them or from a recipient who once found one useful. A trial period helps: pause the report for a quarter, note any requests for it, and stop it permanently if nobody asks. Most paused reports are never missed.
- List every recurring report and dashboard, with who produces it and how long it takes.
- Ask each recipient which reports they used for a decision in the past quarter.
- Stop producing reports that nobody names, and tell recipients they can request them again if needed.
- Repeat the exercise once a year.
We stopped producing a third of our monthly reports. Two people asked for one back. The analysts used the time to dig into the measures that mattered.
Head of performance, services client
Getting started
Take the current leadership dashboard and, for each measure, write down which priority it supports, who owns it and when it was last discussed. Remove the measures with no answer to all three. Then fill any gaps where a priority has no measure at all. Most leadership teams find they end up with a shorter dashboard and better conversations.
Source: Intelliversal analysis.
