KPIs: winning tips and common challenges

A good corporate strategic plan includes a solid set of key performance indicators (KPIs) that can translate strategy into manageable operational actions for employees. Usually, a business strategy fails to achieve this objective if it includes too many or unaligned KPIs. This can weaken the focus on objectives, making it difficult to communicate a consistent implementation plan to staff. KPIs should give individuals concrete links to the organization’s corporate objectives.

Moreover, a large list of KPIs that does not have clear linkages to a business’s overall objectives may be a sign of a larger problem: a lack of strategic focus.

Management must strike a balance between setting the bar high enough to encourage greater performance, without prompting risky behavior and leaving holes that allow managers to play the system.

Selected KPIs in any strategy should have clear and solid links to the overall performance. Understanding the importance of different KPIs in driving these objectives is a necessary condition for providing good, actionable information at the operational level where corporate strategy is implemented.

The article on which this abstract is based introduces some tips on exploiting KPIs and explores some common challenges companies face when using them. It also highlights the factors critical to designing the type of KPI that will lead to successful strategy implementation. The article focuses on the reasons why some organizations effectively implement their strategic plans, while many others fail to do so. In addition, it aims to inform the reader of various techniques used in KPI management. It is hoped that this insight will help planning and performance professionals to do their jobs more effectively.

Finally, it is worth remembering that there is no science behind KPIs – it’s an art, something that you can only ever get really right by trial and error. For example, one expert may recommend a list of KPIs and another expert would likely recommend a completely different list. Neither of them is right or wrong – both lists will have their advantages and disadvantages. So, be confident with your target setting: brainstorm, filter and seek agreement. Be realistic, but be wary of being vague. Be ready to measure your organization’s success!

The complete article was written by:

  • Dr. Rachad Baroudi PhD
    Director, Strategy Advisory Services, EY, United Arab Emirates

Read the full articlepdf623.68 kB

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