For managers, developing key performance indicators is a very important process because they create a tool that helps them effectively manage more people, larger projects, and more complexity without becoming overwhelmed.

The way you use KPIs helps you encourage the right behaviors and activities, which in turn leads to better results.

Many managers have not been taught how to develop relevant, targeted KPIs that support their efforts to motivate the team and get results. I'll explain the six steps I use when developing KPIs to improve the performance of a project, department or company and figure out what actions to take.

When developing key performance indicators, start with the company objectives (strategy) or the objectives of the function or team you work in. Key performance indicators must align with and support these objectives.

Using KPIs puts the team's focus on the actions and activities that drive the KPIs you've developed. It's really important that their behavior and focus is aligned with the goals, rather than causing confusion and wasted effort.

Second, when planning how to develop key performance indicators, try to define the questions you need to answer. Once you have agreed, written down and distributed your goal, plan how you will achieve that goal(s). What will make the biggest difference to the success or failure of the project? Identifying these activities will help tremendously in selecting the best key performance indicators (KPIs).

Third, it is very important to figure out what data you need to collect and compile to track the KPIs you have chosen. Ideally, the data needs to be quick and easy to compile and preferably automated. Data remains a very practical consideration when developing KPIs for a company or for a project.

Fourth, create ownership of the KPIs. Unless you want to aggregate all KPIs (which is not recommended), you need to ask team members to be responsible for and report on each KPI. You also want these people to drive the actions to improve those KPIs. Create ownership for that.

Fifth, ensure high transparency of key performance indicators. When tracking team performance, measuring employee performance, and similar measures, transparency of KPIs is necessary to promote individual and team accountability. Take the time to discuss the KPIs as a team. Plan the steps you need to take to improve the results shown by the KPIs.

Sixth, when using KPIs, it is critical to the usefulness of the KPIs to interpret the results those KPIs provide and take the right actions to improve those results.

Work through each of these steps and you will end up with very useful and relevant KPIs that address the core of the activity you need to perform to be successful.

00:00 Introduction
02:16 Always start with your goals
03:33 Define the questions you need to answer
05:12 Identify the data to support your KPIs
06:18 Take responsibility for the KPIs
07:16 Create visibility, accountability and discussion of KPIs
08:59 Interpret the results and take action
09:56 Summary

Some more videos you may find useful:
How to run a great team meeting https://youtu.be/WV5l4xYVSeY
5 steps for effective one-on-one meetings with team members https://youtu.be/j24134N9KYw
How to set goals for the team https://youtu.be/flKkeZd4nRY
How to execute things and make them happen https://youtu.be/8LusXiTn0wo

If you have any questions about developing key performance indicators, please leave them in the comments below and I will get back to you.

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