Let's delve further into DORA Metrics! In our previous discussion, I introduced you to the fundamentals, but there's...
Setting strategic goals can be paramount to succeeding, but only if done in the right way. To do so, the SMART model is a commonly used model for setting goals. This model aims to set a goal that is; specific, measurable, attainable, relevant and time-bound. To achieve the outcome you expect and your goals, it can be a good idea to apply the use of KPIs. KPIs are tools for measuring how well you and your team are doing in regards to accomplishing that goal.
Thus, this article will guide you through the usage of Key Performance Indicators (KPIs) to set goals. The reason for using KPIs is because they give an indication of whether the company is achieving its strategic goals. It also shows where they are in that process. This article tries to give a general knowledge of how to approach and talk about this subject. And at the same time, increase the motivation for everyone involved. Read it below!
In order to set goals that align with the company’s purpose, it’s a good idea to include objectives and key results.
Objectives are descriptions that map out what you want to achieve. They should be easy to remember, and engage the team. They differ from goals because they have a short period of time. They also attempts to guide companies towards a specific direction. Goals, on the other hand, are the company’s long term ambition.
Not only should your company focus on what you want to achieve short-term, but also mid and long-term. This way the company maintains balance and ensures the accomplishment of long term goals. Click To Tweet
Key results, however, are quantitative. They allow you to monitor your objectives and to measure your progress. There should be several key results for each of the objectives. Yet, it is advisable not have more than five key results as goals to be achieved within a given period. Otherwise, the focus would become more scattered. This way, not all goals will be achieved. Doing this will align the company’s purpose, mission, and vision beyond different teams and departments. It will also establish the shared goals within the company.
Many companies have a shared goal, which is usually set by c-level. This is what the company is working towards. Yet, these strategic goals can be hard for lower-level employees to identify with. This is why you need to make sure that your goal is adaptable to each department. Make sure your employees can relate to what the goal represents.
Let’s take the LEGO group as an example. LEGO group has a shared goal of achieving the highest possible customer satisfaction. They are using the KPI tool “Net Promoter Score” to measure customer satisfaction. First, they ask their customers about their level of satisfaction in regards to their shopping experience. Then, they assess the likelihood of to which degree they would recommend LEGO products. Finally, LEGO measures the overall success of this goal. They also aligns this goal with the goals of other departments. Every one of them is evaluated from a different perspective, but with the same common end goal. This is what we call differentiated goals.
If we take a look at IKEA’s shared goal to manage the movement of the goods efficiently and how it is differentiated. We find that there are three teams who have created a goal that is relevant for their department. Yet, that goal still aligns with the main goal.
One of the departments is receiving the merchandise. Thus, they focus on the flow of goods and on avoiding overstock. Another department is managing logistics. They make sure the volume of products coming in and out is aligned. Lastly, we have a department that does stock controlling. They focus on keeping track of the stock movement and they try to keep logistic costs low. What seems apparent is that all three teams mainly focus on something different. Yet, in the end, all of the objectives align with the shared goal. They have been adapted to each of the teams. That way, employees can stay focused and motivated on what is relevant.
Although you will want to adjust your actions to maintain your strategic goals. You will need to trust your goals and not modify them all the time. Goals are set at the beginning and evaluated at the end. These are the only two times you should review your goals. Of course, you should also track them with KPIs to achieve the optimum results.
Although having set your strategic goals is a good start, this is only the beginning. One of the keys to success is to keep an eye on progress – this is where KPIs are can be crucial. Remember to review your KPIs frequently. It will help you find more effective ways that you hadn’t thought about before.
Moreover, it can also help you figure out what is happening in your company. Choosing the right KPIs will provide you with practical performance information. This information should be presented, explained and later on applied properly. It will facilitates the decision making process of the management team.
Setting KPIs which will involve the team will improve the companys’ performance. This works as a virtuous circle. Employees will see that their work on a daily basis matters to the overall company strategy. They will be more motivated and work harder. They will correct issues themselves. Hopefully they will begin to see KPIs and goals as a tool for improvement and self growth.
When you choose the right KPIs for your company, you can get a good overview of what is important for the company. Using KPIs as a measurement can provide a lot of benefits. Yet, you also have some pitfalls if you don’t continuously adjust your actions accordingly.
When your strategic goals have reached their deadlines, you should evaluate. Not only on whether you reached your target but also on the actions executed in the process of trying to achieve them.
You need to ask yourself and everyone else in your department; “Why did we succeed? What worked well? How could we do better? Can we keep doing this? And what is the next step?”. This is to become aware of which practices you should repeat next time so that you will be successful once again.
If you succeed, make sure to congratulate the team and thank them for the hard work. Show them what they have achieved and how they have helped to accomplish the company’s common goals. If you fail to reach your goals, you need to ask yourself and your team; “Why did we fail? What did we do that didn’t work? How could we do better? Did we follow our plan or did we veer off course somewhere? Could we have prevented it? Do we want to improve this with an adjusted strategy or new goals? What can we do next time to avoid failure?”If you find out the reasons why you were not so successful, make everyone in the team aware of them so that next time you can avoid them. One way to make everyone understand each other’s perspectives is through visualization. This could be a graph, a bar or a gauge of numbers. It could also be a drawing or an illustration of how each person sees the current situation or his or her place in the organization.After all, running an organization is not something that ever reaches any deadline. It is an iterative process of improving and learning.
To sum up, we first set common goals that will be the same for the whole company. Then, we differentiate for each department in order to adapt it to the capabilities. Later on, the KPIs are set to track these goals by monitoring the KPIs. Lastly, you will evaluate the strategic goals to see if we have achieved what we wanted or how far we were from it. Then, we repeat this process.Did you like this article? If so, sign up for our newsletter to learn more about goals and KPIs!