A working definition of a Key Performance Indicator (KPI) would be a flexible measurement value that demonstrates how effectively a company is achieving key business objectives. KPI’s will vary from organisation to organisation depending upon a number of factors such as its vision, mission, market sector, purpose, product, status as well as short and long-term goals.KPI’s serve a substantial role in an organisation’s strategic planning, primarily because the indicators are selected for their tactical value. High-level KPI’s may focus on the overall performance of the organisation, while low-level KPIs may focus on processes in departments/divisions such as sales, marketing, or staff retention.
There are a host of metrics and measurements that can be used, so it is equally critical to identify what needs to be measured, why this is critical to the organisation and how it will be measured. KPI’s can be financial or non-financial. They serve as guideposts for individuals or departments where direct effort is needed.
A further consideration is to evaluate the outcome of the KPI’s. When the data is collected, one of the recommended evaluations is to consider the Return on Investment (ROI) in the activities required to achieve the KPI’s. This is further emphasised if the KPI’s have not been met.
For organisations considering implementing a coaching programme, either for individuals or as a wider cultural change programme, then it is advisable to consider setting some KPI’s as well as considering ROI implications. Research studies and empirical evidence clearly outline the benefits and success of coaching initiatives. For example:
- 80% of people who receive coaching report increased self-confidence, and over 70% benefit from improved work performance, relationships, and more effective communication skills.
- 86% of companies report that they recouped their investment on coaching and more (source: ICF 2009).
- A small number of investigations suggest an ROI of between 5.5 and 7.9 times the cost of the engagement for executive coaching. This is combined with a variety of soft benefits including;
- Improved working relationships with direct reports (reported by 77% of executives)
- Improved working relationships with immediate supervisors (71%)
• Better teamwork (67%)
• Better working relationships with peers (63%)
• Greater job satisfaction (61%)
• Conflict reduction (52%)
• More organisational commitment (44%)
• Better working relationships with clients (37%).
These figures appeared in a study by The Manchester Consulting Group in 2001, which is often cited as a definitive case for the benefits of coaching.
In considering the statistical evidence for the benefit of coaching, KPI’s can be established that clearly engage with the strategic objectives. A starting point could simply be to ask what will people who are coached be able to do better and how will that benefit the organisation? From there it will be easier to be more specific about what KPI’s the organisation needs to include.
The steps are to:
- Define and agree the definition of successful performance
- Identify the desired actions and behaviours that will lead to achieving the KPI’s and hold people accountable.
- This helps those tasked with achieving these KPI’s to understand what is required and who to ask for help and support if and when needed.
‘If a measurement matters at all, it is because it must have some conceivable effect on decisions and behaviour. If we can’t identify a decision that could be affected by a proposed measurement and how it could change those decisions, then the measurement simply has no value’. – Douglas W. Hubbard. How to Measure Anything: Finding the ‘Intangibles’ in Business.