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4 Easy Tips How to Create KPIs to Improve Teamwork and Achieve More

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Have you ever participated in a KPI development meeting?

Typically, these sessions are fairly productive and mostly positive. The participants quickly define a bunch of good indicators and it seems like a great start (or, at least, they seem to be good until implementation). In two weeks, when a team leader assesses the performance of the KPIs, some unexpected shortcomings start to emerge.

In most cases, these shortcomings are:

  • Poor definition. Result: troubles with KPI implementation, lack of focus
  • Lack of details. Result: the team lacks a clearly defined path to the goal
  • Lack of accountability throughout the implementation process. Result: no one owns KPIs
  • Difficulties with measuring KPIs. Result: a lack of data to measure the implementation success.

Each of these has a significant impact on teamwork. Combined, they can easily lead to demotivation. So, if the team leader doesn’t address them, KPIs are doomed to fail.

In this post, you’ll read about how to define KPIs the right way. Below, find the most important KPI solutions to stimulate teamwork and maximize performance.

1. Addressing the Why in KPI Setting

Helps with resolving:

  • Lack of accountability
  • Poor definition
  • Difficulties with measuring KPIs.

Basically, the development of KPIs comes down to two things: the Why and the Specifics.

Every well-defined KPI is essentially an answer to the question: “Why was this KPI developed?” It’s the justification explaining the importance of the indicator to the overall business goals.

Here’s an example:

KPI: Reduce customer churn by 5 percent The Why: the company loses customers! The customer churn directly impacts the company’s growth and requires more careful corporate expense management. The reduction of the churn leads to higher revenues; the churn of 20 percent and higher indicates significant red flags like increased operational issues. We need to work on customer success and improve growth. Related Benchmarks: total new customers. These are the people who become paying customerstotal customers lost. The people who haven’t renewed subscriptionNet Promoter Score (NPS) Customer Service. This indicator tracks customer loyalty.

Addressing the Why means conducting a comprehensive analysis of each KPI and uncovering related issues and goals. Eventually, you’ll have a good understanding of who should be responsible for a KPI and how to measure its performance.

In the case of customer churn reduction, one can measure its performance using the above benchmarks. The persons responsible for growth and customer success should be accountable for the implementation.

2. Set Realistic Expectations from the Team

Helps with resolving:

  • Poor definition
  • Difficulties with measuring KPIs.

Before you create the KPIs for your team, you need to have a good understanding of what they can achieve. If you don’t, you might end up giving them unrealistic goals and performance benchmarks. In turn, unrealistic goals are the biggest demotivating factors for employees.

There are two major steps to take to avoid unrealistic goals: measure team performance and make changes to the goal-setting process.

Setting Realistic Expectations: Measure Team Performance

Begin by doing these simple steps:

  • Calculate the average number of typical tasks a team member completes within a specific period (month, week)
  • Evaluate the average time it takes a team member to finish a typical project
  • Conduct an employee survey asking to self-assess their skills and time needs.

Keep in mind that you can use time-tracking apps for your business to effectively measure average task completion times.

Setting Realistic Expectations: Making Changes to Goal Setting

The goal here is to prevent you from setting yourself up for failure by doing:

  • Identify specific unrealistic expectations. Review previous projects to learn from past mistakes and have a brainstorming session with your team
  • Define requirements before deadlines. Deadlines are often unreasonable because the team almost always receives extra tasks. That’s why you should start by making a list of tasks and potential additions and then move on to setting deadlines
  • Always ask your employees for input. Your team is a group of individuals who may have worked on similar projects before. Asking them to help with setting unrealistic goals by identifying estimates for completion.

3. Don’t go Overboard with KPIs

Helps with resolving:

  • Poor definition.

Creating too many KPIs is another major blow to a team’s motivation and performance. The leaders need to think about how many of them their team actually needs to achieve the goals, and often they go overboard.

We gotta admit, though: the task of selecting KPIs is tricky.

The final number varies with every company and project. In this Guide to Key Performance Indicators, PwC says that the formula for selecting KPIs doesn’t exist, but recommends between four and ten measures.

If you’re still unsure where to start, use this framework.

  • Have no more than 3 KPIs per goal. This helps to avoid being overwhelmed
  • Always have at least one leading KPI (specific, positive KPIs that describe the company’s goals) and one lagging KPI (these resemble the actual performance of the company) per goal.

Important! Lagging metrics can make a huge difference in helping your team stay focused. Take a product email working on the project to increase the number of people signing up for a free trial within a month. If they choose to have only leading KPI, they would have to wait an entire month to get any information on their performance.

Creating a simple, spreadsheet-based KPI report describing the performance of the team is a good way to implement the framework. Use online tools like EssaySupply and Grammarly to write concise, on-point, and clear reports for your team.

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4. Ensure that Your Team Understands KPIs

Helps with resolving:

  • Poor definition
  • Lack of details
  • Lack of accountability.

A huge reason why teams fail to achieve KPIs is a lack of understanding of techniques, strategies, technical components, and other things they’re supposed to use.

Often, it’s a mistake on the leader’s side, who fails to communicate the KPI and the means to achieve it.

For example, the leader simply asks the team if they understand KPIs. He or she answers their questions to the best of their ability. In many situations, some important topics remain unaddressed.

There are at least two good reasons for this.

First, the KPI setting meeting might be time-limited, so something is left for later. This often occurs when setting KPIs for remote teams. Second, team members might not be comfortable asking questions that require a thorough explanation to avoid taking up too much time.

To cover everything, make sure to follow up with an online survey. This way, you can ask if everybody understands what they need to do.

The survey can include questions like these:

  • How would you access your understanding of the KPI? (provide a scale from one to ten)
  • Was there something you didn’t completely understand? If yes, please describe
  • Have you used the tools for this project before? If not, please list them.

Not only will you help your team but also improve their work satisfaction. If there’s a need to increase employee loyalty as soon as possible, learn how to do employee journey mapping.

How to Create KPIs to Improve Teamwork: Summary

Now you know how to address the four most common shortcomings of KPIs. By reducing their impact on your team, you’ll be able to prevent a lot of issues undermining teamwork and motivation. Here’s how to do this, once again:

  • Address the Why to make KPIs sufficient detailed and easy to measure
  • Set realistic expectations to avoid team demoralization
  • Collect feedback to make sure the team understands how to achieve KPIs
  • Have 2-3 KPIs for each important goal (a leading and lagging one).