Aligning Team KPIs with Strategy

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As the new year kicks into gear, companies are busy with setting goals. At the corporate level, targets relating to revenue, expenses, market share, and other high level goals are set. To support these goals, each team in the company needs to work cohesively. This requires establishing team targets that align with the corporate strategy. A tight correlation between team goals and the corporate strategy produces a cumulative effect on delivery. The converse creates a dissipative effect.

Team goals are performance levels assigned to the key performance indicators. What are the relevant key performance indicators for the team? There are three key considerations in developing the team’s key performance indicators:

1.       Causality

The work performed by each team in a company contributes to the overall success. A team could rely on input from another team. Its output might have a direct or indirect impact to the corporate goals. By determining the causality of the team’s work to the results that make a difference, you identify what needs to be monitored. The team ought to do these critical tasks well.

2.       Prioritization

Resource constraints place a limit on how much work a team could take on. While speed and quality matter, what matters most is the results that count. Hence, prioritization is necessary. Based on the team’s mandate, you determine the success criteria. The key performance indicators need to reflect how well the team meets those criteria. Focus on a select few that are most important.

3.       Improvement mindset

What gets measured gets improved. A bottleneck holds up a workflow. A breakdown in communication leads to delays and rework. When there are hiccups that require attention, determine the root cause and use a performance indicator to assess the significance. You can also use that indicator to monitor improvement as you introduce changes.

Causality clarifies the line-of-sight. Prioritization drives focus. The improvement mindset fosters a positive culture for results measurement. Engage team members in determining the appropriate key performance indicators. Their participation helps to build buy-in. The alignment between the key performance indicators for a team and the corporate strategy is crucial in ensuring that there is coherence in the work that is performed throughout the company.

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