While Ralph Waldo Emerson’s words inspire travel and grace countless knick-knacks, many COOs may roll their eyes at his focus on the journey over the destination. After all, key performance indicators need to be met for continued growth, client satisfaction and even those coveted team bonuses. The destination cannot be tossed out the window like a banana peel.
As with any road trip, organizations cannot get to destinations without a solid foundation in place. And by setting realistic KPIs, organizations can still achieve change, with fewer potholes along the way.
Is the vehicle safe for highway travel
Before jumping in a car for a long journey, a safety check is the prudent first step. In the business world, before any operation can set realistic KPIs that resonate with employees and customers, there are three safety checks that position it for success:
- Ensure strategic alignment of the business strategy
- Have an inspirational and compelling vision
- Outline clear objectives
Making sure there is strategic alignment is critical to setting key performance indicators. The operation must have a tactical orientation to the business’ strategy; it shouldn’t be an independent plan. Everyone involved should know how they fit in and how the work they do enables the business’ larger strategy. If the team is working on anything that doesn’t align with the strategy, it needs to be reevaluated and challenged.
Once there is a solid foundation, a critical need is an inspiring and compelling vision that is simple and resonates with the employee base. This vision serves as reason for getting in the car and driving to the destination. i.e.. the Grand Canyon. Employees will want to be on the journey when they’re interested in the destination. The destination/vision I’ve added to the GPS for my team is to be the customer’s first choice for life insurance by delivering innovative solutions.
The operation must have clear objectives that line up with and enable the overarching strategy. These should be measurable, actionable and outcome-based, serving as the “why” for the whole journey.
Hitting the road
With those three elements laying a solid foundation for a sturdy, road-worthy vehicle, realistic and meaningful KPIs can now be formed. There are a few things to keep in mind:
- Ensure they are directly related to objectives and achieve larger business goals. If the KPIs don’t relate to the objectives set in your foundation, let alone the main goal of the business, employees will be spinning their wheels with as much luck as a Skylark stuck in Alabama mud. The workforce will get discouraged if they are working toward indicators that have no bearing on the vision at large.
- Focus on the top few. Prioritization is crucial to success; otherwise, the team will be spread too thin to have any real impact. By focusing on the top performance indicators, the team can devote the appropriate resources and time to making sure those are met.
- Identify leading indicators. No different than a GPS re-routing you when there is an accident ahead, it is imperative for the operation to have leading indicators that will alert the team to a potential issue so the course can be corrected before a problem occurs. The leading indicators my team uses include sharp changes in volume, staffing or mix of business.
- Know what is critical for your specific industry and function. When it comes to operations, regardless of industry, KPIs should include expenses, i.e. as a set percent of premium or unit costs such as cost per application, call, claim, policy, etc. or expense as a percentage of premium.
See also: 3 Fatal Mistakes Risk Consultants Make
When setting new performance indicators and driving significant change, there are three best practices that keep everyone safely moving toward the target: mindsets and behaviors, change management and rewards and recognitions.
Establishing mindsets and behaviors that are expected from the team grounds them in habits that drive a shift in culture. Things like collaboration, accountability, agility, innovation, process improvement and being data-driven are just a few examples of mindsets and behaviors to which I hold my team accountable.
Cars don’t just swerve into a new lane without turn signals -- well, the good drivers don’t -- and a strong change management program acts as that trusty blinker. By leveraging a well-thought-out change management program, KPIs are met more easily and with less resistance. It's imperative to have a change plan mapped out that ensures the team is aware in advance of the change, understands the benefits to them, the business and customers, is given the right training and is rewarded for adopting the change. Having a clear map will also enable the team to bring stakeholders on the journey and manage any resistance.
No road trip is complete without some fountain sodas and snacks. Don’t forget to connect reward and recognition programs to the desired behaviors and outcomes. When a team member is exhibiting the actions driving expected outcomes, they should be rewarded. Rewards will reinforce the change and help the team achieve the KPIs, ultimately meeting the broader business goal.
There’s a lot to be said for the journey, but having a clear destination in mind can help the journey fly by so that when someone asks, “Are we there yet?” the answer is "yes." With these tips in mind, don some sunglasses, get a full tank of gas and hit it.