dartboard target aim goal achievement concept
I am often asked, what is the benchmark for a particular KPI. At first, I would quickly answer the target from the SMRP Best Practices Guide. Depending on the organization and the maturity, I would either see their faces light up or see them shut down. If they shut down, what momentum was present, quickly vanished. If they were meeting the target (and the KPI and supporting data checked out), the momentum would fade a bit, as they were hitting the target.
As I learned more, I decided not to answer with the target. Instead, I would ask where they were in their maturity with spares, work management, their maintenance strategy, etc. This would give me a baseline to discuss their specific progress against the KPIs in question. I did this as I have come to learn, that there is no true target, as it is a moving target, which must be reviewed and revised periodically to drive the right behaviors.
Why Not Have A Defined Target
By now, you must be asking what the point of is not sharing the best in class targets. It comes down to the purpose of KPIs, which is to drive behaviors and actions. If you have a target set too high, you lose motivation, and same goes if it is too low (as they have already achieved it). You need a challenging target, but realistic in achieving based on the current state of the program.
This is not to say, that there should not be a short or medium-term target, these are needed to measure progress, but those targets need to be matched to the current state. As the organization and it’s processes mature, the KPIs should be reviewed and targets revised.
How to Determine What the Interim Target Should Be
So how do you determine what the target should be? Well, there are a few different ways to do so. The first is to benchmark your current state and determine what is realistic to achieve in the next 6-12 months. This is a great approach, as the business case and benefits can be calculated and focus applied to the right KPIs.
The second way is to have an assessment done (internally or externally) and determine where you fall in maturity against others. This will allow you to make an informed decision on where your target should be based on similar maturities. The potential downside to this approach is that once again, the targets may be too high or too low.
After a period of time has passed, such as 6 or 12 months, the performance against the KPIs should be reviewed. This will allow the organization to decide if the targets need to be revised (higher or lower). This is critical as it will ensure the targets stay relevant. It is also ok to change the KPIs if they are no longer relevant to the organization.
Before revising the targets, I have to recommend that a detailed review and audit of the KPIs and data is performed. This will ensure the KPIs are truly reflecting the actual performance.
KPIs Need to Drive the Right Actions, Not Demotivate
KPIs are designed to drive changes in behavior, hence performance, that will make positive changes to the organization. I have found in the past, that not only can unrealistic targets demotivate, but it can also cause “creative” ways to calculate the performance, resulting in “meeting” the target. This results in a lack of improvements.
The importance of selecting the right targets cannot be overlooked, as it can influence the entire program and it is ok to revise the targets as needed. The right KPIs (including balancing KPIs) need to be selected and the targets based on the current performance of the organization.
The Never-Ending Journey
So as a company matures and the performance improves, the targets should be moving as well. The increments that they move will be greatly reduced as the maturity improves, as the improvements become harder to achieve. It is this change in expectations and the continued challenge which will drive continuous improvements in the organization.
If you need any assistance with building a performance management program, please contact [email protected] for additional information.
I’m James Kovacevic
Principal Instructor at Eruditio
Where Education Meets Application