The critical role of local teams when starting a new factory in developing production cultures
Why saving on the local team during a factory launch is one of the most expensive decisions a company can make.
Read article‹ All insights · Management
SMARTPP: establishing KPIs (Part 1)
SMART is not enough. Add Process and Person — and KPIs start managing for you.
A KPI (key performance indicator) is not only an abstract or real target value for your business or process — it is also a unique manager that can make your people and process management truly independent and efficient.
Correctly established KPIs let you control everything without controlling anything. Different kinds of KPIs should be set according to your goals and planned achievements.
How to establish KPIs? The standard way is the SMART principle (Specific, Measurable, Achievable, Relevant, Time-bound). But is it enough? Experience shows it is not — especially if you want not just a few extra percent, but something really new or a different level.
What else is needed? I call it P and P: Process and Person.
1. Process KPI
To establish or adjust a process the way you see it, you must understand the target of the process. If it has no target, it should be deleted, simplified or integrated into another process. Only a process with a clear target can have a clear KPI. The KPI is derived from the process target and its influence on the business and on other processes. Every significant process with a clear target and influence on the business needs a KPI; processes without a clear target or influence should be removed or merged.
How? Take the purpose of the process and its influence, combine them, and define in 3–5 words the main target of the activity and what you want to get from it. Then think how to measure it in the simplest way. If you can, that is the process KPI. If not, think how the process can be changed, simplified or integrated so that it becomes measurable.
2. Person KPI
How do you control people’s work without controlling them? Only by persuading them to follow what you need — which works only if they see that working with you is a WIN-WIN. That means they feel the work benefits them financially, mentally or in their own goals, and that it is better to be with you than without you.
One of the clearest signals of this is a KPI: a real KPI that depends on them and can be achieved by them personally — not an abstract value like regional sales that depends on the whole company’s management and on the environment. If people feel they can influence the targets on both sides and receive something important to them in return, they will work independently and without control.
People at all levels should have personal KPIs — not only top and middle management. Without them, work slides into a routine mode whose productivity depends on mood, time, competing offers and other circumstances. If you are not able to set personal KPIs, consult the appropriate person or company.
SMART + Process + Person = SMARTPP. Only with SMARTPP do you run your business — and not the other way round.
Both KPI types must always be established. Without them there is no success in achieving your goals — whether you are a small firm or a large corporation.
