How many KPI’s should your team have?

How many KPI’s should your team have?

There are a lot of variations on an old saying that goes something like this: “That which gets measured gets done.” This is especially true in Lean organizations. Making improvements requires a detailed understanding of how things are going.

Many of these metrics that are tracked are simply used to keep a process operating properly. Some, however, rise to a higher level of importance. These are the metrics that are either critical to the operation or are tightly linked to improvement objectives. They are known as KPI’s or key performance indicators.

Many managers take the “more is better” approach when creating KPI’s. They think of all the possible things they can measure and add them to some sort of dashboard. The problem is that this dilutes effort and hides things in the clutter. Remember, the “K” in KPI stands for “key”. If everything is key, then nothing is.

My recommendation is to break your KPI’s into categories. I most often suggest using QDCSM, or quality, delivery, cost, safety, morale. Between one and three KPI’s for each category, with no more than eight or nine total is generally manageable.

Be careful. There is a tendency at higher levels of the organization to want to add in more metrics. Resist the urge. Even senior leaders can be spread too thin.

A final note: I am not saying that you should not measure other things. I just mean that KPI’s need to be actively managed and are discussed in monthly operations reviews. Any misses require a countermeasure to get back on track. KPIs should take priority over misses on other metrics.