Select KPIs For People, Processes, Technology, And Data
The volume, velocity, and complexity of change thrust upon us leave little room to avoid transformation. The only constant is change, and transforming ourselves and our organizations is the only way to withstand such change. In this article series titled "Transformation Blueprint," we explore the various levers of transformation available for an organization and offer practical tips and tools on how to activate them. This article discusses why Key Performance Indicators (KPIs) are critical in a transformation, offers key tips on how to select them, and presents 7 KPIs to consider as your measure and evaluate the transformation efforts in your organization.
Why Are KPIs Important In Transformation, And How To Select Them?
"What gets measured, gets managed," the famous quote by Peter Drucker, could not be more applicable here. To ensure your transformation efforts are paying off, you will need to set the right Key Performance Indicators and set up an analytics capability to be able to collect, track, and report on the progress of the transformation. A few tips you can consider in selecting and tracking the correct KPIs include:
- Selecting KPIs that you can easily measure and explain to anyone in the organization and your external stakeholders
- Defining specific KPIs that pertain to a specific customer base
- Articulating the expected business outcome the KPI will be measuring
- Defining KPIs that are specific, measurable, attainable, relevant, and timely (SMART)
So, what KPIs should you be using? The short answer is it depends on your organization and the breadth, depth, and scale of your transformation efforts.
According to MIT Sloan, KPIs must be shared transparently as they will inform data-driven decisions, help align your transformation efforts, and provide a holistic view of the customer, which is crucial at the transformation office level to ensure that the various transformation efforts are aligned and centered on the customer. [1] While there are more than 40 KPIs to consider in a transformation setting that impacts the elements of people, process, technology, and data, below we recommend considering 7 KPIs centering on these elements. [2]
Customer Experience KPIs
Your transformation efforts should be taking place so that you can improve the customer experience and the product and services you offer to your customers to address their needs and improve their lives. If your transformation is not customer-focused, it needs to be. There are two key customer-focused KPIs we recommend: Customer Effort Score (CES) and Net Promoter Score (NPS).
Customer Effort Score (CES) measures how much effort or time it takes for a customer to benefit from using your product or service. You can measure CES through a Likert scale survey question, asking the customer to denote the level of agreement or disagreement on how easy it was to interact with your products or services. The higher the average, the better the customer experience.
Net Promoter Score (NPS) measures how happy customers are based on whether they would recommend on a scale from 0–10 (with a 10 rating meaning customers would absolutely recommend) your brand, product, or service to their friends and colleagues. The NPS is calculated by subtracting the detractors (all the 0–6 ratings) from the promoters (9–10) to get the Net Promoter Score. Although benchmarks vary by industry, generally, scores between 30–50% are good, between 50–70% are great, and over 70% exceptional.
Employee Experience KPIs
Employees are critical to organizational transformation because they are the ones implementing the transformation effort and are also impacted by them. There are several employee experience metrics to consider. Here, we recommend two: Employee Net Promoter Score and Employee Productivity.
Employee Net Promoter Score
Similar to the Customer NPS, the Employee NPS measures whether employees would recommend your organization to family, friends, and colleagues as a great place to work. The Employee NPS is calculated by subtracting the detractors (all the 0–6 ratings) from the promoters (9–10) to get the Net Promoter Score. Although benchmarks vary by industry, generally, scores between 30–50% are good, between 50–70% are great, and over 70% exceptional. The higher the Employee NPS, the more successful your transformation efforts, all other things being equal.
Employee Productivity
A good way to measure the effectiveness of your transformation efforts internally is its impact on employee productivity. Successful transformation efforts should increase employee productivity and decrease wait times and waste. In a learning context, you can measure employee productivity by the number of learning assets developed or curated per employee during a given time frame (e.g., monthly, quarterly, or annually). While employee productivity is a quantitative KPI, it must be analyzed in conjunction with qualitative data to ensure that, while the number of products or services delivered is increasing, their quality is not compromised.
Process, Technology, And Data KPIs
New Business Process Adoption
Transformation efforts impact process improvement by removing bottlenecks, simplifying processes, and introducing new and/or improved business processes. One valuable KPI to help you gauge whether your transformation efforts are positively impacting processes is the new business model adoption KPI. This KPI measures how many new business processes have been implemented over a given period of time (e.g., quarterly or yearly). For example, shifting from waterfall to agile and adopting agile process improvements across the various stages of the design, development, and delivery stage can offer you a good gauge of the impact of the transformation on the organizational business processes.
Cloud Adoption KPI
When it comes to technology transformation, a key element is cloud adoption. This particular KPI allows you to measure how many employees are using cloud-based applications to do their jobs. This KPI allows you to gauge the percentage of business processes designed for the cloud, as well as the usage of these cloud platforms. Reviewing data from this KPI in conjunction with other KPIs, such as employee productivity and new business process adoption, can be illuminating.
Data Quality KPI
Data is crucial to the transformation effort, and its quality is even more so. At a transformation office level, you can monitor key characteristics of data quality, such as completeness, accuracy, timeliness, and validity across the various data sets collected from the transformation efforts.
Conclusion
KPIs are foundational in measuring and managing a transformation effort. While there are more than 40 KPIs to consider, it is advisable to ensure that you include a manageable number, usually between five and seven KPIs (definitely less than ten), including KPIs that focus on people, processes, technology, and data.
