Three Chartered Accountants tell us how they use performance metrics to enhance organisational efficiency beyond traditional benchmarks
Niamh McCarthy
Finance Business Partner
Primark
Relying solely on Key Performance Indicators (KPIs) can mean ignoring the human elements that impact performance. Focusing only on a project’s outcomes might meet KPIs, but it can also make people feel that their wellbeing or personal development is not a priority.
In my experience, the best way to ensure a balance between quantitative metrics and qualitative assessments is to set clear expectations when setting annual goals, provide feedback and coaching more regularly than in one-off annual reviews so that everyone is aligned, and add weighting to both quantitative and qualitative metrics based on their importance to the company.
Subjective factors such as employee behaviour, teamwork and communication skills are crucial in performance evaluations.
These measures can influence a company’s culture as employees feel heard and that they can collaborate with their peers. These positive behaviours drive a positive culture. The more positive employees feel, the more productive they tend to be.
Careful consideration is required before implementing alternative performance measures to ensure clear definitions of the metrics. Transparency is a must to ensure everyone understands the metrics that are being used.
A standardised approach is also needed for all employees. To achieve this, the managers setting these performance measures need adequate and uniform training to ensure consistency for everyone.
Employees should be involved in their goal-setting every year, of these goals must align with the company’s values and objectives. There should be a sense of ownership over these so that they are not just ‘given’ to the employee but they instead feel that they have created them, can drive them and ultimately achieve them.
These goals should be reviewed regularly – not just annually – to ensure that they are still relevant. Otherwise, you risk employees feeling disconnected from their own objectives or those of the business.
Unlike traditional performance metrics focused solely on quantitative outputs, alternative performance measurement methods often take a more holistic approach.
Various factors are considered, such as skills, behaviours, contribution to the team and alignment with company values. This comprehensive assessment provides employees with a more nuanced understanding of their strengths and potential areas for improvement, facilitating targeted development efforts.
Employees who feel they can grow and develop within a company are more likely to actively contribute to the business. The more you give back to employees in terms of recognising their development and wellbeing, the more they will give back in turn.
Mark Riseley
Strategic and Financial Consultant/Fractional CFO
My lens is formed from a career working for high-growth scale-ups where change is constant, requiring systems, data, processes and (most importantly) people to flex as the company grows.
Traditional KPIs are often unsuited to measuring capacity to scale efficiently, for both people and companies, and do not capture a company’s true enterprise value along that path.
Some alternate measures of performance include:
- Time management – In high-growth environments, time may be a team’s most valuable commodity. Does the company measure time, quantity and output generated by meetings?
- Data – What is high-quality data, and what is just noise? Instead of just measuring data output, measure the speed and efficiency of decisions to determine which data is worth keeping.
- Adaptability to a culture of change – Identify, hire and measure based on key personality traits, such as decision-making capacity, adaptability/flexibility, resilience, trust, diligence and communication skills, rather than just the known skills of the profession.
- Effectiveness of organisational design – Is the organisation’s design scalable, or does it need to pivot to enable growth? Does it allow executives to delegate/empower decision-making? Check employee turnover to determine the effectiveness of your organisation’s outlay.
- Common goal – Is the common goal clear? Do companies measure the clarity of messaging, such as doing spot checks on the elevator pitch, for example? Do performance measures flow from the corporate to departmental and individual level? Make sure all messaging is aligned.
- Enterprise value – Is enterprise value (EV) clear, measured and reported? Is there a consequence to hitting forecasts? The ability to do this can mean the difference between a rear-view EV and a front-view EV. Are margins increasing, thereby demonstrating the effectiveness of scaling systems, processes and people?
To ensure that alternative performance measures align with organisational goals and contribute to overall success, companies must clearly define their goals, objectives and values so that employees fully understand and can align them with their own goals, objectives and values.
Alignment and collaboration between different departments and teams within the organisation will ensure alternative performance measures are consistent and mutually reinforcing.
Success is more likely if all employees feel they are working towards a common goal aligned with the company’s goals.
Yier Hu
Senior Associate in Management Consulting
KPMG
There are certain limitations to relying solely on KPIs for performance measurement. Although KPIs provide quantitative metrics to measure performance, they tend to overlook crucial perspectives essential for a comprehensive evaluation.
At KPMG, we recognise the importance of looking beyond KPIs to ensure a thorough approach to performance measurement.
The quantitative matrix can fail to account for a series of subjective factors, such as employee behaviour and communication skills. These intangible elements offer valuable insights into employee performance and should be considered alongside quantitative measures.
KPMG employs its own separate benchmark for performance measurement, analysing performance from six distinct perspectives: client, people, innovation, financial strength, public trust, quality and development. We advocate for measuring performance from multiple perspectives, recognising the importance of a holistic approach.
These alternative measurements assess the benefits an employee brings to clients while also evaluating their contributions to the working environment.
From the people perspective, we focus on how the team studies and improves, how to be a strong mentor to the team, how to build internal communication and culture and how to make everyone feel like a part of the team.
From an innovation perspective, we prioritise building trust with the team and client, supporting the team to identify opportunities, and leading by example. This is crucial and creates long-term value while also enhancing overall satisfaction within the company.
By embracing a multi-dimensional approach to performance measurement, organisations can gain a more nuanced understanding of their employees’ contributions and foster a culture of continuous improvement and growth.
LOADING...