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How often does a failure to meet Key Performance Indicators (KPIs) trouble you as a business owner/director/manager?

Or, phrased more positively, if every colleague consistently met and exceeded their KPIs, what impact would this have on the business?

Often, the underlying reason for failing to meet KPIs is that they are incorrectly set. This may seem like a spurious reason, after all, if a business needs to generate a certain amount of turnover per colleague then there’s no arguing with that.

However, it’s not the amount of turnover that’s the issue, it’s how you go about achieving that number. The fundamental cause of failing to meet KPIs is down to focusing on the Outcome rather than the Source.

Let’s use a salesperson as an example

Many salespeople are given KPIs around the number of sales they need to complete, or revenue they need to generate. Meet Jen Bloggs; Jen is a phone based saleswoman and the business gives her a KPI of £100,000 worth of sales in a 12-month period.

With a KPI like this, it is very easy for Jen to not reach her target. And more importantly, no one will definitively know why.

The reason being that the KPI has been derived from an Outcome, rather than Source activity.

Through our global community we know that the fastest growing companies understand that if you focus on Source  activity, the Outcomes will look after themselves. So sticking with the analogy of Jen  for the moment, if her KPI was the number of calls that she needs to make in a 12-month period, this is much more achievable.

Obviously, the business still needs to generate £100,000, however if Jen reaches her KPI and the Outcome target of £100,000 isn’t reached then the business can investigate why this has happened and address it.

It may be that Jen makes enough calls but doesn’t have a good conversion rate, so the business gives her intensive conversion training which means she is far more likely to achieve her KPI.

Or perhaps, through talking to potential customers, Jen is gathering valuable information which will help shape future product development that in turn delivers more sales. Ultimately the reasons for failure may be any one of a number of causes, it may even be that Jen isn’t cut out for sales! The only way to find out however, is to address the Source, otherwise your business may find itself lagging behind on all its KPIs and making all kinds of wrong decisions to fix it.

It’s a very simple principle that is rarely adhered to properly, except in those businesses that really tap into their potential. The reason being is that for leaders, implementation is a mind-set, rather than just a one-time policy/procedure that is rolled out.

To work solely at a Source level leaders will need to coach rather than tell their staff how to perform. It requires consummate communication skills and an underlying vision in the business that drives everyone’s why.

The highest growth companies, such as Apple and Google, have absolute clarity on their business vision and the underlying why in the company. In turn, this clarity enables a leader to train and effectively cascade this understanding to their people. The KPIs are simply just the process (the Outcome) that supports a greater depth of thinking by an individual, team, board and business.

If you’re interested in finding out how to apply Source / Outcome within your business you can download our free eGuide or get in touch with one of our team who will be happy to discuss how you can access the Source / Outcome framework, as well as many other business growth strategies, by becoming a Powered by Shirlaws licencee.

Alternatively if you would like to learn how to shift your communication style from instructional to coaching you may want to attend our Coaching Skills Masterclass, click here to find out more.