Anyone working in business is familiar with the old adage:“what gets measured gets done.” Key Performance Indicators (KPIs) have become an integral part of business management since the late 1980’s. When developed effectively, they can help to define a picture of success. People and functions are horizontally and vertically aligned towards specific goals, fostering a sense of both personal and shared accountability. In the fast paced world of business it’s often only what’s measured that gets done.
However, despite the obvious necessity to leverage KPI’s as a tool to enable success, an extensive MIT Sloan Management Review survey reveals that only 27% of companies strongly influence process and people management through their KPIs. What’s more – many businesses that actively evaluate organizational and functional performance against a set of KPIs limit their performance measurements to traditional ‘hard assets’. Spend, revenues and profits are important to track. But they do not give a full picture of how the company will perform in the future, nor do they necessarily align with the organisational strategy of vision. ‘Soft assets’ should play an equal role in a company’s performance metrics.
If we glance back into recent business history, we can find an example of a forward-thinking approach to balancing soft and hard assets. As early as 1992, Robert Kaplan and David Norton developed the Balanced Scorecard Framework (BSC) which operates with an emphasis on selected combinations of financial and non-financial measures. The BSC makes use of strategy mapping to better align KPIs to strategic objectives, going beyond outcome-tracking by incorporating critical performance enablers.
