KPIs vs Metrics…
KPIs vs metrics, scorecards, dashboards, almanacs, KPOs, SLAs, SLOs…
There are so many terms revolving around the numbers that are the heartbeat of our organizations that it can become quite confusing. Many of us may use various combinations of these terms as synonyms, and while some are, we should make a distinction between others.
When working with our consulting clients, we frequently have to remind ourselves of these terms’ subtle but essential differences. So let’s start with the promise of the title KPIs versus metrics.
What is a KPI?
KPI is an acronym for key performance indicators. When discussing this with a room full of people, I like to reorder the words for emphasis (hopefully, you can hear my vocal emphasis when I say this), “KEY indicators of performance.” Key is key. We will explain why that emphasis is vital, but first, a quick dive into what a metric is.
What is a metric?
A metric is a number of measurement. That’s it. There are no other adjectives to describe it. It is just any number that measures anything.
When we are working with our consulting clients to determine their KPIs and corresponding targets and goals, usually this leads to an explosion of ideas from owners on what else they want to measure. Wanting more numbers isn’t a bad thing. However, this is where KPIs and metrics are to be differentiated.
The most appropriate time and place for KPIs are at leadership team meetings or anytime you are in high-level discussions. Measuring your company’s performance is important, but you don’t want to spend all your time evaluating metrics. Identify which metrics are most essential for your business. If you regularly review your KPIs, you’ll know whether further research of other metrics is necessary to look for a cause.
Almanac/scorecard vs dashboard
I draw similar parallels to the Almanac (the book Traction by Gino Wickman calls this “scorecard”) and a dashboard. An Almanac is a collection of KPIs, whereas a dashboard is a collection of metrics. As often as I tell a client, “That’s not a KPI, it’s a metric,” I clarify that does not mean that metrics are not important. So we want our middle managers and team members to dive into metrics and our leaders concerned about KPIs.
SLA Resolution Time
Let’s take an example of my favorite KPI, SLA Resolution Time. It is key because we have found that Resolution Time is a leading indicator of not only client satisfaction (CSAT) but also service efficiency. Your technical mind is likely already punching holes in this statement and that’s natural. As we lead larger teams, getting into that midrange of IT Service Providers (~15-25 team members), leaders have to be willing to step back from the details.
For example, as a leader, your service delivery is doing well when your Resolution Time is hitting desired targets and even more so when you have a manager taking care of the details and producing the results. On the other hand, a Service Manager also wants to track the Resolution Time KPI, but since this is the end of the service life cycle, a Service Manager should see all of the available metrics that contribute to Resolution Time on a dashboard.
A few examples may be Response Time, number of hours per ticket, number of time entries per ticket, percentage of tickets escalated, technician utilization, etc. Every one of those numbers can have a direct or indirect impact on the Resolution Time KPI.
Tip of the Iceberg
Imagine an iceberg drifting through the water. The part above the water is about 10 percent of the total size. What most people don’t realize is that the remaining 90 percent of the iceberg is below the water’s surface. The same analogy applies to business. Other managers, departments, or teams, are managing their icebergs. These teams could be Projects, Finance, Sales, Marketing, and the like.
As a leader of the company, knowing that every iceberg is managed, you can now look at just those iceberg tips to make sure everything is in the right place and headed in the right direction. Your Almanac can stay at a high level because others are handling the Dashboards. Your list of KPIs can stay short (we recommend just 5-7) because you know someone else is watching the Dashboard, which might include dozens of other metrics.
How to Use KPIs vs Metrics
Being able to step back from the details and manage results can be a difficult task to learn. It’s not that the task itself is hard to understand; it’s that we care greatly about the result. To get started, work with your team to understand how the metrics result in the KPI. Get comfortable with how it works, and once you have that comfort, step back, and deal with only results. Of course, you can always step down into the detailed metrics when needed, but you need to free up your time to solve bigger and more extraordinary challenges to launch your company into the future.
If you need help on beginning or having trouble finding what’s key and what’s not to your business, feel free to hop on the phone with me or comment below. I love discussing these topics and bringing our community together to share and exchange data and ideas.
