The Ultimate Guide To KPI Management

02. KPI Planning Process

Like many things in life, sometimes following a process or a series of steps creates the structure you need to achieve a better outcome. Here is a series of steps that will help you plan, create and track the right KPIs for you company and teams to use.


Step 1 – What are your Strategic Objectives?

A good way to create the steps is to start with your strategic objectives or aims. Why? Because KPIs that don’t align with and support what you want to achieve run the risk of not being fit for purpose, and not helping you to execute your strategy and achieve your goals. A commonly used approach to setting Strategic Objectives is to use Strategy Maps and Balanced Scorecard. Under the headings of Financial, Customer, Internal Processes & Learning & Growth, you can set Strategic Objectives and plan KPIs for these.

Examples of Strategic Objectives:

  • Be the fastest growing company in your category (financial)
  • Deliver on our promises to stakeholders (financial)
  • To be the most recommended in our category (customer)
  • Have the fastest delivery in a category (process)
  • Provide the most choice in a category (process)
  • Be the fastest to resolve an insurance claim from when first notified (process)
  • Build and maintain great teams (learning and development)

You can read other examples of Objectives on our OKR examples page.

Brilliant, best & excellent are hard to measure

Be warned that if you set goals that are about being ‘brilliant’, ‘the best’ or even ‘excellent’ you may get caught up in long and drawn out debates on how you measure that. So having goals that are measurable is a great starting point and will save you lots of time.

It’s a good sign if you can have between 3 and 6 of these objectives as that would mean you’ve good coverage of the key areas of your business. 


Step 2 – Enlist the right people to discuss KPIs

You are going to be talking to a variety of people within your team and in other teams about KPI planning. Some of these people will like being involved and some might be skeptical or even measurement resistant. Either way, metrics and measurement can’t be an option and you’ll need the ‘right people on your bus’. There are also roles in KPI management that need to be defined and assigned:

KPI owners

The person who is ultimately responsible for the KPI and it’s target level of achievement.

KPI collaborators

The people that are accountable and directly contribute towards the maintenance or improvement of a KPI.

Data originators

These are the people that work closely with the data and make it available to be used. This data might not be a KPI yet.

Data aggregators

These are the people that pull data from lots of sources and make it available to teams. This could be your Accounts or IT team for example. They might combine data sources and / or perform calculations on the data to create a KPI.

Data source

The source of the data whether that’s a person or a system like a BI system, software tool or spreadsheet.

KPI Management Software

ZOKRI has KPI ownership and collaboration as part of the OKR software, in addition to allowing KPIs to be updated from many sources, including manual updates. These KPIs can have targets set, can be used as part of an OKR, are available for dashboards, and can be included in check-in and meeting discussion. You can read more about OKRs vs KPIs here.


Step 3 – Create the long list using a cascade or mindmap

When you’ve got the right people together you can start to plan your KPI examples. A good way of discussing candidates for KPIs is to create a cascade of metrics. This can start with your Strategic Objectives and at the outermost branches have your leading indicators.

Try hard not to worry about whether you have the KPI yet when doing this exercise as you will end up measuring what you have not measuring what you need.

plan to measure what matters

For example, you can start with your objective / aim, discuss what the building blocks are to achieving that, what the KPIs are that would measure that objective’s achievement, what the drivers of those KPIs are, and which leading indicators might drive those.

In the example above, ‘fastest growing’ would be achieved via the building blocks of New Business, Retention, and Expansion / Upsell of Accounts. New Revenue would be measured by the ‘deals closed’, ‘deal contract value’, and ‘contract length’. If you were to consider the KPIs that drive ‘more deals to be closed’ you might agree that you need ‘qualified leads’, ‘meetings’ and ‘quotes’ to be measured. ‘Qualified leads’ might be driven by ‘email performance’ and outbound ‘call connects / discussions’.

You can see how this exercise can quickly lead to there being a lot of branches created. Using mindmap tools of infinite whiteboard tools can help hugely.


Step 4 – Shortlist those that are important

Some of the KPIs you list available and some will need to be sourced and baselined. Baselining KPIs is essentially the exercise where you get the first metrics. After this you can start to think about setting targets.

Upon reflection, some of your KPIs might be seen as being unimportant, whether available or not. The result of which will result in a shortlist. You might want to use your cascade to label the KPIs you’re going to use and have now, and the ones you’re going to use and need to baseline.


Step 5 – Start tracking & setting goals

You are now in a position to define, assign, source, and set targets for your KPIs. Some you will decide need to be improved by increasing or decreasing the metric. Some might need maintaining between a range.

When creating KPIs, the calculations, any limitations or assumptions made in reporting should be explained in the narrative. ZOKRI has an area for this. Anyone looking at the metric can then judge its reliability and make any necessary adjustments in their own analysis and interpretation. And as far as trust and reliability goes, people are often as interested in the trend of a KPI rather than the absolute performance being reported.

Part of the management process is deciding what the target value of a KPIs should be within a specified date range which are usually standard planning periods like Quarters and Years.

What is not true is everything needs to be improved all of the time. Not every KPI can be a priority to improve. The more priorities you have the less effort goes into the KPIs that need the most attention. The effort required to improve what is already ‘great’ might also prove to offer a marginal gain, versus focusing on what would have a greater likelihood of improving performance.

The KPIs that are priorities to improve might then form a core part of SMART goals or OKR (Objective and Key Results). The advantage OKR has is you can have groups of Key Results as part of the Objective, often combining quality and quality KPIs for example, and OKRs can cascade and align in a similar way to the KPI cascade.

Whether you have the KPI yet when doing this exercise as you will end up measuring what you have not measuring what you need.

Step 6 – Stay on track and agile

Setting and forgetting KPIs or goals is obviously a bad idea. KPIs need to be updated, reviewed, discussed, kept agile, have work like projects and tasks aligned with them. These processes can be done individually and in teams via check-ins and review meetings in OKR software like ZOKRI,

If KPIs stop aligning with strategic objectives or stop working as KPIs, then they can be abandoned as well. It’s important to continually evaluate what we measure and why.

Your strategies and objectives will of course develop over time. This makes it inappropriate to have the same KPIs from period to periods. Your choice of KPIs is not set in stone.