What Are SMART KPIs? Understanding The Importance Of Value-Driven Goals
Making the right kind of key performance indicator (KPI) that generates realistic targets for your team is a balancing act for managers – they’ve got to keep their employees engaged, and their bosses reassured that work is getting done in the most well-organized way possible. But building KPIs is about more than just the task at hand, according to Joe Mull, workplace commitment expert and author of Employalty: How to Ignite Commitment and Keep Top Talent in the New Age of Work.
The right kind of KPIs are the ones that tap into a company’s core values and drive employees to work with more passion and zeal. That’s why your KPIs shouldn’t just utilize the SMART framework; they should also be values-driven.
Why should you use values-driven SMART KPIs?
Mull notes that more than 200 research studies were amalgamated for his recent book to determine how and why employees join an organization and stay (or quit). While it might seem like something managers rarely think about, essential features of work such as KPIs, OKRs, and milestones are the fundamentals of the employee experience, as they’re a part of everyday work life.
“What’s clear in the labor market of late is that there is a recalibration taking place around how work fits into people’s lives,” Mull says. “Employees from across industries are seeking roles that provide – in one way or another – a better quality of life. For some, this is an increase in pay. For others, it’s a more manageable workload or work that aligns more with their talents or interests, or a work culture that includes a better boss or more supportive team.”
“It is through this lens that I wanted to [talk about] KPIs,” Mull says. “Employees are seeking a more humane employee experience. While there are several dimensions to such an environment, among the two most important are flexibility and trust. And KPIs are the foundation upon which flexibility and trust are built.”
Building the perfect KPI using the SMART method
It can seem a little daunting to try and integrate one’s overall culture into their daily work, as it can take some creativity and ingenuity. But with enough brainpower and the right tools, such as Hive Goals, you’ll find that these goals are self-perpetuating inspiration machines that nurture commitment among invested parties.
1. Go back to basics
Mull says that constructing the ideal KPI needs to be contextualized by one’s culture and office environment. And corporate values, especially ones that retain employees, are what good KPIs are built on.
“Flexibility is now the most requested workplace benefit in the world, according to the Society for Human Resources Management (SHRM),” Mull says. “And we know that when leaders grant and earn trust, psychological commitment at work increases.”
So how does one craft a KPI with principles that will inevitably lead to employee engagement? The answer is simple, Mull says: hone in on what employee demand and consumer demand are, then tweak those ideas to create an aggressive approach that all stakeholders can feel passionate about. Only then can you know how to most efficiently track progress, insights, and objective achievement in a way that makes higher-ups happy and involves team members.
“A lot of leaders can struggle to know exactly how to write KPIs for people in their charge, so rather than get it wrong, they don’t try at all,” Mull says. “And so, KPIs are an essential building block for the kind of innovative approaches to work – for example, 4 day work weeks, remote work, or asynchronous work – that are both in demand and a competitive advantage for a company.”
2. Apply the SMART model
Now that you’ve decided what kind of KPI you want to create, the next step is narrowing down your big idea into a more reasonable and achievable one.
“The SMART model is a terrific approach to setting KPIs,” Mull says. “When the SMART model is followed, the goal or outcome is clear. When a leader and a team have defined clear, mutually agreed-upon outcomes, ambiguity disappears. The employee knows exactly how their work will be measured. The leader knows what to expect and when to expect it.”
The model works particularly well for KPIs, as these indicators are supposed to create a measurable way to track some aspects within a team for consistent improvement.
“KPIs engineer the clarity needed for leaders and individual contributors to collaborate effectively in an environment that provides the flexibility and trust that employees crave more than ever.”
3. Adapt and evolve
SMART KPIs must constantly remain in the context of forward-thinking and innovative company culture. And to do that, Mull says, flexibility has to be transformed into adaptability. This kind of ability to shift and pivot is what differentiates regular KPIs that aren’t based on values from SMART KPIs that are.
“When adaptability is included as a part of the process, we can regularly revisit whether we’ve identified the right metric or timeline or tasks and adjust when needed,” Mull says. “The very nature of the SMART model allows us to move forward without having to get the KPI right, right from the start. Testing, evaluation, and revision are baked in.”