There is No Right Value for the Wrong KPI

Posted on 15/11/2021, Helena Torres

How do we set and measure goals at, written by Helena Torres

Setting goals is key for any enterprise. Some companies do it for the entire year and spread the values throughout twelve months. At, we look at it also from a project management point of view. Plus, we strive for flexibility. Thus, KPIs (Key Performance Indicators) is set every quarter. In this aspect, we are very transparent. The company goals are known, so the team’s or tribe’s job is to cascade them down into achievable goals every quarter. Focus group sessions are conducted per major KPI and are open to everyone in the company to attend.

Finding the right metric

Quite frequently the main brainstorming is not around what to do, but how to really measure success. The fact that we count on amazing analytics helps, but it doesn’t necessarily solve the question. Time is also limited. The entire process for the entire organization should be finished usually within two weeks. Therefore, sometimes one of the KPIs is: “Finding the right metric.” That means more meetings will occur to set the best possible metric. Sometimes it means building entire new databases of intel and specific dashboards, to track it. After all, you can’t measure apples looking at pear’s statistics. A challenge, indeed, but not the most difficult one…

When cascading down, KPIs can lead to losing the bigger picture

When you take company goals, everything is quite simple. It is basically around one simple equation: Sales – Costs = Profit. You just have to raise sales and reduce costs! However, when you start cascading KPIs down, that is where things get tricky… 

In order to sell more, you might consider opening a new market. Yet, this will increase the costs with customer support to serve that market, specific payment integrations, etc. Another example could be the conflict between a team focused on contracting more suppliers and a team focused on increasing the quality of the processes ongoing with the existing suppliers. Opposite goals such as a team that wishes to discount prices in order to achieve the metric of raising the number of people who try a product and the team is focused on raising the margin.

Certainly, everything contributes to the whole picture and everybody is aware of that. However, on a daily basis, it can become an internal battlefield if the entire machine loses track of the bigger picture and focuses only on their team performance. Easily, you end up with conflicting KPIs between teams, each of them focused in their own fields, their piece of the puzzle.

The key is to set KPIs that bring teams closer

Perhaps even before worrying about the right metric, the key is how to set KPIs that bring teams closer towards a goal and not apart. Taking one example, if the KPI for both “sales-oriented teams” and “cost-effectiveness oriented teams” is “Raise sales by X% keeping the margin at Y%”, then they can work together in order to find the right balance between sales and costs and both achieve their goals.

That is different from setting the following KPIs:
Sales teams KPI: Raise sales by X%
Cost teams KPI: Decrease costs by Z%
Teams working the margin: Keep the margin at Y%

How different is it? In the first scenario, sales teams become mindful of the costs. Cost teams are mindful about raising sales. There is little room for “cost-oriented teams” to block the “sales-oriented teams” from pursuing higher turnover and vice versa. “Sales oriented teams” don’t go crazy offering discounts just for the sake of getting that sale.

Bottom line, to me, the biggest challenge around KPIs is to keep them aligning teams around the real company goal, instead of making them so focused on one angle that internal cooperation is disrupted and the company goal is missed. Otherwise, we can get into ridiculous outcomes, like rewarding a sales team for doubling sales while cutting the margin down to half. Who knows, maybe putting the entire company at risk… But hey, they reached their KPI! 

Do you want to join our team and join us in setting and measuring goals? Take a look into current open positions!