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3 Tips for Aligning KPIs in an Agile Organization

In a thriving Agile organization, there must be alignment of IT with the business. The IT department works together with the company to achieve common goals, and open communication flows between both parties – creating the best business results and outcome for the customer.

When IT and the business are not in alignment, conflicts tend to arise. Tension may build, especially when IT is seen as a service provider to the rest of the business. Through the alignment of KPIs, or Key Performance Indicators, organizations can work to erase artificial boundaries between the two departments, leading to better results.

The following blog post, from our partners at Eliassen Group, details some of the ways that an Agile organization can align its KPIs in order to create IT alignment with the business. To learn about more tips on the use of KPIs in an Agile organization, as well as how to erase artificial boundaries between departments, check out Eliassen Group’s full ebook.

 

Tip #1: Cascade KPIs That are Representative of Outcome and Impact

According to Jeff Patton, author of multiple books on Agile methodologies, there are certain KPIs that are important to cascade within an Agile organization. Specifically, these are the KPIs that represent “Outcome” and “Impact.”

“Output” is the work of the organization, while “outcome” is the difference that output makes to those who make use of it. “Impact” consists of the ultimate benefits realized by the organization and its customers. To implement this tip, organizations should cascade only a few top-priority KPIs across the organization.

Why is this helpful? For one, when people share the same goals, their behavior is very different than it is when they have different goals. As Bob Fischer, Director of Agile Delivery and Training at Eliassen Group, noticed during one engagement, when multiple departments had their bonuses tied to the same goals, communication improved. In the case that Bob observed, long-standing process divisions between IT and Customer support groups began to resolve as groups started working more collaboratively to achieve their goals.

The following diagram provides an example of cascading KPIs. In the example, call center costs per customer might be useful to cascade across your organization.

 

Cascading KPIs Across the Organization
Cascading KPIs Across the Organization

Tip #2: Consider How Far Down, and How Widely, to Cascade KPIs

When cascading KPIs, there will likely be a question of how far down to go within layers of the organization. Should KPIs overlap just across the top couple layers of management, or to the whole organization? You’d be correct to realize that, at some point, the KPIs may have so little meaning for the individual, that they don’t inspire action.

You’ll also want to consider how widely to cascade KPIs. Call center costs per client, for example, might be appropriate to cascade to many departments, but not all. This requires careful thought. Product development has an impact on costs per client because the clients are calling about their product. Operations has an impact because they hire the staff, train them, manage them, and provide them with tools to do their job.

How about marketing? Possibly. They could, for example, highlight the benefits of your self-service offering, preventing calls to the call center. Corporate real estate? Yes, their facilities costs roll up into call costs. Shipping and distribution? Perhaps not, but you’d have to look. If your distribution channel provides clear updates on when your order will arrive (think Amazon), then you are less likely to call a call center for updates.

If you need help making decisions on individual KPIs, a partner like Eliassen Group can help to make these decisions, and better align the organization as a whole. Learn More about Eliassen Group’s Agile Consulting here.

 

Tip #3: Facilitate Change — Then Hold Agile Teams Accountable

The alignment of KPIs in an Agile organization can be a dramatic cultural change. Because of this, the best way to roll it out is with an effective communications plan and Q&A town hall meetings to address the questions that arise.

If you socialize any changes before they are officially rolled out, you will give people time to think about the actions they could take to have an impact on these KPIs.

If you are an organization that makes use of Agile teams, consider moving some of your high-performing teams to become accountable for the outcomes and impact of their work. Instead of simply producing output (such as completed user stories or features), consider having them measured by the business results they produce. You can experiment with this in pockets at first.

When approached in the right way, the alignment of KPIs in an Agile organization can have transformative effects on a company’s ability to achieve results. Need help in making that happen? A trusted partner can guide you through the process.

 

Need help aligning KPIs within your organization? Contact us to learn how Eliassen Group  and Valiantys could help you achieve your Agile transformation today.

 

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