Some KPI's are more meaningful than others

Some years ago, I recall my work colleague Marlon confiding to me with a rueful grin “Guess what? I avoided a ticket for exceeding the speed limit on the way to work this morning, and also managed not to run out of petrol on a near empty tank, to get in for the meeting, in time”. I told him “Thank your stars my friend” and quickly corrected it by saying “Thank your KPI’s”. Now you might wonder why KPIs (Key Performance Indicators)?

Two reasons prompted me to say that. Firstly, the meeting that morning, chaired by the Vice President of operations (a stickler for punctuality), was all about KPI’s- which at that time a kind of ‘flavour-of-the-month management fad. Secondly, during that fleeting moment, I found an analogy to Marlon’s story. In the same manner that his car’s speedometer and petrol gauge indicated to him how he was travelling to get to the office on time, key performance indicators can help hotels and restaurants measure their progress and stay on track with their revenue and profitability targets.

I also remember that it was a time when the term ‘KPI’ was a buzz word, mentioned several times at just about any morning, executive or management meeting. Ironically, while the majority of staff at these discussions, seemed to know what the acronym KPI stood for, many, when asked, what a KPI actually was, provided various definitions. Consequently, managers began to immerse themselves in heaps of data or spending time unproductively scrolling through a pile of reports.

Digging further, what I learned from all this mayhem was that while many knew that KPI’s measured performance information, only a few understood that-

• Unless each KPI had a specific quota and a goal associated with it, there is no way to measure how well one is performing. The quota is defined as the lowest number acceptable and the goal is what your hotel is hoping to achieve. One can set up a system that sends an alert should KPI’s go below/above a certain level.
• You need to identify only those KPIs that deliver mission critical data and that the KPIs you receive regularly (daily, weekly, monthly, quarterly), focus on the numbers that transmit 80% of what you need to know within a 10-12 second glance.
• KPIs cannot be assumed to be financial or numerical only. This is too narrow a definition. Put another way, they indicate a difference between one thing and another.
• There are metrics that are quantitative and revenue focused ( ADR, Occupancy rate, to name a few), but that there are also ones that are more subjective and personal, and just as important – such as your  customer/guest satisfaction rating which reflects how well or badly your visitors are being treated at all touchpoints. Too often, KPIs are assumed to be financial or numerical only. This is too narrow a definition. Put another way, they indicate a difference between one thing and another.

Far too often one observes the disconnect that exists between whether something can be measured and whether it should be measured? What many do is take the low road - i.e. just identify anything and everything that is easy to measure and count. Then collect as much data as possible on what has been identified and end up with meaningless data overload. From here onwards it is a disaster where meaningless data ends up on a dead-end. It’s like fixing a ‘kill meter’ to a rat trap to count how many rats the trap caught. Who cares how many? What matters is that the trap works efficiently, and that does not require any KPI.

In layman’s terms, if you notice a shift from one state, situation, element or segment of performance to another, at a particular time, that is either strategically or operationally important to the success of your business, then you can measure it and it can be termed a KPI.

Ilzaf Keefahs - a freelance writer who enjoys focusing on hospitality related matters that he is passionate about, and likes to share his views with hoteliers and customers alike. He delves into the heart of hospitality to figure out both customer service and consumer trends that impact the industry.

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