Measurement is an essential element of strategic planning because it offers a declaration of intent: This is where we’re going as an organization, and here’s how we’ll know when we get there.
But in large organizations, especially colleges and universities, key performance indicators (KPI) can become a strategic headache. These institutions house many different departments and units, each of which define and track their work differently. This results in a long, unwieldy list of KPIs that don’t have a relationship with one another, making it difficult to see whether the institution is moving toward its goals.
When we’re working with a partner, Credo experts focus on helping organizations limit the number of KPIs they include in a plan, opting instead for composite KPIs. In this post, we will define composite KPIs, demonstrate how they work, and explain how we incorporate them into our strategic planning partnerships to maximize efficiency in (measuring) success.
A composite KPI is exactly what it sounds like: A combination of other KPIs. In a large organization, you want to have several different initiatives mapping to each KPI—because it’s exceedingly rare for one individual initiative to move the needle on a strategic goal by itself.
Let’s say that you’re a leader at a university, and one of your strategic goals is to improve student health. Your research indicates that there are three primary components to overall student health—academics, mental health, and physical health. You assign a weight to each of those components—50% for academics, 30% for mental health, and 20% for physical health. When added together, these three components comprise your composite KPI, student health.
Let’s say that you decide your student health composite KPI will operate based on a 5.0-point scale. At baseline, your students average a 3.0, and you set a goal to raise that to 3.5 in one year. Then, you set sub-goals within each of the three component areas—academics, mental health, and physical health—and assign them to the departments and units related to them.
For example, take your academic health KPI. Let’s assume your institutional data show that students who are undecided on their major have a lower average GPA than those who have selected a major. This becomes a target to help improve your academic health KPI, which will benefit your overall student health KPI. You then invite your student success center to help, and they respond by developing an initiative that identifies and attracts undecided students to help sort them through their major choice. You work with them to create their own measurement system to determine whether participating students’ GPA improves once they select a major.
Some institutions want to start building them on Day 1, while others prefer to wait until their board has approved the plan. In our organizational partnerships, composite KPIs start to take shape during the initial retreat we host with the executive team (and sometimes, the board). By that point, we will have studied the data they share with us about the health of their institution, including the results of recent strategic plans.
As these leaders propose potential themes for a new strategic plan, we provide insights based on that data to help better define the themes. For example, say an organization wants increasing employee retention to become a strategic theme. We can provide detailed information on where the organization’s retention struggles may be most acute, which can help determine the components of the composite KPI, employee retention.
After our partners develop their initial strategic planning themes, we share and test them with the entire institutional community. Then, we solidify the composite KPIs (in general, no more than eight) based on these final, honed themes.
Because of the increasing complexity of strategic planning, composite KPIs are becoming more popular among institutions of all types and sizes—from multinational corporations to local nonprofit organizations. Yes, composite KPIs require a few extra steps to get up and running. But our partners appreciate that, once they have been created and defined, composite KPIs make it easy to track and report your strategic plan’s progress toward its goals. Composite KPIs lend themselves nicely to dashboards and other visual aids that can be shared with employees, board members, and other stakeholders. And most of all, it helps your leadership better pinpoint where your strategic initiatives aren’t quite paying off and require changes.
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