What is a Cascading KPI?
The expression “cascading KPIs” has become increasingly common in the world of performance management, but it is sometimes misunderstood.
Cascading represents translating and aligning organisational objectives and each Key Performance Indicator (KPI) all the way from strategic level, down to departmental level, and finally, to individual level.
How a Cascading KPI System Adds Value
Having a cascading KPI system adds value to the company from two angles:
The company ensures that its established strategic objectives are aligned across the organisation, which leads to clear distinction between tasks, and effective communication at all levels.
The employees have a clear and objective picture of their contribution to organisational performance which leads to high levels of employee engagement, an important indicator to successful companies.
By aligning KPIs, it means that all the performance measures within an organisation correctly relate to one another, and to the things that matter most for the organisation - like its strategy and purpose.
These relationships between KPIs make it possible for everyone to see how they contribute to the organisation in the best conceivable way to excel at what it exists to do.
Aligning Individuals to Corporate Goals
To align individuals to the corporate goals, there is a need to build a clearly cascaded model of goals through the natural layers of the organisation’s structure. This then provides a clear “line of sight” to individuals to see their own goals. As a result, their goals will be:
relevant to them;
within their circle of influence;
and still aligned to what is important for the company.
Incorporating cascading KPIs helps to facilitate the long-term success of an organisation, as it brings focus and clearly defines its identity and strategy, while ensuring resources are allocated towards what really matters.
Having cascading KPIs ensures that strategic objectives are executed across all units and functions and establishes relevant KPIs at each level of the business. The cascading KPI technique addresses the challenge of working in silos, and drives cross-functionality and uniformity.
If you would like assistance with transitioning to a cascading KPI model, get in touch with the team at MJSP Management Consulting today.