SBP022: How to Balance your KPIs Part 3 of 3
Roger Knocker • January 22, 2024
SBP022: How to Balance your KPIs Part 3 of 3
In previous podcasts, we spoke about the importance of balancing KPIs to avoid getting distorted results.
When looking at the selection of KPIs for a team or for the overall business, there is another level of balancing to be added.
The idea was first documented by Robert Kaplan & David Norton who Identified 4 perspectives that KPIs can be grouped by.
1. Financial Perspective – ask yourself, “How is Shareholder value created? The answer to this is normally answered with KPIs that address
2. Customer Perspective – ask yourself, “What valued our Customer expect from us?” They are normally seeking
3. Internal Perspective - ask yourself “to satisfy our shareholders and customers, what internal processes do we need to excel at?” This will typically talk to
4. Learning and Growth – ask yourself “how will we sustain and improve the business long term?” This perspective does not address customer-facing activities but rather activities that are behind the scenes such as
Within each of the above 4 perspectives, you also need to balance between efficiency and effectiveness otherwise you may be driving one at the expense of the other.
Group your business and Team KPIs into the 4 perspectives to ensure you have sufficient balance in your KPIs to execute on your strategic goals.
Resources mentioned in the podcast
www.kpims.co.za/kpis
Www.kpims.co.za/training
If you enjoyed this episode of the Smart Business Performance Podcast, then make sure to subscribe to our podcast.
When looking at the selection of KPIs for a team or for the overall business, there is another level of balancing to be added.
The idea was first documented by Robert Kaplan & David Norton who Identified 4 perspectives that KPIs can be grouped by.
1. Financial Perspective – ask yourself, “How is Shareholder value created? The answer to this is normally answered with KPIs that address
- Financial Growth
- Financial Efficiency
- Optimized usage of their funds which includes generating cash, not consuming it
2. Customer Perspective – ask yourself, “What valued our Customer expect from us?” They are normally seeking
- Quality Products and Services
- Meeting due dates
- A competitive price
- Good relationships or partnerships
- Product leadership and Brand could be important
3. Internal Perspective - ask yourself “to satisfy our shareholders and customers, what internal processes do we need to excel at?” This will typically talk to
- Quality processes
- Efficiencies continuously improving the cost to produce outputs
- Reducing cycle times of processes
- Ensuring good governance
- Executing projects on time, in scope and within budget
4. Learning and Growth – ask yourself “how will we sustain and improve the business long term?” This perspective does not address customer-facing activities but rather activities that are behind the scenes such as
- Building the capabilities of your people
- Optimising IT systems
- Building the environment and culture that is needed
Within each of the above 4 perspectives, you also need to balance between efficiency and effectiveness otherwise you may be driving one at the expense of the other.
Tip
Group your business and Team KPIs into the 4 perspectives to ensure you have sufficient balance in your KPIs to execute on your strategic goals.
Resources mentioned in the podcast
Visit
www.kpims.co.za/kpis
Www.kpims.co.za/training
If you enjoyed this episode of the Smart Business Performance Podcast, then make sure to subscribe to our podcast.
Discover how finance teams can move beyond reporting to lead strategy—turning data into direction and driving better, faster business decisions.
When did finance become the department of “no”? “No, we can’t spend that.” “No, that’s not in the budget.” “No, that’s not how we do it.” Here’s the truth: If finance is just a gatekeeper, it’s failing the business. Finance Isn’t Just About Numbers Andrew Brown put it bluntly on the FP&AI Podcast: “Finance should be leading conversations about the future, not just reporting the past.” Think about it— What’s the point of a month-end pack that no one reads? What’s the point of perfectly reconciled accounts if they don’t change the way decisions are made? Finance isn’t just about accuracy. It’s about impact . The Business Partner Mindset T he best finance professionals think like entrepreneurs. They ask: Where are we really making money? What assumptions are broken? How do we change the levers to hit our goals? They don’t just report results. They interpret them. They walk into the room with a story, a strategy, and a plan. What Johan Taught Us Remember Johan, the volunteer deacon who turned financial updates into action? He wasn’t trying to impress anyone with accounting jargon. He used a worm chart and a waterfall chart to tell a simple story: Are we on track with donations? If not, where are we falling behind—and why? It worked because it made the future clear. That’s what business partnering looks like. The Shift Every Finance Team Must Make B ookkeepers report. Business partners lead. The shift is subtle but powerful: From data-dumping to decision-driving. From hiding behind compliance to leading with insight. From “here are the numbers” to “here’s what they mean—and what to do next.” Your Move So, is your finance team stuck in bookkeeping mode? Or are you stepping up as a commercial conscience— the team that sees ahead and helps the business win? The mindset shift starts here: Stop asking “What happened?” Start asking “What’s next?” ________________________________________ This article is inspired by my conversation with Andrew Brown on the FP&AI Podcast – Episode 1: Finance as a True Business Partner – Beyond the Numbers.
