Insights
KPI alignment: how to tie every KPI to company value
By Pamela Requena, Chief Strategy Officer
· 8 min read
KPI alignment means every KPI a company tracks answers to something that makes the company worth more, has one owner and a target, and is reviewed on a set rhythm. Start from the six value drivers, Leadership, Employees, Customers, Financial Partners, Cash and Growth, and choose a few KPIs under each, rather than starting from whatever is easy to measure.
Key takeaways
- Every KPI should answer to something that makes the company worth more.
- Start from the six value drivers, not from the data you already have.
- Two to four KPIs per driver, each with one owner, a baseline and a target.
- KPIs stay aligned when the team reviews them every week.
- A driver with no KPI under it is a blind spot.
What is KPI alignment?
KPI alignment is the discipline of making sure the numbers a company tracks are the numbers that matter to its plan and its value. An aligned KPI answers three questions: which part of the business it measures, who owns it, and what target it is moving toward. An unaligned KPI is a number someone reports and nobody acts on.
For a business coach, alignment is the difference between a scorecard the client's team looks at and one it ignores.
Why do KPIs drift out of alignment?
- The company measures what is easy to measure, not what matters.
- KPIs come from a software template, not from the company's own plan.
- Nobody owns them, so nobody acts when they move.
- Targets have no baseline, so nobody knows whether a number is good.
- There are so many that the meeting cannot get through them.
What are the six value drivers?
Catipult's Valuation First method groups every KPI under one of six drivers, the same parts of a business a buyer or a bank looks at. The example KPIs below are illustrations; the right ones depend on the company. Read about the six drivers.
| Driver | The question it answers | Example KPIs |
|---|---|---|
| Leadership | Can the business hold a course without the owner in the room? | Quarterly priorities completed on time; decisions waiting on the owner |
| Employees | Does the work get done well when nobody is watching? | Employee turnover; revenue per employee; time to fill key roles |
| Customers | Who buys, why do they stay, and how concentrated is the revenue? | Customer retention; share of revenue from the top five customers |
| Financial Partners | Do banks, sureties and investors give the company room to grow? | Available credit line; days to close the monthly books |
| Cash | What does the work actually leave behind, and how predictably? | Operating cash flow; days sales outstanding; gross margin |
| Growth | Where does the next dollar of revenue come from? | Qualified pipeline; revenue from new customers; win rate |
How to align KPIs to company value, in six steps
1. Start from the drivers, not the data
Ask what makes this company worth more, driver by driver, before looking at what is already measured. A metric that answers to no driver is a candidate to drop.
2. Choose two to four KPIs per driver
Enough to see each part of the business, few enough that the weekly meeting can cover them. A driver with nothing under it is a blind spot, and shows the coach where to look.
3. Give each KPI one owner
One name per number, someone who can move it. When two people share a KPI, each assumes the other is watching it.
4. Set a baseline and a target with a date
The baseline is where the number is today; the target is where it should be, and by when. Without both, nobody can tell whether a week was good or bad.
5. Review them every week, in the meeting
KPIs stay aligned when they are looked at. Open the weekly meeting with the numbers, and turn every one that is off track into an action item with an owner and a due date.
6. Revisit the set every quarter
Drop the numbers nobody acts on, add the ones the last quarter showed were missing, and check that every driver is still covered.
How many KPIs should a company track?
Fewer than most companies do. Two to four for each of the six drivers is a good starting point for a company of 10 to 200 people. The test is practical: can the weekly meeting cover them, and can every owner name their own KPI from memory? If not, cut until they can.
Where does AI help with KPI alignment?
AI is useful at the start, when the page is blank. It can read what a company says about itself and propose KPIs across every driver, so the first conversation is about which ones to keep rather than which ones to invent. It should not set the targets: those come from the company's own data and from the people who will own them.
How does Catipult do this?
Paste a client's website and Catipult drafts the strategic plan with KPIs across all six Valuation First drivers, each with an owner and a target. The coach edits them in their own words before the client sees them.
The client's team updates its KPIs and runs the weekly meeting in Catipult, and the team's home dashboard shows KPI health by driver. The coach sees which KPIs are off track before the next session. Catipult runs in English and Spanish.
Frequently asked questions
What is the difference between a KPI and a metric?
A metric is anything you can measure. A KPI is a metric the company has decided matters to its plan, with an owner and a target. Every KPI is a metric; most metrics should not be KPIs.
How many KPIs should a small company track?
Two to four for each value driver is a good starting point: enough to see the whole business, few enough for one weekly meeting.
Does KPI alignment apply to AI projects?
Yes, the same rule applies. An AI or technology project's KPIs should answer to a value driver, such as cash saved, customers kept or growth enabled, not only to technical measures like usage or uptime.
Can AI choose a company's KPIs?
It can draft them. Catipult proposes KPIs across all six drivers from a company's website. The coach and the owner decide which to keep, and set the targets with the people who will own them.
What are business value drivers?
The parts of a business that decide what it is worth. Catipult uses six: Leadership, Employees, Customers, Financial Partners, Cash and Growth. Every KPI in a Catipult plan belongs to one of them.