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ACCA Strategic Professional · Strategic Business Leader · Enabling success: performance excellence

Tarnby Retail's strategy is to grow through premium customer service. Its CSFs were set three years ago. The CEO now notes that store managers are achieving every KPI target, yet customer complaints are rising and market share is falling. Which is the most likely explanation for this situation?

The most likely explanation is that the KPIs no longer reflect what is critical to the strategy, or can be met without delivering real service quality. Targets are being hit while outcomes worsen, so the CSFs and KPIs need to be reviewed and realigned with the strategy.

  1. AThe CSFs were set too few in number
  2. BThe KPIs measure activity that no longer reflects what is critical to the strategy, or can be met without delivering the strategyCorrect
  3. CThe managers are suffering from excessive empowerment
  4. DMarket share is a lagging indicator and so cannot be relevant

Explanation

When KPI targets are met but strategic outcomes deteriorate, the KPIs are probably poorly aligned with the CSFs, are outdated, or can be hit through behaviour that does not serve the strategy. CSFs and KPIs should be reviewed regularly. Having few CSFs is normal good practice, and lagging indicators remain relevant.

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