KPI accountability: Should product managers be accountable?
"What separates the product managers from the product leaders?" — Aspiring Product Leaders
I've lost track of how often I've been asked this question by aspiring product leaders. While there are numerous qualities that pave the path to product leadership, this article is about one I am particularly passionate about. It is one that is often glossed over: accountability.
No, I am not advocating for direct P&L accountability for product managers here. Instead I am referring to product KPI accountability and ultimately owning the success lifecycle of a product. Very few product managers, and more surprisingly even product leaders have true accountability for KPIs they track for their products or features.
I am advocating for a shift from tracking to instead actively owning and driving.
What is KPI accountability?
KPI accountability simply means product managers are tasked with, and held accountable for driving a KPI in the right direction. This of course, refers to a product KPI — such as a conversion rate, feature usage rate etc. Before this can be practiced, it is important to ensure the pre-requisites are met:
✅ Organisation-wide goals and objectives with well defined KPIs
✅ Agreement on product strategy
✅ A product roadmap (learn how to create a product roadmap)
✅ Goals for the product and product team
Why should product managers be accountable?
Product teams are an expensive investment and as with any investment, you should expect an ROI. Suppose a product team ("A"), comprising of 5 engineers and a product manager is continuously working on a particular area of product for a year, you would expect them to make significant improvement in that product's value leading to some kind of measurable upside.
The product manager in this instance is the "leader" directing the engineers to the outcome the business is trying to achieve, deciding what gets built. With responsibility over the output of 5 engineers, the product manager is essentially acting as a custodian of business resources and is ultimately responsible for value creation (in an earlier article, "what is a product manager", I wrote about a product manager's role in creating value).
With this level of responsibility, it is almost counterintuitive to not keep product managers accountable with a value measuring KPI. If there is no measurable customer or business value created, why would you continue to invest in a particular product team? That team's purpose should be reconsidered when the gains don't justify the cost of the team.
What are the benefits of accountability?
There are several benefits to keeping product managers accountable for KPIs:
- Ensures the highest value initiatives are prioritised first and foremost
- Focuses the team on value creation, rather than focus on delivery of features (that are potentially without upside)
- Revenue upside if KPIs are aligned to commercial drivers
How should KPIs be determined?
Ideally the product leader in conjunction with the product manager determines the KPI. It is vital to use the correct KPI, and additionally avoid these common pitfalls:
❌ Lack of empowerment: There is no point in setting a KPI that a product manager cannot drive, e.g. a KPI that has no relation to what the product manager does or lack of resourcing to drive the KPI.
❌ Detached KPIs: Sometimes a KPI may seem related to the focus area of a product manager however isn't directly related to the initiatives on their roadmap.
❌ Lagging indicator: This is when a big shift is required for any change to register on the charts. These kind of KPIs often have multiple underlying factors that influence them (e.g. customer retention %). While these indicators may be great long term measures, they are unsuitable for measuring short term performance.
❌ Averages: Averages lie, as they are influenced by outliers. Using medians paints a better picture.
❌ Stakeholder dependencies: Avoid using KPIs that are dependent on external stakeholders who don't have aligned goals or shared KPIs. E.g. App sessions could be a KPI for a product manager, however if app sessions are largely determined by app installs, it would require the marketing team to have installs as a connected KPI.
Follow these best practices when setting product manager KPIs:
✅ Use leading indicators: Ideally aligned to commercial drivers but not directly revenue.
✅ Set targets: KPI's without targets don't lead to accountability. Leverage your data, benchmark where possible against similar products or features within the same business. Most importantly, ensure that targets are mutually agreed by the product leader and product manager.
✅ Set complementary KPIs: Within the product team, ensure that the KPIs set for product managers complement and drive each other towards a unified goal.
Should KPIs impact Product Manager compensation?
I am a firm believer that KPI accountability should come with some sort of compensation. KPI targets should be one (not the only) part of a product manager's bonus plan, along with other goals.
Additionally you can set stretch targets for KPIs that result in a bigger bonus payout.
How should product managers be held accountable?
KPIs should be closely coupled to a product team's goals and ultimately the goals for each product manager in the team. Goals and KPI targets should factor into the people evaluation process your business follows.
The main idea behind KPI accountability is not to find a product manager to blame when things go south but instead to ensure product managers are actively prioritising the best value initiatives.
Are there situations where this doesn't work?
KPI accountability won't work if:
❌ The product team is not empowered: KPI accountability will not work, if your product team isn't empowered to solve problems autonomously. They need to have free hand within the remit of the product strategy to drive initiatives.
❌ There are no KPIs outside product team: Quite often, KPIs are connected to other teams and unless those teams also have KPIs that are related, the product team will be handicapped when it comes to their own KPIs.
KPI accountability works best when there is:
✅ Mature product organisation: The product organisation should have a strategic framework, operational cadence and KPI instrumentation.
✅ Organisational alignment: The rest of the organisation understands and supports the product team's KPIs.
If you have a question about KPIs you'd like me to address, get in touch.