I used to work company that was very driven by Key Performance Indicators (KPIs). We had measures for every part of the process because we believed that gave us control. But when you measure like that and reward/punish the results – you might be unwittingly driving the wrong behaviour.
I was working in a process team in Customer Service. One of the (many) KPIs we had was to turn bookings within 2 hours. The point of the KPI was well-intentioned: we should deliver good service to customers by getting back to their requests within a reasonable time.
Every week, headquarters would host a call and would rank each office’s performance. All the offices I supported in East China were failing to meet the 95% target (hitting around 80%)… well, all but one office. This one office was turning 99.7% of booking within two hours – it was amazing.
Every week, headquarters would heap praise on them and chastise the others. I was feeling the pressure to improve the performance of the other offices so I decided to go get some ‘best practice’ I could share it with the others.
So what did I find? If they got a booking they couldn’t confirm within 2 hours, they would just cancel it. Once they knew they could confirm the booking, they would tell the customer to go in and make a new one. I was stunned. Customers were having to do a whole lot of extra work and encountering a lot of frustration in order for us to look good on our internal KPI. The purpose of this KPI was to deliver a good level of service to customers… but it was having completely the opposite result.
They were smashing the KPI and they were getting tons of praise for it. That is one of the really dangerous things about KPIs and Culture. KPIs and what we reward/punish in an organisation sends messages to people about how they should behave. In this case it was all about meeting the number, not the objective.
It’s vital that the messages we send within our organisation go to supporting the KP’WHY’ and not just rewarding and punishing the performance of the KPI. Otherwise you might end up with great looking metrics… but terrible outcomes.
What is your experience with KPIs? Have you seen cases where the KP’WHY’ has been completely missed? I’d love to hear your experiences in the comments.
the above is quoted from Human Synergistics Australia, written by: Dominic Gourley – Relationship Manager.
Reading the article had motivated me more into importance to empower communicating vision to employees.
As HR and Administration Manager of a construction company, One of my unit duties was to recruit talents, driven by vacancy cost, progress leads, and bid – contractual validation needs, efficient process then should be maintained to respond to aggressive and unpredictable demand.
First answer comes in mind: measuring efficiency by KPIs
Yet, generally, i observed that if the “indicators” were set on functional it will be a acting like a blind pointer with undesirable outputs! if it was set on the strategic side then outputs will decline!
Instead, i will invest my energy in explaining the strategy, proprieties, importance of the vacancy for the organizational structure, and ask for feedback “opinion” on best achieving practices, based on this meeting, we might me setting KPIs to specific occupations “ex. document controller, q.c., etc…” but deal with critical ones on (KP) module.
My feedback delivery during this process is very critical to its positive maintenance, and tailored to each team member expectations, motivational points, continues team building, and competencies improvement.
Article by: Tarik Altoubasi