The Problem with Key Performance Indicators (KPIs)

December 12, 2012 — 9 Comments

iStock 000020144943XSmall 300x183 The Problem with Key Performance Indicators (KPIs)Joe (not his real name) began the team meeting by covering the team’s scorecard and Key Performance Indicators (KPIs).

 “Great work on your sales KPIs, we’re in the top-tier across the board.  We are so close to beating Sharon’s district.  If everyone just sold one more today, I think we can do it!

Also, we seem to be struggling in the customer service KPIs.  We have a downward trend and there are 4 districts ahead of us.  I need more focus there across the board.  Janet, you are doing the best… so whatever you’re doing keep it up.  Everyone else, I need you to try a bit harder.  Awesome.  Thanks everyone… now let’s go make it a great day.  Remember, fantastic customer service!”

If that sounds like a team huddle you’ve ever been in, you know why I have a love/hate relationship with KPIs.  Joe’s team may understand the KPIs, but they don’t have a clue what they are supposed to do when they leave that meeting.

What should they DO to sell one more?

How DO they improve the customer experience?

KPIs Are Indicators, Not Action

Scorecards and KPIs provide wonderful directional indicators.  Good trends point to actions worth replicating.   Bad trends shine a spotlight on what must change.  A hard look at the data can help you to identify best practices.  Comparative scorecards will also help you identify outliers who need more support.

KPIs are important.

One of the biggest mistakes I see team leaders make is talking about the KPIs instead of the behaviors needed to achieve them.

KPIs are a terrible topic of conversation.

People don’t change scorecards, they change behaviors.

A focus on KPIs versus behaviors can lead to useless, if not stupid actions.

Almost any behavior applied with enough focus will create a short-term lift in results.

Micromanagement can get you there for a hot minute.  Fear and intimidation will work for a while.  Heavy incentives and hoopla will create a short-term lift.  Ice cream and pizza can’t hurt either.

Upward trends in KPIs without an underlying change in behaviors, can lead to a false sense of security.

When the fear goes away or the sugar wears off, the results go back down.

The Behaviors That Matter

The only way to build sustained results is to improve the underlying behaviors.  Don’t ask a sales rep to be more courteous.  Ask her to open the door for the customer, use the customer’s name, and walk around the counter with the bag.  Talking about the frequency of those behaviors will do more good than talking about her customer service survey percentages.

So what are the right behaviors?  Why not ask the team?

karin 9 2 150x150 The Problem with Key Performance Indicators (KPIs)

Please use the comment section to add your experiences and questions.

  • What tools and techniques have you used to ensure the conversation focuses on behaviors?
  • How have you avoided the distraction of numbers and KPIs?
  • How have you used KPIs to delve deeper into behaviors?

For more on how-to see:  Build Behaviors That Create Sustained Results

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9 responses to The Problem with Key Performance Indicators (KPIs)

  1. We recently built a new home. We used a pretty large builder. As the process went along, it became obvious what the employees were all working for. Their KPI’s.

    The biggest “indicator” used by their main office to determine bonuses and continued employment rested primarily on one question I would be asked at the end of the build.

    The question…”Will you recommend our company to a friend to build their new home?”

    This approach is backfiring for this company, and they don’t know it. The construction manager flat out said (and I know of others that have done the same thing)….”my ability to feed my kids rest on your answer to this question.”

    He went on to explain, “I know you we had some problems along the way, and I know you are not happy with the design process over promising. But, that’s not something I can control. So, if you could help me out. That would be great.”

    This company isn’t learning how to improve. And, all their talk about meeting our needs as a customer was just window dressing. We of course will never use this company again nor recommend them. In fact, we’ve talked a couple people out of using them.

    But, at least their construction manager got his bonus.

    What you measure demonstrates what you value.

  2. Behaviors and motivators are critical for success. This is why my clients love my process called Job Benchmarking. We ask if the job could talk, what type of person would they want in that position? Once the benchmark is established, we assess candidates against it. I also use this process with people in existing jobs to show where they need to improve, based on what the job is asking for.

    Instead of asking the team to try harder, ask a question. “What are we doing as a team, when we’re delivering fantabulous customer service?” Then, listen to the responses from the team. Keep inquiring.

    The answer is always in the room.

  3. KPIs are good to tell a story. You need to know where you’ve been, where you are and where you want to be. That’s the story KPIs help you tell. How you move the dial is understanding the potential skill or knowledge gap that may exist or if it’s not a training issue, check to see if it is a process issue. Analyzing these things are best done by first asking questions and second testing against duties and tasks of the role. Once you can see “the whole picture” you can begin to provide what is needed to move that dial to meet or exceed the KPIs.

  4. Steve,I really like that image… “if the job could talk.” That is a great way to think about the needed skills in a creative way…

  5. Agreed, KPIs are very useful in telling the story and showing where to dig deeper. Thanks so much for adding that.

  6. I did a lot of research writing a paper for my AACEi Certification. Although, I agree with your points, you can’t overlook whether or not you have the right KPIs that reflect the real picture.

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