Many organizations set Key Performance Indicators (KPIs) to monitor their performance against an overall goal or target. Makes sense, surely, to monitor progress with something tangible. And they can be very effective. But there are a lot of pitfalls. And I’m not convinced they work for all circumstances.
A major pitfall in implementing KPIs and targets is an overly top-down approach. Every department / function is told it must have a set of KPIs with targets. After all, this will ensure everyone is accountable. And there will be lots of data showing KPIs against targets Management to review. When these requests come through, most people just shrug their shoulders and mouth “here we go again,” or something less polite. They put together some KPIs with targets that will be easy to achieve and hope that will keep the Management quiet. After a bit of horse-trading, they agree slightly tougher targets and hope for the best.
Or even worse, Management wants to “hold their feet to the fire” and they impose KPIs and targets on each department. They require the cycle time of site activation to be reduced by 20%, or 20% more documents to be processed with the same resource, for example. This leads to much time spent on the definitions – what can be excluded, what should we include. How can we be ingenious and make sure the KPI meets the goal, regardless of the impact on anything else. We can, after all, work people much harder to do more in less time. But the longer-term consequences can be detrimental as burnout leads to sicknesses and resignations and loss of in-depth knowledge about the work.
This is an exercise in futility. It is disrespectful to the people working in the organization. It is wasting the time, ingenuity, and talent of those doing the work – those creating value in the organization. “The whole notion of targets is flawed. Their use in a hierarchical system engages people’s ingenuity in managing the numbers instead of improving their methods,” according to John Seddon in Freedom from Command & Control. Rather than understanding the work as a process and trying to improve it, they spend their time being ingenious about KPIs that will keep Management off their backs and making sure they meet the targets at whatever cost. There are plenty of examples of this and I’ve described two in past posts – COVID testing & Windrush.
Much better is for the team that owns the work to use metrics to understand that work. To set their own KPIs and goals based on their deep understanding. And to be supported by Management all the way in putting in the hard graft of process improvement. As W. Edwards Deming said, “There is no instant pudding!” Management should be there to support those doing the work, those adding value. They should set the framework and direction but truly empower their workforce to use metrics and KPIs to understand and improve performance. Longer term, that’s better for everyone.
Text: © 2021 Dorricott MPI Ltd. All rights reserved.
Picture: KPI Board by Anna Sophie from the Noun Project