Key Performance Indicators (KPI’s) are more than a number.
If your KPI’s are used to measure an individual’s performance and how they are rewarded, they will evoke an emotional response and they will drive behaviour.
The KPI’s that the team think carry the most weight in the assessment process will be those that drive behaviours the most.
Why would the team think that one KPI was more important than others? Because they make an assessment based on:
- how vigilantly a KPI is monitored, reported and published;
- how much focus is placed on it in performance reviews; and
- what management is saying day to day.
There will be an automatic skew, then, towards the activities that drive those KPI’s deemed more important.
This skewed focus causes silos in organisations – in an endeavour to meet KPI’s team members may “isolate” themselves in order to focus on certain tasks, at the expense of other tasks and other team members.
Case study:
Jerry is a salesman selling widgets and he perceives the KPI that will have the biggest impact on his career progression and his bonuses is a sales KPI – 1000 units per day. So his focus is on selling – he is operating alone as a silo in order to meet this benchmark. Even though his position description requires him to train and assist other salespeople, to nurture customers post sale, to do the leg work to bring new customers into the business, and come up with innovative ways to do things better – these activities are put on the back burner, deemed less important.
The customer enquiry goes unanswered, the community events unattended, the system ineffective and the team floundering without training – these are the symptoms of a KPI system only half done.
There is more to building KPI’s that measure the performance of activities included in a position description. The next step is to build a measuring, reporting and publishing system that reflects the weighting given to the KPI’s which in turn reflects the behaviours you want to encourage.
So Jerry would notice that the same degree of emphasis was being placed on training, nurturing, rainmaking and innovation as on selling and his behaviour would accommodate this. It is to his advantage to be a team player.
And he knows this to be the case because weekly team meetings cover all KPI’s, performance reviews do the same and the language used by management is consistent with this understanding.
Don’t underestimate the last point – what management says can derail the best intentions. Spend time ensuring that leaders understand this phenomenon, fully support the KPI structure and use appropriate language in all communications with the team.
And don’t let the subjectivity of KPI’s impact their place in the pecking order. Yes, they may not be as easy to measure and report but they may be critical to the culture and performance of the organisation.
In summary, to drive the right behaviour with KPI’s you:
1. Build objective and subjective KPI’s that measure the performance of activities included in a position description.
2. Build a measuring, reporting and publishing system that reflects the weighting given to the position description KPI’s, which in turn directs the behaviours you want to encourage.
3. Ensure that leaders understand this phenomenon, fully support the KPI structure and use appropriate language in all communications with the team. Their talk must support the intent.
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