KPI’s damage Culture
Arnold Ho
Traditional management practices today attempt to extract high performance by motivating individuals through key performance indicators (KPIs). Whilst at the same time, making it clear that should they underperform, a managerial figure will know about it.
Little wonder why organisations spend such a large time investment on annual performance reviews. I believe that there’s another way, one that requires brave leadership. If organisations are to gain ingenuity and innovation from their people in an increasingly complex World, they must distance themselves from individual KPIs. Conversely, organisations should focus on creating and communicating a compelling organisational purpose and vision, whilst developing people to achieve bottom-up, aligned objectives.
Origins of traditional management practices
Previously, the majority of work could be accurately broken into simple tasks and all you needed were employees that could do these task as efficiently as possible. Subsequently, it made very reasonable and logical sense to motivate individuals through KPIs. However, as work has become increasingly complex through rapid technological innovations. Greater creativity, problem solving ability and mental capacity is needed. Measurement of individual KPIs can only serve to undermine this. Take for instance a sales person that is measured by the amount of leads they attempt and sales converted. As customer needs and demands become more varied a more creative approach may be needed to achieving sales. But instead of exploring this, sales staff are incentivized to not stray from their KPIs, which may even lead to deceptive tactics being used as they find sales harder to come by.
But what about high performers and underperformers?
The first response to this system of work that I often hear is ‘how do you fairly judge individual performance?’. It is a fair response and requires brave leadership to unlearn decades of ‘best practice’ management. In a recent study of over 500 organisations globally, employees ranked peer motivation as the number 1 reason to go the extra mile, followed by an intrinsic desire to do a good job, feeling encouraged and recognised, and having a real impact. Interestingly, money came in at 7th place. What we see from this is that people don’t need to be judged by KPIs to perform well, they innately want to do so for their peers and for themselves, all whilst making a real impact. For the small percentage that underperform, there is no hiding. In fact, it would be even more obvious because of the increased accountability of the team. Compare this to KPIs which rarely provide an incentive to hold peers to account. In a model like this, a role of a leader is to coach and support people who underperform with discussions based on outcomes, and not outputs.
What do you have to gain?
Whilst it may be difficult to change, the reward is great. Team objectives would organically produce greater collaboration between individuals and reduce behaviour that undermine organisational goals and values. Call centre staff unconcerned about completing calls within arbitrary time frames, but working to prevent the need to call. Operation teams not manipulating their work to meet productivity measures, but working to reduce waste through process improvements. Managers unconcerned with just their own department finances, but sharing resources to meet shared objectives. These are just a few examples of what this system of work can create but best of all will be your entire workforce aligned to achieve the same goal.
How do you start?
Start somewhere is what we always say. What that means is if you can’t influence your CEO, then start with your manager, if you can’t start with your manager, then start with you team. And of course we’re always happy to have a chat. After all, our organisation’s purpose is to ‘make work better for a new world’.
