When an organisation talks about and sets key performance indicators (KPIs) it can often be met with a lot of adverse reactions; sometimes, even downright hostility. But, it really doesn’t have to be this way. You must introduce KPIs to your team or company for the right reasons and explain this very carefully to everyone. Before digging into all the right reasons to introduce KPIs to your organisation, let’s delve into why KPIs are often met with such resistance.
Traditional Role of KPIs: Control and Intimidate
The reason so many people’s first reactions to the mention of KPIs are negative is because sometime in the professional pasts of these employees, KPIs were a tool to micromanage, control and intimidate them. Have you ever been in a situation when management used KPIs as a weapon for controlling behaviour? Were there quotas for every action? Many employees assume the only reason for KPIs would be to measure their performance success or failure. In this context staff may quickly come to view KPIs as a management weapon for imposing conformity and dishing out reward and punishment.
If you are in management, you might worry that your entire existence will be compiling data and reports that nobody will ever look at. Some publicly held companies are required to report to shareholders and the market regularly, but the fear of managers when they hear about a KPI initiative is that not only will they be required to spend their valuable time producing reports for the mandatory external requirements, they will be inundated with internal reporting requirements on top of it.
This approach to KPIs is outdated and fuels a counter-productive “them versus us” mentality within the business. Oftentimes, it can encourage people to find creative ways to fix or fudge the KPI rather than focus on genuine improvement. The objective becomes focused on looking good for the KPI report, and action that could truly impact performance isn’t taken.
Valid Reasons to Introduce KPIs
Although KPIs are often introduced for the wrong reasons and leave employees and those they report to with a sour taste in their mouth, KPIs can be incredibly powerful management tools. Introducing KPIs as a way to develop learning, growth and empowerment will revolutionise your corporate culture. Most employees want to improve and when the right KPIs are used in the right way, they provide vital performance information. If this information is introduced, explained and used properly it can empower employees and management to make better decisions and improve performance.
Employees want to see that what they do matters. If they can appreciate the connection between what they do on a daily basis and the corporate strategy, they are likely to be more engaged. Information available through the right KPIs can tell employees how they and the business are performing and whether they are on or off track. They can then self-correct. Rather than be a management weapon, in this context, KPIs are an evidence-based tool for continuous improvement and better decision-making—at every level.
Consider this example from one of my clients. They used to micro-manage their people through KPIs. They would measure how many sales calls their sales people had made or how many meetings they attended. This approach led to a lot of “gaming” where sales staff would make sales calls and set up meetings with people that are not likely to buy – simply to boost their KPIs. Today, the same company has changed their culture and now focuses on high-level KPIs like revenue growth and leaves it up to the sales people to monitor the finer details of their job. Many of the sales staff still monitor meetings but not in a way that was done before, there is no longer the incentive to cheat. Remove the monitoring and mentality that KPIs are a management weapon, and they can be used to empower employees to catapult their own growth based on what they learn from the KPI data.
And, isn’t that what it’s all about? That everyone in your organisation is moving forward to achieve the company’s objectives? The right KPIs give everyone in the business access to vital information that can help direct and shape the company as a collective. The right KPIs measure for learning and empowerment—the only really valid way of using KPIs in an organisation. This approach always leads to the biggest performance improvements.
Bernard Marr is an internationally bestselling author, futurist, keynote speaker, and strategic advisor to companies and governments. He advises and coaches many of the world’s best-known organisations on strategy, digital transformation and business performance. LinkedIn has recently ranked Bernard as one of the top 5 business influencers in the world and the No 1 influencer in the UK. He has authored 16 best-selling books, is a frequent contributor to the World Economic Forum and writes a regular column for Forbes. Every day Bernard actively engages his almost 2 million social media followers and shares content that reaches millions of readers.