KPIs and Metrics – they aren’t reality


Key Performance Indicators (KPI), metrics, balanced scorecard and other measurement based approaches to management have a common set of objectives: to give management visibility into what is happening in the organization.

Perhaps you have noticed that in some organizations the metric values look good but deep within the organization, it’s actually poorer than perceived quality and manipulated results. I have seen organizations so obsessed with metrics and documentation that a cadre of bureaucratic minds tends to raise to the top and believe that metrics are reality, as long as the documentation and metrics look good, they say its all good.

I recently spoke at a university that is heavy on documentation and metrics, before walking into the classroom, I was told by one of the bureaucrats to say something to the  students that they would need for the exam but wasn’t available elsewhere because students weren’t attending class, essentially what was this bureaucratic saying?:

1)     The students saw no value in attending class,

2)     The university was aware of that, and,

3)     Rather than improve quality by changing something, the solution was to punish the students.

A recent investigative review of hotel and restaurant cleanliness by a customer oriented TV show, found shocking problems with a lack of cleanliness, essentially employees using unsanitary approaches to keeping facilities clean and food free from contamination. When confronted, hotel and restaurant leaders babbled the usual corporate speak but appeared to have no idea what was actually happening at the operational level.

We have also seen banks caught cheating customers in a push to drive profit metrics higher, some of the leaders of the organization appeared surprised that their excessive focus on revenue metrics resulted in unethical behaviour.

At United Airlines did a focus on profit, adherence to rules and schedule metrics result in a man being dragged down an aisle?

Metrics aren’t reality.

There are a few reasons for this difference between metrics and reality:

1)     Some metrics are subjective and are tabulated using subjective weights, we have subjective weights, descriptions, ratings and thus subjective results used as objective results.

2)     Metrics can suffer from validity and reliability problems i.e. are we measuring what we think we are measuring.

3)     Organizations can use metrics to reduce operational skill level requirements and thus dumb down jobs.

4)     At the operational level, excessive focus on metrics can be de-motivating and result in employees putting what over how and losing sight of why.

5)     Leaders use metrics as a primary form of understanding and reduce the person to person communication or learn-by-getting-involved approach.

When we represent a complex multidimensional space with simple two dimensional metrics we have lost information, for example, converting a 256 colour picture into a gray scale image means we have lost information.

Metrics are summary of reality and potentially a lower dimensionality summary of reality.

If you in a leadership position, you need to do every job within your realm, if you don’t have the required skill then act as an apprentice or job shadow. An additional approach is to interact with your organization as a supplier, partner or customer and see what your organization looks like from the outside. Experience what is actually involved with a job. Don’t accept the summary or the metric as a true understanding of the job. You need to understand the nuances, the implementation, the implications of each job and decision.

Don’t be fooled into thinking metrics are reality.

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