Managers Who Use KPIs For Evil, Not Good

September 18, 2012 by Stacey Barr

There are still managers around who think that the way to make performance improve is to hit people over the head with KPIs or performance measures. We know they’re doing far more harm than good, but what can we do to stop them?

road sign for blind cornerIt’s a very paternalistic approach to management, to “performance manage” people by holding them to account with KPIs.

Usually those KPIs are not within the complete control of the individuals they measure, and it leads to two negative consequences: people will either fudge the figures or scam the system. And this is exactly the opposite of what we want, which is to improve performance.

It certainly is a tough one, because trying to make a big-KPI-stick-weilding manager do a 180 degree turn-around is no small task. We have to aim our bullets right at the heart of the problem: their deep-seated beliefs about how organisations and businesses change.

You might like to have a crack at several of the following ways to turn around your big-KPI-stick-weilding managers:

Tip #1: Discuss the real consequences of measuring people.

Gently start a conversation that will help the manager appreciate the way measures drive behaviour. Ask him how he will respond when a person’s measure shows an unacceptable result. Then ask how he believes the person will feel about his response. And then ask what he expects the “performance-managed” person realistically to do. Have several examples of how people have distorted the data or distorted the process in order to make the numbers look good, rather than to find and fix performance constraints.

Tip #2: Challenge their belief that the whole is equal to the sum of the parts.

Many big-KPI-stick-weilding managers believe that when people individually perform better, the whole organisation will perform better. They believe that the whole is the sum of the parts. But the truth is that the whole is more than the sum of the parts: it’s the interaction among the parts. You can illustrate this with examples of how competition between employees has caused problems with the end outcome (usually felt by the customer).

Tip #3: Suggest a team-based approach to achieve performance targets.

What the manager wants and what “performance-managed” people actually do are usually two very different things. Suggest to the manager the alternative of a team-based approach to using measures to drive performance improvement. Have at the ready a couple of ideas of how your team could work collaboratively to measure an important outcome and its drivers, and acheive a target together.

Tip #4: Use case studies to show them how performance measures work best.

Sometimes all it takes is to show a manager how others have succeeded using a different approach. Your big-KPI-stick-weilding manager might only know this one way of managing performance. She’s probably spent her whole career being treated the same way. Show her some alternatives, and she might just get curious about giving something different a try. You can find a few case studies in the Measure Up podcast series.

Tip #5: Check if their motivation is it to manage people or to improve company performance.

Focusing too much on individual performance means losing sight of what really drives company performance. So share with your manager the idea of holding people accountable for using measures, not for the actual measures themselves. This will encourage people to monitor the team-based performance measures they own, interpret them for signals, and initiate action to improve performance when action is needed. Much better than holding them accountable for things outside their control.

Tip #6: Seek a higher influence to guide the manager.

If the manager is not amenable to any of the above ideas, then you need to call the cavalry. Go to a more senior manager to ask for advice, and possibly some assistance, to influence your big-KPI-stick-weilding manager. Sometimes they just need to hear it from the right person.

Tip #7: Give up and let it go.

It’s too hard to do measurement without harm when you have a leader who is a micro-manager and fundamentally believes that performance only improves when people work harder. If you’ve tried everything and still can’t make any ground, the cold and hard truth is probably that the time just isn’t right. You’ll have to wait until the manager moves on, or has a performance management epiphany.

TAKE ACTION: If you have this problem of the big-KPI-stick-weilding manager, summon up the courage and try at least one of the ideas for broadening their awareness and challenging their current mindset. If you do it with a spirit of honest willingness to help the manager achieve their goals, you might be surprised how much influence you can actually have.

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  1. Johan Sivertsen says:

    I found the link below because I want to learn more about the Pareto Rule.
    Beside Pareto, the article also groups people into how they perform. Therefore I think you might have an interest in reading this:
    http://blog.strat-wise.com/2012/09/16/employees-productivity-and-pareto-thinking.aspx

  2. Husam Sarhan says:

    Hi Stacey,

    I agree wholeheartedly with your tips and recommendations. However, I read tip #1 with a little bit of hesitation when you suggested to have “several examples of how people have distorted data or distorted the process in order to make the numbers look good”. I hope that readers’ interpretation of this would be more along the lines of “we should learn from what happened to department/company X”, rather than “Mr. Y or Ms. Z are fudging the numbers” (especially if they happen to be from the manager’s department). The former might help convince the manager to measure key processes instead, while the latter might convince that manager to be even more stringent in measuring individuals’ performances.

    Recently I’ve also picked up a book titled “Winning”, penned by Jack Welch, in which he shares his experiences during his time as CEO of GE. One of the things that struck me is that he preaches “differentiation” among employees, where the top 20% get treated like stars; the middle 70% need to be motivated and engaged to get onboard and perform better; and the bottom 10% have to be let go. His opinion is that such differentiation will come out with clear, candid performance reviews where all employees will know where they stand. These performance reviews, he opined, should use qualitative as well as quantitative measures. This approach has obviously worked well at GE, so it got me thinking:

    • Do you think these two views (measuring key processes and employee differentiation) are necessarily at odds with each other, or can they be reconciled somehow?
    • Can performance measures (both employee specific and in general) be non-numeric? If so, how effective can they be?
    • If performance measures are used to measure only the output of business processes, and not people, how can underperforming employees be identified effectively?

    I’m not really involved in any performance measurement initiatives right now, but I’m fascinated by this stuff, especially as I am somewhat involved in an ERP system implementation at my company. Apologies for this long winded post, but I would very much value your opinion.

  3. Stacey Barr says:

    Johan – thanks for sharing this link. Wow, what a terrible application of the Pareto Principle!

    Systems thinking and statistical thinking tell us we cannot measure each individual’s unique contribution to company profitability because of interactions (interactions between employees, interactions between employees and business processes, policies, etc…).

    The idea of ranking them reminds me of Enron’s infamous “rank and yank” system – everyone gamed the system, made deals with each other, and then Enron subsequently would sack its 10% most honest employees each year (because they didn’t make deals and thus got lower rankings).

  4. Stacey Barr says:

    Husam – I see what you mean. I absolutely did mean to find examples of fudging the numbers purely to illustrate the point. Definitely NOT to head-hunt those people doing it!! Thanks for the clarification.

    Now your questions:

    1) Are measuring key processes and employee differentiation at odds with one another? No I don’t think so. I believe in measuring processes, but not measuring people. For employee differentiation (or employee performance appriasal or employee performance management), I don’t think we should measure employees, but rather evaluate their performance based on how well they monitor, interpret and take action to improve performance by them USING the process performance measures.

    2) Can performance measures be non-numeric? The idea of a measure is to provide objective evidence of the degree to which a performance result is occuring over time. If we can do that with evidence that is not numeric, then the answer is yes. But I haven’t seen too many good examples of this.

    3) How can underperforming employees be identified effectively? See my response to 1) above.

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