Why You Can’t Buy KPIs

January 29, 2019 by Stacey Barr

Buying KPIs from online libraries or hiring experts to develop them might seem like the best way to get the right ones. But it only perpetuates the problem and fixes nothing.

When we pay someone else to create our KPIs, we are bailing out a leaky boat.

When PuMP doesn’t help, do you know what the reason is?

Almost always it’s that leaders or managers didn’t want to invest the time. They felt it was faster to pay some expert to create their performance measures or KPIs. And they believed that only this expert could create the “right” KPIs for them.

One of my first meetings when I joined Queensland Rail as the Measurement Consultant, early in my career, was with the Corporate Strategy Manager, David. David called me to his office, placed an inch-thick report in front of me, and asked “what should we do with this?” He went on to share the biggest objections people had to it:

  • they didn’t understand the KPIs or how to calculate them with the data the railway actually had
  • they didn’t see how to link the KPIs to the railway’s strategic and operational goals
  • they didn’t feel the KPIs were tailored enough for this particular railway organisation

Basically, people didn’t want to take ownership of the proposed KPIs.

The report had been prepared by one of the big international management consulting firms. They had been contracted to produce a list of all the KPIs that our railway should be monitoring. That report had cost an obscene amount of money. And the railway’s leadership team didn’t do anything with it.

To this day, I still hear the same frustrating story. Leaders pay a lot of money for a KPI expert to create their performance measures, and then wonder why they still don’t have the performance information they need.

The problem isn’t that the wrong expert was contracted.

And it isn’t that the KPIs they provided were wrong or bad (there are good ways to use curated KPI lists). Rather, the problem has everything to do with the dominant performance measurement mindset held throughout the organisation. Robert M. Pirsig says it this way:

“But to tear down a factory or to revolt against a government or to avoid repair of a motorcycle because it is a system is to attack effects rather than causes; and as long as the attack is upon effects only, no change is possible. The true system, the real system, is our present construction of systematic thought itself, rationality itself, and if a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory.” – Robert M. Pirsig, Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values

When we pay someone else to create our performance measures for us, we are attacking the effects of a poor approach to measurement. We are not fixing the causes. If we try to replace our useless KPIs with the right ones, but the mindset that produced the useless KPIs is still there, any new KPIs will be useless also.

The problem is we have the wrong performance measurement mindset.

If performance measurement is ever going to be transformational, like Dean Spitzer describes it as in his classic book…

“Measurement is actually the most fundamental system of all. When the ‘measurement system’ works well, management tends to manage (and reward) the right things – and the desired results will occur. The measurement system – for good or ill – triggers virtually everything that happens in an organization, both strategic and tactical. This is because all the other organizational systems are ultimately based on what the measurement system is telling the other systems to do.” – Dean Spitzer, Transforming Performance Measurement

… then we cannot avoid checking and changing our mindset about it.

And our performance measurement mindset needs to change in ways like these:

  1. Developing our own measures doesn’t waste time and money, it saves time and money.
  2. People own measures (and the goals they monitor) not because they sign off, but because the buy in.
  3. No-one understands our unique strategy and purpose and operations as intimately as we do, and so only we can know the measures that matter most (but we need the skills).
  4. Measures are never perfect, and the only way they will ever become more relevant and useful to us is through our own action-learning cycles.
  5. When people make measurement part of their “real work”, it doesn’t distract them, it focuses them.

When we pay someone else to create our KPIs, we treat only the effects, not the causes, of a poor approach to measurement. We are bailing out a leaky boat.
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DISCUSSION:

What’s the dominant mindset for performance measurement in your organisation, and especially in your leadership team? Which of the five mindset changes listed above could be a useful place to start a conversation with them?

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