5 Ways KPIs May Actually Be Harming You
The title of this post probably baffled you. Well, you are not wrong after all. Key Performance Indicators, or KPIs, are a good thing. There is no way they could be harming your business. However, they are good only as long as they are used sensibly. Misused or misrepresented KPIs could be doing more damage than good by undermining your organization’s process improvement. Some of the most common problems with KPIs could be:
1. KPIs that don’t show the complete picture
If the KPIs don’t cover all of the things that matter to your business, they could be presenting a partial picture that only provides a false sense of security, which can be extremely damaging as it affects your chances of process improvement. One of the worst things that can go wrong with any organization is not being aware of the problems or the possible shortcomings. That is why it is essential to carefully map out all key drivers in perspective of the outcomes you have in mind. This requires a very structured, detail-oriented approach.
2. False KPIs
Surprisingly, KPIs can be wrong. In fact, they can be wrong in many ways at a time. Sometimes, they could be defined incorrectly while at others, there could be many different definitions of a single KPI within the same organization. Sometimes, there could be simple arithmetic spreadsheet slip-ups, or at times there could be mistakes in understanding what the KPIs are showing. A KPI database would usually solve these problems without much trouble.
3. KPIs driving inappropriate employee behavior
This is one of the worst things KPIs can do, and it happens more often than you might think. How often has your call been discomfortingly rushed by a customer service representative who’s being measured on Average Handling Time or a similar, misleading metric? You need to ask yourself what kind of employee behavior want your KPIs to be driving and fix them accordingly.
4. KPIs that consume too many resources
One of the golden rules of surviving in today’s technologically advanced times is to automate everything that can be automated. There are tools to take care of the complicated excel legwork, dashboards, and data reports. You do not want to work in an environment where a few dozen people are set aside only to create reports.
5. Unnecessarily time-consuming KPIs
If your KPIs require a group of employees to carefully study a 99-page report before being able to make a decent decision, there is a higher probability that the employees will just skim through the report. Innovative and well-defined report and dashboard designing can be immensely helpful.
Make sure your KPIs do what they’re supposed to by keeping them up to date and well defined.