So many organisations – of all shapes, types and sizes – are attempting to improve their workforce culture.
Leaders want people to be “engaged” at work. They want people to buy-in to the organisation’s goals and strategy. They want people to “work on” and not just “in” the business.
Yet just about everything leaders do with performance measurement has exactly the opposite effect. Just about every way that leaders use KPIs, has the exact opposite effect they say they are looking for.
Improve culture. Engage People. Control people with KPIs. Judge their performance regularly on the tasks they do. Efforts that conflict and push people in opposite directions and leave them confused in the middle and apathetic to get involved.
Leaders and managers have missed eight massive opportunities to engage people and make progress towards a high-performing culture.
From a dozen years of collecting the key struggles and challenges people have with performance measurement the overriding issue is the effect that the poor use of measurement has on organisational culture. The poor usage of measurement – typically in the way KPIs are set and used – disengages people from their work, and discourages them from wanting to be involved with “measurement” at all. As humans, we learn through the Plan, Do, Check and Act cycle and measurement provides an evidence-based approach to building our knowledge and learning.
KPIs, are typically poorly articulated performance measures with targets attached to them. In common practice, they have ceased to be the key performance indicators they were intended to be. And typically, they are “brainstormed” towards the end of the annual planning process.
People regularly tell me their issues with KPIs are:
- They are meaningless to my work
- I do the work that I know is important, then just do my KPIs when needed
- My manager uses the KPIs to judge my performance – for reviews or for performance bonuses
- I am not engaged or consulted in the process of developing the KPIs
- If I get the chance, I negotiate my KPIs with my manager so that I can be sure I meet them – bring them within my control
- My KPIs are ‘widgets’ – they are just counting the things I do, not measuring the impact our team has
- The targets I have do not reflect the difference I make to my customers
- It is our team that achieves our results – I’m still don’t know why we have KPIs on individuals.
Any of these sound familiar to you? What would you add to this list?
One person once told me that there are “perverse KPIs”. When we discussed this in a little more detail, this lady was referring to target levels of RBTs that were imposed on a local Police force…apparently encouraging activity to meet quotas, rather than reduce the level of people driving under the influence.
However, we should expect this.
When we make “success” hitting a number, then we should expect people to do anything to get the number. Often times, hitting the number/KPI is not about ‘success’, but making sure we don’t draw attention to ourselves by not hitting the targeted number.
Let’s be clear.
Measurement doesn’t have unintended consequences on behaviour. Only targets do. When leaders put targets on people then we get these unintended behaviours.
Often targets are set in a flurry of planning activity. Or when we have not yet defined the associated performance measure and don’t know the current level of performance. In these circumstances, how can we expect these targets to be meaningful?
When leaders set targets on performance measures and judge people – only then do we get ‘unintended’ consequences.
Couple this Target/KPI to dollars and you can be sure people will get the number ‘by hook or by crook’. Such as we saw in the recently Royal Commission into Banking in Australia and infamously with Wells Fargo in the USA.
“The problem with making an extrinsic reward the only destination that matters is that some people will choose the quickest route there, even if it means taking the low road. Indeed, most of the scandals and misbehavior that have seemed endemic to modern life involve shortcuts.”
– Daniel H. Pink Drive: The Surprising Truth About What Motivates Us (2009)
In short, the way most organisations use performance measures and KPIs has the effect of demotivating people. And often encouraging people to game the measure or the system.
The main purpose for developing and tracking performance measures is to get objective feedback on an aspect of performance, about the results we seek.
How to motivate with measures
When we use measurement for feedback – not judgement of people – then people will look to the measurement as seeking to understand what performance is doing, and why it is doing that. It then will change the context from a success or failure narrative to one of learning.
When people are using measures as a way of learning what has an impact on performance, or why something is performing that way, then we have a chance of inspiring curiosity.
If we can inspire curiosity, then we will be engaging the hearts and minds of people into solving the key performance challenges of the organisation.
“There will be joy in work, joy in learning. Anyone that enjoys their work is a pleasure to work with. Everyone will win; no losers.”
– W. Edwards Deming, The New Economics for Industry, Government, Education (Deming.org)
When we switch our focus onto measuring for learning we can shift to looking at how we can interpret performance and see the signals in the measures, rather than reporting that we have hit the number or not.
Performance improvement practitioners have used XmR charts for this for decades. (You can see examples of XmR charts and explanations in these articles, one and two). XmR charts provide a picture of what performance is doing, the measure forms a pattern that we can easily interpret.
Using measures in this way (for example in XmR charts) allows us to see where progress is being made. And the feeling of making progress is key to connecting people, with their work and finding meaning in that work.
“Of all the things that can boost inner work life, the most important is making progress in meaningful work.”
(The Progress Principle): Teresa Amabile and Steven Kramer, The Power of Small Wins, Harvard Business Review May 2011
“Human beings have an innate inner drive to be autonomous, self-determined, and connected to one another. And when that drive is liberated, people achieve more and live richer lives.”
Daniel H. Pink, Drive: The Surprising Truth About What Motivates Us, (2009)
When we use measurement in a way that it becomes visual and easy for us to use (like XmR charts) then people will talk more about performance. What the signals in the charts are describing, what has caused the signals and patterns. The conversation in teams becomes one of learning, experimentation and a quest for progress.
“…the simplest and most effective way you can enhance the inherent motivation of any project, process or work (is) by making progress visible. Short-circuit feedback loops, and protect your team from setbacks and delays, or from being ambushed by change. Avoid shifting goals autocratically, and maintain structures that provide context and visibility of the stuff that matters.”
Jason Fox (2014), The Game Changer, page 95
The missed opportunities
1. When leaders set success as hitting a number, a KPI or some sort of target or milestone, we lose the hearts and minds of the people. Instead of engaging people in trying to understand what performance is doing and why, they make success hitting a number.
2. And when success is seen as hitting a number, then people will “choose the quickest route there” which will often involve manipulating the system or the data that produces the target number. Producing a false reading in the measurement system. The consequence, poor decision-making based on what our measurement system is telling us. Poor decision-making by managers leads to less engagement and motivation.
3. Reports are used to justify that targets are being met, and that everyone is busy completing their tasks and actions. Rather than using performance reports to show what performance is really doing and then encourage people to get curious about why it’s doing that.
4. Leaders set too many KPIs. In an effort to seemingly set an impossible number of goals to mistakenly inspire people to stelar performance. Priorities are lost. Instead of being clear about what to focus on improving, we get busy doing. (see the Two Types of KPIs)
5. With so much effort on KPIs and action, people can only “work in” the business. The attention shifts to task completion and survival. To “work on” the business, people need the autonomy (leaders can still set a small number of priority areas) to get curious, to experiment, to learn. To build new organisational knowledge about what performance is doing, and how to affect change.
6. When leaders (mistakenly) react to targets not being met and demand responses at monthly meetings. And when leaders react to the normal variation in performance measures, we miss the opportunity to put meaning into the work of others. It becomes a futile tail-chasing exercise that, month after month, takes the heart out of the work.
7. When measures are used to provide feedback on the impact of someone’s work, rather than counting how many things they’ve done, they will focus more their impact. When they can see that their impact contributes to the organisational goals and to the people, community and customers that we serve, then we add value and meaning to their efforts.
8. When we use measures to demonstrate that we are learning and that we are making progress, we enrich the lives of the people that work here.
Are there others I’ve missed?
Call to action
This call to action is for leaders and managers to cease this misalignment. On one hand trying to boost engagement and buy-in, and yet with the other hand creating organisational processes that disengage and produce wasted effort. We need to stop offering the carrot with one hand and then using KPIs as a rod to their backs in the other.
It is time to discard those ‘management techniques’ that were popular last century and adopt a proven performance measurement methodology that can help gain the alignment we seek.
That alignment will deliver people engaged in their work and seeing a line of sight between their work and the organisations goals. They will be curious about performance and, from their experiments, learning how to improve. Building organisational knowledge. The progress they are making will be visible. Hmm, maybe this is the definition of a high-performing culture…
If you are not sure where to start, check out PuMP, the Performance Measurement Process developed by Stacey Barr.
Or drop me a note and I’ll get a detailed whitepaper to you on the method.