Key Performance Indicators (KPIs) often fail to deliver the expected results due to their misuse. Instead of enhancing performance, they can lead to counterproductive behaviours, such as gaming the system or fostering a narrow focus at the expense of overall organisational goals.
The root of the problem lies in the misunderstanding of the purpose of KPIs. They are not meant to control behaviour but to align it with organisational objectives. To make KPIs work, they should be seen as a tool for learning and improvement rather than a means of punishment or reward.
A successful KPI system should be built on trust, with clear communication of purpose and goals. It should encourage teamwork and collaboration, rather than competition. Also, KPIs should be relevant, simple, and linked to strategic objectives. They should be regularly reviewed and adjusted to reflect changes in the business environment.
To sum up, for KPIs to be effective, they must be used as a tool for learning and improvement, built on trust, and linked to strategic objectives. They should encourage collaboration, be simple and relevant, and be regularly reviewed and adjusted.
Go to source article: https://www.forbes.com/sites/stevedenning/2021/02/15/why-kpis-dont-work-and-how-to-fix-them/