KPI’s and targets-be careful what you wish for!

KPI I have a dreamYet again in the news today we have examples of KPI’s and targets driving perverse behaviour.

A special police unit in London has been accused of persuading women to withdraw charges of rape. The motivation for this was alleged to be to improve performance in relation to a KPI target that they had been set, for crime clear up ratios. The KPI’s and targets here were directly driving this behaviour.

While this sort of  behaviour is totally unacceptable, it is completely understandable and is a prime example of a complete misunderstanding of KPI’s and targeting by those who set up these management processes.

Another example is the recent horsemeat contamination scandel. Again KPI driven by the big retail chains with KPIs designed to target the rachetting down of cost to the point where some suppliers were only able to complete an retain business by cheating.

A key performance indicator is exactly that, an indicator. Targeting KPI improvements will drive and change behaviour, but if the KPI is not selected very carefully, it will not achieve the performance improvements that it is engineered to achieve.

There are some fundamental principles to be borne in mind when deciding upon KPIs

1. Does the KPI measure actually measure what it is thought to measure. i.e. is there a direct linkage to performance. If so, how robust is the correlation. In the police scenario above. the KPI showed improvement, but actual outcome performance showed deterioration.

2. What possible negative behaviour could be generated as a result of trying to improve the KPI.

3. What steps can be taken to eliminate the prospect of negative behaviour, on the basis that it must be assumed that if negative behaviour is possible, it will happen.

What we need to realise is that KPI’s are only  indicative of performance outcomes, they are not the outcomes themselves. Perhaps we should start differentiating between KPIs and KPOs (Key performance outcomes), then perhaps we may get a better grip on reality and start targeting the outcomes and not the indicators which are in themselves are often quite false measures.

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3 Responses to KPI’s and targets-be careful what you wish for!

  1. procentus says:

    Just another example of this reported in the news today.

    In the UK, NHS trusts hospitals are targeted at improving mortality rates in their hospitals.One hospital was doing particularly well and was awarded a prize for it’s work in exceeding it’s targets.

    The chief executive of that trust has today been suspended. It has been found that deaths at the hospital were being deliberately miscoded as due to septicemia, Under the rules, deaths due to this condition are excluded from the KPI calculation (and in fact attract extra funding!).

    Again, perverse behaviour driven by inneffective KPI targeting and application.

  2. One constant and critical concern with measurement of KPI’s – which frankly cannot be avoided – is interpretation and, as noted above, application. Naive as it may seem, I prefer to think in terms of the triple bottom lines, rather than just one. Sustainability may seem like a cliche but it encompasses not only people, planet AND profit, it also speaks to maintaining integrity of mission. What exactly is the mission of the NHS trust hospitals again?

  3. Pingback: Setting KPI’s | It's more fun than a TPS report...

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