I wonder: are performance indicators Pavlovian?

I’ve been working for over twenty years in environments where people’s performance is monitored (some may say encouraged) by performance indicators. The famous KPIs. They come under multiple forms and acronyms depending on what system has been adopted in your organisation.

Over that period of time, I’ve often noticed that the indicators work in the opposite direction to performance. in organisations. **The KPI is like medication, there can be side-effects, and they’re not necessarily the same for everyone! Setting objectives is above all behavioural, because people change their behaviour to achieve their objective, and that sometimes means cutting corners or taking risks.

Indicators generate side effects

The problem with setting indicators is that we can unknowingly generate these side effects, even when we have thought about it thoroughly.

For example:

  • Setting financial indicators to the detriment of customer delivery
  • Production output at the expense of human physical safety

These are two real examples which may seem absurd to you on reading them (well, I hope so!), but which are the result of organisational drift. If you had confronted the management in these companies, they would have told you that this was unacceptable and that action had to be taken. But the fact is that this is something that has gradually crept in, in a context in which management has participated without realising it, blinded by their own constraints.

The choice of indicators and the consideration given to secondary effects are very important, because you’re putting in place a structure that influences the behaviour of the people who work for you. You need to be able to measure weak signals, i.e. what is actually happening in the field, not what is supposed to be happening. An organisation works like a system and will adapt in some way to the new constraints you set it. You need to see how it adapts and if the adaptation is aligned with your goals.

Secondary effects are often hidden and not very visible to management.

Ask yourself the right questions before setting your indicators

The indicators must be there for employees and managers to make the right decisions.

The right questions need to be asked beforehand: What is the intention or the values we are promoting? What do we want to achieve? Do the indicators have to be achieved at any cost?

Indicators need to be aligned with values, and we need to ensure on a regular basis that every action contributes to the objectives we really want to achieve. That’s when you get results. My job is to find out what’s really going on in your organisation, to detect the underlying and undesirable side-effects, and to propose solutions that support your ambitions. Contact me for a no-obligation discussion full of opportunities!