This is why KPIs fail

A few blogs back I wrote about when KPIs fail (see here for the blog) and the blog How to lie with your KPI? was about deliberate manipulations of KPIs and their outcome. But there are more reasons why KPIs in the end fail.

Over and over again I emphasized the fact that KPIs are meant to set change in motion when necessary. If no change is initiated, the set goals will not be met and the performance was measured for nothing. Here is a list of possible things that prevent you to act upon the outcome of a KPI.

1. Bad data quality
KPIs run on data. Without good information the KPI cannot be created. Data drives your KPI. That's why correct data is of upmost importance. Unfortunately all sorts of things can go wrong with you data. Especially when data was originally not created for the purpose you are using it for in your KPI. Or because default values can be entered (e.g. '999999'). This can be especially tricky with Financial KPIs. But also with commercial KPIs this can be bothersome. Can you really ensure that all the data you use is correct? A small error in your underlying data can have huge impact. This topic asks for a separate blog.

2. People don't see the importance
Without people knowing and understanding the importance of the specific KPI it won't fly at all. Not only must people be aware of them, they also have to see the consequences of not meeting the thresholds set.

3. People don't understand
In one of the first blogs I discussed the complexity of KPIs (Keeping them Simple and Stupid). This wasn't for no reason. People will not easily admit that they didn't understand the complex and complicated KPI you showed them. They will say they did, but that's only because they don't want to look stupid. Inevitably this will lead them to ignore the KPI as much as possible (to prevent looking stupid again). Or their actions are less effective as they could have been, had they understood the KPI better.

4. People are not interested
As a result of item 2 and 3 or because of other factors, people just might drop out. Some people just hate being measured and KPIs is the manifestation of this. Others just don't desire a product like KPIs because they don't see what's in it for them. And there is always a group of people that lose interest as soon as numbers are involved.

5. People were not involved
I think this is an underlying factor for people to be skeptical about the usefulness of the KPI. It is the "Not-Invented-Here" principle. People do like to have an influence, especially when it concerns their future and how they will be assessed.

6. After creation, the process was stopped
Creation is just the first phase when using KPIs (see my first few blogs on the creation process). There are three more phases that are just as (or maybe even more) important. These are Communicate, Consult and Control (together with the Create this is what I would call the Four C model). Item 2 -5 of the list above are a direct result if you do not communicate. But also "Consultancy" and advice on how to implement and use KPIs is important. It is not enough to just tell people that your KPI exists and how important it is. And last but not least, you have to check whether people adhere to the agreed actions. Are due-dates met and was the work done sufficient and correct?