KPIs (Key Performance Indicators) are documented in most business. So many of our clients include them in either their daily “stand up” meetings or weekly supervisor sessions.
Organizations use KPIs as a barometer of the business’ health. Like barometric readings, the actual number is not important, but the direction is the key. Is the number increasing, decreasing or staying the same? Is the KPI moving in the right direction, or is steady state the goal?
I always look at KPIs and ask, “Is it truly a KPI, or a KMI (Key Measurable Indicator) instead”?
A KMI is what can be measured by an organization and then used as a proxy for information they truly want. When the proxy KPI is the best and organization can do, it is important to recognize and call out the limitations of the numbers.
Here is where organizations stumble. The proxy becomes the metric. The metric becomes the grading system. The final result is that organizations end up drifting to misguided incentives that Steven Kerr described in a classic essay over forty years ago. That is the “Folly of Rewarding A and Hoping for B”.
When you reward a metric, your organization delivers that metric. When uncovered the results can leave managers dumbfounded.
A pharmacy wanted a simple measure to improve the customer experience. They decided that speed to answer was the goal. The pharmacy lacked a call center or a sophisticated phone system. They wanted to create an initiative to drive the desired outcome.
The result was the “3 rings or less” rule. The managers insisted that the phone be answered in three rings or less. The metric was viewed as simple and easy to understand by all.
The customer experience, however, did not improve. All customers received a consistent experience. The customer would hear two rings, an abrupt “please hold”, and then music. Often, the “please hold” was omitted. Eventually someone would get back to them.
The organization delivered on the rule, but the outcome was far from the desire experience.
Attempts vs. Completes
A specialty pharmacy wanted to measure the effectiveness of their team members that contact the patients to confirm and set up delivery. The metric was the number of outbound attempts to reach the patient. The team members were being measured against volume of activity.
The organization wanted successful completion of order set up and deliver, but the metric was working against that goal. Employees delivered volume of outreaches. They would call a patient and leave a message at home, document the call and the pend the work. The teammate would then open up the work and call the cell phone and leave a message, document the call and pend the work.
This behavior resulted in two units of the declared metric, but did not get firm deliver set ups. With a well-designed metric, the teammates would begin to strategize on behavior to ensure the highest probability results.
These two examples highlight the need to be careful in what you ask for, because your team will deliver it.
When your organization seems adrift. Step back and review the course you have charted. If your team is delivering what was asked, change the metric.
As always, we are available to help. Let’s get to work!