Most organisations use KPIs for the wrong reasons. Here’s the one reason they’re truly irreplaceable — and why no leader can afford to ignore it.
Humans are inherently goal-oriented. Without a result to move toward, we lose direction, momentum, and the ability to know whether what we’re doing is working. That instinct is exactly why performance measurement exists — and why so many organisations do it anyway, even when they do it badly.
And when we do it badly, it often starts with the wrong framing for why we use KPIs or performance measures.
The most common uses of performance measures cause their bad reputation.
The most common uses for performance measures are:
- judging people’s performance
- holding people accountable
- reporting upwards to management or leadership
- reporting outwards to stakeholders
- covering bums
- jumping through bureaucratic hoops (we just have to have them, no thought about why)
All the wrong uses.
But just like any kind of tool, isn’t it true that how KPIs are used will depend on the intentions and skills of the user?
Is it that measuring performance isn’t inherently bad, or that it can just be done badly?
Most of the horrific problems that measures are associated with are almost entirely caused by insufficient skills or unsavoury intentions in designing and implementing and using them.
The ranking of schools based on the results their students get in standardised tests isn’t done with bad intentions. But it’s done badly. Schools will only encourage the smart kids to sit for the standardised tests, for fear of poor results reducing their funding or making parents choose other schools. And this dynamic works against the ultimate intention of schools in society.
Measuring school performance can be done more sensibly to serve their ultimate purpose, like in this example of how to measure school effectiveness. But the question remains, why measure performance at all, if the risks are so high of doing it badly?
What special gift do performance measures have for humanity, that we can’t get any other way?
Is there something uniquely special about performance measures, that we really ought to develop the skills and clarify the intentions to master the measurement of performance?
Measurement is well accepted in many other domains of human life, like weight reduction, cholesterol management, vitals like body temperature and heart rate during surgery, and metering doses of pharmaceuticals.
We measure in these domains because measuring produces information with more objectivity, comprehensiveness, accuracy and speed than does human perception.
Numbers are the best way to answer “how much?”
Measuring puts numbers to things. Numbers are an objectively shared experience. We all understand and agree on what 1 is, how much it is, how much it is compared to 2 or 345. Numbers answer the question “how much?” more objectively, more quickly, more accurately, more easily than qualitative constructs like more, less, similar.
Business has complex processes, diverse customer and stakeholder needs and wants, many people with different experiences, opinions, values and knowledge. We want to know things like “how much” customer loyalty we have, or “how much” time is wasted in recruitment, or “how much” backlog of work there is.
If we relied on qualitative constructs that come from the opinions of different people, or a single person, we’d be little wiser. But if we measured these constructs, we’d know with much more certainty.
Measuring tells us what we can’t know through perception.
Performance measures are tools we use to guide us to achieve or improve the results that matter. And performance measures are essential for this, because they tell us what we can’t know in any other way:
- They tell us how things are objectively, without the bias and distortion that compounds from varying points of view and interpretations.
- They tell us how things are changing over time, something human perception does very poorly and with little objectivity.
- They tell us which variations are real signals compared to the variations that are simply natural noise, where humans are notorious for knee-jerk reacting to every variation.
- They tell us how things are everywhere that matters and not just what’s in front of us, and humans are renowned for biasing higher attention on what’s happening right around them.
Performance measures alone won’t ever give us the complete picture about performance. We do still need experience, knowledge and qualitative feedback too. But performance measures add something uniquely essential, so we can more quickly notice, agree on and investigate the results that matter most.
This is why the question isn’t really “should we use KPIs and performance measures?” It’s “are we using them for the right reason?” When they’re designed as quantitative evidence of what matters — not as tools for judgement or compliance — they show us things we simply cannot see any other way. That’s their real power.
Something to ponder:
What is the most common reason for measuring performance in your organisation? When might you find an opportunity to challenge any unhelpful reasons? Getting the reasons right is only the first step — the next is making sure the KPI basics are solid across your team.