Using KPIs to Drive Behaviours

When I was driving to my client yesterday I was listening to an interesting debate on the radio about GPs being paid to diagnose dementia (you can read more here). The reasoning behind this is to increase the number of people on a 'dementia register'. This is good example of how measuring a specific feature of a business / organisation can affect the outcome. In this case they have added an incentive too.

So, how would this relate to your business?

I spend a fair portion of my time reviewing the Key Performance Indicators (KPIs) of a business with my clients. They may be achieving their KPI targets, but sometimes are left wondering why their overall performance is not where it should be. KPIs can be really effective, when done correctly.

If KPIs are only focussing on the output of a business then it can be a 'win at all costs' scenario that evolves. The day to day work life may be chaotic, but if you only measure the output then developing a consistent system of working can lose out to fire-fighting and running around narrowly averting disaster.

When the KPIs don't mean anything to the individual they often don't lead to a change in performance. If the metric cannot be translated into meaningful actions then the KPI has failed; it is not just there to be recorded and reviewed, it is there to provide direction when choosing the next action in the business.

Using one KPI in isolation is a risky proposition when making business decisions. Just like the dashboard of your car you need to have several (or Key) pieces of information to make an informed decision. Watch out for people who are making decisions based on one metric alone, often it is an incomplete view of the (business) world.

I do hope that the GP incentive scheme provides some meaningful results, but not at the expense of other diagnoses being overlooked due to the focus / incentive. KPIs are the same in your business too, they are there to help steer your business. If you feel that they not working, not generating effective actions to improve performance, then it might be time to look at your KPIs as a group and see if you have the right ones.

Giles Johnston
...optimising MRP systems and re-engineering business processes

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