Why the traditional KPI model does not work

THE TRADITIONAL KPI MODEL Why it doesn't work

Why the traditional KPI model does not work

The problems with the traditional KPI model are explored in this article below by Lucas Yla – and it raises a few interesting questions about just how you should encourage and reward the right behaviours in your call centre.

Keeping up employee motivation and performance is one of the biggest headaches for managers these days. The most common way to increase performance is simply by using a “motivation system” – directly linking employee KPIs with monetary incentives.

However, this “motivational system” was created in the XIXth century and worked well during the times when production flourished. Most of the jobs required physical work, so it was easy to track employee performance and even easier to engage them. Everyone knew, the more stuff you produce at the assembly line – the more you earn.

Vice versa, today’s businesses drive most of their value through service, intellectual property, innovation, and creativity. Even if you’re a manufacturer, your ability to sell, serve, and support your product (and the design itself) is more important than the ability to manufacture.

So maybe the “motivation system” (which links performance to bonuses) is not as effective today as it was 20-50 years ago?

Lessons from the past

IBM, the leading software company in the 1970s, tried to measure productivity among its workers. Executives wanted a way to measure how complex projects were, and after consideration, they decided to track the lines of programming code. The theory was that the longer programs were better and harder to make than the shorter ones, which implied that better programmers wrote more lines of code.

From an assembly line perspective, this was a decent theory: a person who can make twenty bricks in an hour is better than one who makes only five. The mistake was in the assumption that programming (and most other creative work) is a volume task, which in fact isn’t. Later it turned out that better programmers needed fewer lines of code in their projects, not more. Only someone unfamiliar with the attributes of good programming could invent such a backward measurement.

The risk of even having a good metric

The trap is that even if you find a good metric that avoids the trap that IBM fell into, people will naturally, even subconsciously, work to game the metric. They want to “do good”, and once leaders put up a scoreboard that everyone sees, it has unexpected power.

Do you want to increase new sign-ups for your service? Fine. It’s easy to get more sign-ups if you don’t care if “customers” never return or you don’t have a good filter for spam.

Eventually the number-centric leader will find out the weaknesses of the system and will create a few more precise KPIs, which might help at first, but soon the same pattern will repeat and the previous problem will have amplified.

“People will do what management inspects, not necessarily what management expects.” – Prof. Dean Spitzer

What is the right KPI to have?

It is wrong to assume that employee engagement could be easily increased by using “good-old” motivation system linking performance to monetary incentives. More often, the side effects of this motivation system are more painful than beneficial for the company.

The real problem is not that you can’t manage if you can’t measure it. The problem is to strike the right balance between what should be measured, and what is unmeasurable or is best left to observation, contemplation, or intuition. For example:

  • Do you want a copywriter to squeeze more words per hour or do you want a great ad?
  • Do you want a customer support manager to handle more tickets or do you want the greatest customer support ever?
  • Do you want to hit as many sales as possible to increase revenue or do you want to create the best product in the market used by millions in order to increase your revenue?
  • Do you want quality or quantity?

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