From KPI to KPI: Why Metrics Alone Aren't Enough

Key Performance Indicators (KPIs) have long been the gold standard for measuring success. But in today's fast-paced business environment, numbers alone don't cut it. If you want to achieve lasting success, you need to focus on your people: keep them involved, informed, and inspired.

Here's why this people-centric approach matters and how to implement it in your organization.

Moving Beyond Traditional KPIs

KPIs, or Key Performance Indicators, are metrics used to measure an organization's progress towards its goals. While useful, they don't tell the whole story. That's why we're advocating for a new kind of KPI—one that puts people first. Think "Keep People Involved," "Keep People Informed," and "Keep People Inspired." These new KPIs are the key to unlocking long-term success and sustainability.

In this article

• The Limitations of Traditional KPIs
  • Short-term focus
  • "Numbers game" mentality
  • Unsustainable management
• A New Approach: Keeping People at the Center
• Implementing People-Centric KPIs
• So, is KPI going bye-bye?

The Limitations of Traditional KPIs

While KPIs have their place in measuring organizational performance, they also have several shortcomings that can limit their effectiveness.

Short-term focus

Traditional KPIs often lead to a narrow focus on short-term results, neglecting long-term sustainability. When companies chase specific numerical targets, they overlook critical factors like employee morale, customer satisfaction, and organizational culture. This shortsightedness can lead to a "churn-and-burn" mentality, where employees are overworked and underappreciated, and customers feel neglected. This approach might yield short-term gains, but it's unsustainable in the long run.

Consider Wells Fargo. In 2016, the bank was fined $185 million for opening millions of unauthorized accounts to meet sales targets. This myopic focus on KPIs damaged the bank's reputation and cost it billions in fines and lost revenue. A people-centered approach, prioritizing customer satisfaction and employee morale, builds a sustainable and loyal customer base.

"Numbers game" mentality

KPIs can create a "numbers game" mentality among employees. When success is defined solely by meeting numerical targets, employees might cut corners or engage in unethical behavior. This damages the organization's reputation and erodes customer trust.

Take Mylan, for instance. The pharmaceutical company came under fire in 2016 for raising the price of its EpiPen by over 500%. This wasn't driven by market forces but by a desire to meet profit margin KPIs. This focus on numbers damaged Mylan's reputation and lost customer trust. A people-centered approach, prioritizing ethical behavior and customer satisfaction, helps build a loyal and engaged customer base.

Unsustainable management

Reducing employee performance to numerical targets can be demotivating. Employees want to feel that their work is meaningful and feel they contribute to a larger purpose. When KPIs are the only measure of success, employees become disengaged and demotivated, hurting organizational performance.

Look at Patagonia. The company prioritizes environmental sustainability and employee well-being, offering benefits like paid activism time, on-site childcare, and wellness programs. This focus on employee engagement and well-being has created a motivated and loyal workforce, passionate about the company's mission and values. This, in turn, has helped Patagonia achieve long-term success and build a reputation as a socially responsible and environmentally conscious business.

In short, the shift from KPI to KPI is not just a passing fad, but a response to the changing nature of work and employment. By focusing on metrics that capture the full range of employee contributions and by creating a culture that values and nurtures employee skills and abilities, organizations can build a competitive advantage and achieve long-term success.

A New Approach: Keeping People at the Center

"Keep People Involved," "Keep People Informed," and "Keep People Inspired" are three key principles that can significantly contribute to the success of an organization. We'll explore the reasons why these principles work and how they can help organizations achieve their goals.

1. Keep People Involved Humans are social creatures. We thrive on collaboration and connection and do our best work when we feel part of a group working towards a common goal. Keeping people involved is crucial for organizational success. When employees feel they have a stake in the organization's success, they're more engaged, motivated, and committed.

Create cross-functional teams that bring together people from different departments to work on common projects. This fosters collaboration, creativity, and improved communication. Encourage employee feedback and participation through regular town hall meetings, suggestion boxes, or online forums. Giving employees a voice taps into a wealth of talent and energy.

2. Keep People Informed Transparency and communication are essential for organizational success. When employees have access to timely and accurate information, they trust the organization and feel it's acting in their best interests. Keeping people informed builds trust and fosters engagement.

Establish clear and consistent communication channels, like regular email updates, a company intranet, or a weekly newsletter. Provide context and background information to help employees understand the bigger picture. For example, explain major changes and their impact on employees and stakeholders.

3. Keep People Inspired Inspiration drives motivation and innovation. Inspired employees are more creative, resilient, and committed. Organizations that prioritize employee well-being, growth, and development tend to be more successful in the long run.

Create a culture of learning and development. Offer training opportunities, mentorship programs, and regular feedback. Recognize and reward employee achievements through performance-based bonuses, awards, or public recognition. This keeps employees inspired and engaged.

Implementing People-Centric KPIs

Implementing and measuring the effectiveness of keeping people involved, informed, and inspired can be challenging but is crucial for long-term success. Here's how to do it:

1. Define Clear Goals and Objectives Set specific, measurable goals aligned with the organization's mission. For example, if the goal is to improve employee engagement, aim to increase employee-led initiatives within six months.

2. Identify Key Drivers Determine the key drivers that will keep people involved, informed, and inspired. These should be relevant, measurable, and actionable. For example, key drivers for improving employee engagement might include opportunities for feedback, a culture of transparency, and promoting learning and development.

3. Communicate the New Approach Communicate the new approach to all stakeholders, including employees, managers, and executives. Use town hall meetings, company-wide emails, or training sessions. Explain the rationale behind the new approach and how it aligns with the organization's mission and vision.

4. Collect and Analyze Data Track progress through surveys, feedback sessions, and other data collection methods. Monitor key drivers over time and identify trends or patterns. This helps pinpoint areas of success and areas needing improvement.

5. Continuously Improve Use data and feedback to continuously improve the new approach. Adjust key drivers, communication strategies, or revise goals and objectives as needed. This ensures the organization stays on track for long-term success.

So, is KPI going bye-bye?

In today's rapidly changing business landscape, investing in people is essential for achieving long-term success. Traditional KPI-driven approaches focus on short-term metrics, but a people-centric approach fosters trust, engagement, and innovation. By investing in your employees' growth and development, you build strong relationships with employees, customers, and stakeholders, leading to improved performance, greater resilience, and higher levels of creativity and innovation.

Don't wait. Shift your focus from traditional KPIs to keeping people involved, informed, and inspired. You'll find the benefits far outweigh those offered by numbers alone, leading your organization to a more promising and sustainable future.