Don’t kill KPIs — just set KBIs for ethical, customer-focused, non-greedy behaviours
This article was originally published via LinkedIn on 17 June 2018 after the Australian Royal Commission into Misconduct in Banking, Superannuation and Financial Services had exposed some of the worst excesses of the corporate world (eg charging fees for life insurance policies to dead clients’ estates!), many were despairing about what could be done to tackle the problem, and corporate commentators were questioning the role of Key Performance Indicators (KPIs).
I called for organisations to map out the ‘desired state for ethical, customer-focused, non-greedy behaviours’ with specific, measurable, Key Behaviour Indicators (KBIs). A recent poll showed that 65% of Australia’s biggest companies have now done so (hopefully with commitment and practical action not just a ‘tick box exercise’!). The original article had more than 4,000 views.
After the exposure of widespread lack of ethical behaviour and several cases of corporate criminality, notably (though not exclusively) in the Australian banking & finance sector, the finger of blame has been turned by many on “KPIs”.
But we need to be careful not to shoot the messenger here, and not to throw the baby out with the bathwater.
KPIs (Key Performance Indicators) is simply a label that we’ve put on the important process of setting and monitoring measurable goals and targets that are regarded by the leadership of an organisation as the priorities to make sure we stay on strategy and deliver the desired vision.
There’s nothing wrong with the underlying concept, but a lot wrong with the way it has been applied.
— -WHAT HAS GONE WRONG — -
The two biggest failings have been around selection of appropriate KPIs and effective co-monitoring of progress to ensure success.
In sectors like banking & finance, customers have suffered from too narrow a focus on measures designed to generate revenue, profit & executive bonuses.
This is not a criticism of the process of setting and achieving measurable goals and targets. It’s simply a criticism, as well as an inevitable consequence, of the particular priorities chosen for the focus of attention and reward.
If you don’t want those results, then set different priority goals and targets.
We’ve also seen evidence of senior leaders focusing too much on what drives short-term dividends for shareholders rather than balancing the longer-term interests of customers and shareholders, whilst also looking after the employees who can deliver this desired outcome.
Once again, goal setting and monitoring, using KPIs, is not a sin, but the narrow and short-term nature of the selection of these types of KPIs has become sinful and, in the recent banking scandals, criminal.
In other sectors, the KPIs set have had a broader scope but they have often not been monitored and discussed through the year in a proper strategic context — just the end-of-year ‘tick box exercise’, again usually to justify executive bonuses.
False criticisms appear such as “scrap the annual performance review” when, in fact, evidence-based good practice has always been to have regular, open conversations around the selected KPIs to assure success, not a once-off review that cannot provide the feedback loop and adjusted behaviour required for success.
— -A BETTER FUTURE IS YOURS IF YOU WANT IT — -
Instead of calling for the abolition of KPIs because of unethical, criminal, greedy, self-centred behaviour in the banking and corporate world, why not use KPIs properly to set and monitor priority goals for:
1) ethical behaviour (to deliver shared value without greed)
2) focusing on customers’ interests (or better balancing with shareholders’ interests)
3) supporting and motivating staff (without narrow reliance on financial incentives and bonuses)
Setting, monitoring and delivering on such KPIs — or KBIs (Key Behaviour Indicators, perhaps Kind Behaviour Indicators?!) — can transform the corporate landscape, your corporate landscape, within 2 years.
Paul Vittles FMRS FAMI FRSA is a coach/consultant/counsellor who helps people and organisations achieve sustainable success with high ethical standards and optimal mental health.
