Why Key Performance Indicators Often Aren't: And How It Hurts Organizations

Big data has created its own momentum. A corollary, if you will, to 'if you build it they will come.' In this case, it's 'if you generate it, they will feel compelled to analyze it.'

The problem, as the following article explains, is that organizations (and their leaders) too often assume the truth is manifest because numbers don't lie. Which is not even true at the most granular level of detail, but the real damage is done by the way in which incorrectly applied or interpreted data can mislead.

Enterprises and the people who work in them get hurt by this because their creativity is stifled, their ambitions are thwarted and their progress is diverted. The negative impact of the meaningless can often outweigh the positive influence of the meaningful. If you are going to measure, just make sure the metrics are tied to an outcome that actually matters. JL

Liz Ryan comments in Forbes:

Many leaders can’t get their heads out of spreadsheets long enough to notice the waves of energy around them. They are mystified by the topic “corporate culture” because it doesn’t show up in their spreadsheet or on their dashboard. If we trusted ourselves as leaders more than we do, we could get rid of half the goofy measurements we employ.
I worked for a long time in fast-growing companies, where people are moving too fast to stop and take measurements every five minutes. It wasn’t until I started consulting that I saw just how much measurement of everyday tasks goes on in most large employers.
I was shocked. I met competent and smart people who spend as much time measuring their work as actually doing the work. I met very few people who felt good about the amount and type of measurement associated with their jobs.
“I have my real job, and then my extra job meeting the completely arbitrary numbers in my KPI Profile,” said Marilyn, a veteran software engineer. “Tell me about the KPIs,” I said.
“Key Performance Indicators,” said Marilyn. “I have to keep track of about fifteen things that I do and I have numbers to hit every week. The correlation between hitting my KPI targets and actually getting my work done is a very weak correlation. I could do a fantastic job during the week and move our company forward a lot and at the same time miss all my KPI targets.”
“So the yardsticks themselves are broken — the measures,” I suggested. “Not only that,” said Marilyn, along with hundreds of other working people I’ve met over the years in similar circumstances. “It’s not only that the yardsticks are poorly designed.
“There’s no way any measurements could keep up with the changes in our business. We are on the front lines.
“The measurement-people are way at the back — they are completely disconnected. We measure too much and there’s too much emphasis on numbers. Why should I work hard to hit a number someone gave me? I work because my work is fun and challenging.
“It’s insulting to have to stop my real work every few hours to focus on the numbers that someone assigned to me without even talking with me.”
In the ‘modern’ business world based on a two-hundred-year-old industrial model, we are obsessed with measurement. We teach rising executives to make decisions  based on numbers alone and we exalt some of the numbers by including them in Executive Dashboards, one of the most harebrained notions to come down the pike in years.

I suppose  you could captain a ship without actually being on the ship or seeing the water. You could simply read the numbers from the ship’s instruments and make captain-type decisions that way, from a distance. Most of us would rather that our ship’s captain stood right at the wheel and looked at the water and the sky.
Business is more about waves than particles, but many leaders can’t get their heads out of spreadsheets long enough to notice the waves of energy swelling and crashing around them.
They are mystified by the topic “corporate culture” because it doesn’t show up in their spreadsheet or on their dashboard, but it influences their success or failure more than any other factor.
When people feel like they’re part of any win your firm might experience, they give everything they’ve got. Everyone knows that characteristic of humans, but in the business world we pretend that we don’t know how humans operate. We pretend that they’re motivated to hit the random KPI numbers we give them just because — maybe because they’re dying to get gold star on their forehead next week and the week after that and every week in the future.
We know better. If we trusted ourselves as leaders more than we do, we could get rid of half the goofy measurements we employ. We could stop obsessing about KPIs and talk about the mission, instead — the organization’s mission and our own personal missions bound up with it.
It’s stupid to create lumbering bureaucratic systems just to measure your teammates’ activities when the real goal is to take care of your customers and deliver great products and services. You’ll never measure your way to greatness.
You’ll never excite your team to higher heights by measuring them to death.
You’ll never cultivate Team Mojo by measuring more of your team’s activities, but you can kill your culture by measuring too much and evaluating people based on their numbers more than other factors.
Team Mojo is the momentum that powers a team to accomplish something amazing in business, athletics or anywhere people band together to achieve something great.
A Human Workplace is a place where the leaders understand the Passion-Performance Connection and don’t shove KPIs down their teammates’ throats just because they can.
They wouldn’t dream of measuring anything non-essential or of slowing people down with excess measurements when there’s so much real work to do.
That’s why high-growth companies don’t waste their time dreaming up KPIs. Who has time to stop and measure things when you’re racing down your path?