Warning 1: How KPIs can kill businesses

SCENARIO: A retiree owns a large parcel of shares in your employer’s business but has no understanding of how it operates – they’re just focused on their return and what that will get them – an overseas trip, a new car, or possibly putting their grandchildren through college. They have no comprehension of your sacrifices – working late, when you’ve taken work home, or put your job before your family. They want a good return on investment, and they want it NOW! How will that affect the business in the long term? Imagine you’re working in a company where your CEO’s bonus payment depends on meeting certain Key Performance Indicators (KPIs) and outputs. This has been signed off by the Board. The CEO then instructs the Human Resources department to set all the staffs’ KPIs to align to their bonus KPIs. KPIs drive behaviour, so now all the workers are focused on meeting their KPIs, which ensures the boss gets their bonus. This means the Chairman, the CEO and company staff are all locked into supporting the shareholder’s lifestyle. From a company perspective this is very dangerous, because it focuses only on the short term. When people have met a certain KPI, they stop working in that area. Fast forward three years and the CEO has taken their bonuses and moved on. Meanwhile, the total focus on short-term KPIs and the lack of focus on the long-term Key Result Areas (KRAs) of wellbeing and the growth of the company means the business has gone into decline and is dying. The end result is that all your hard work and sacrifice was for someone else’s pocket.

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