To Prove Or To Improve - What Are KPIs For?

Do you want KPIs to prove what you're doing and achieving, or do you want KPIs to help you improve what you're doing and achieving?

This might sound like a loaded question, but it’s not. There's room for both reasons to measure performance, but the reason needs to match the context.

Personally, I'm biased more toward the belief that KPIs are primarily about improving performance, despite writing a book called Prove It!. "Prove It!" was supposed to be a catchy and provocative title. But it kind of suggests that I think measuring performance is about proving an organisation's success. You'll know it's not, if you've read the book; you'll know that what I really believe is that measuring performance is about improving an organisation's success. We just can't do that without evidence, or proof.

Using measures to improve performance isn't the only right use. And using measures to prove performance isn't, either. But we have biases, and it's useful to understand where those biases come from, first.

Why are we biased either toward proving or improving?

Whether someone is biased more toward proving or improving with KPIs will be partly influenced by their values. With values like self-actualisation, service, collaboration, discovery and insight, synergy and wisdom, people will be more biased toward the belief that KPIs are about improving performance. With values like self-preservation, security, self-worth, obedience, tradition, social affirmation, achievement and competition, people are probably more biased toward the belief that KPIs are about proving performance.

Our roles also bias us toward proving versus improving with KPIs. For people who are focused on process improvement, strategy execution and innovation, it’s easy to believe that measurement is mostly about improving. For people who are focused on winning resources, satisfying external stakeholders and meeting regulations, it’s easy to believe that measurement is mostly about proving.

Following our biases isn't the safest approach to how we use KPIs. If we stick to our bias, and ignore the other purpose of KPIs, there are consequences.

There are consequences of a bias toward proving with KPIs.

If we're biased toward proving performance with KPIs, we run the risk of manipulating performance measurement in ways that make the KPIs give the proof we want them to give. This is particularly a risk when transparency is something we're uncomfortable with, but have no choice about. And it's also a risk when those we are proving performance to are not objective or understanding in their interpretation of the KPIs. The consequence is that performance only looks good in the numbers, but isn't as good as it should be in reality.

We know this consequence happens all the time when KPIs are used to prove how well, or not, an employee is performing. If their promotion, bonus, salary or reputation depends on hitting KPI targets, particularly targets they feel are not within their full control, guess what happens? The KPI data or definition might be manipulated, so the KPI target can be easily hit. We end up rewarding the very oppositive behaviour we want: instead of rewarding what improves organisational performance, we reward numbers gaming.

And it also happens when KPIs are used to prove, to external stakeholders, that an organisation is hitting its targets. We talk a lot about the importance of transparency in government, of demonstrating the outcomes achieved from the investment of taxes. But there still is a lack of measurement maturity in government organisations, so this transparency is very threatening to the leaders, who then resort to output- or activity-oriented KPIs to prove performance, rather than direct measures of the outcomes.

There are consequences of a bias toward improving with KPIs.

If we're biased toward improving performance with KPIs, the risks are much lower, but shouldn't be ignored. The same KPIs that are used to diagnose and improve important business results are the same KPIs that can be used to prove to others how performance is going. But if we keep our heads buried in improvement projects, and not keep stakeholders updated about the impact they're having, we could lose their support.

A wave of Six Sigma projects were underway in a machinery workshop. Teams each had their own Six Sigma project, focused on improving one aspect of their specific maintenance or repair work. They were head down and tail up into the steps of the Six Sigma process, using data to find root causes and coming up with actions to remove those causes. But what almost every team lacked was a good KPI that could show the impact of Six Sigma on the workshop's bottom line. How could the leadership team continue to invest in improvement projects without knowing the return on investment?

Investment doesn't have to be financial, either. An advocacy group was working with the police department in a Texas district, to investigate a hugely disproportionate rate of assault charges filed against Black children in a school. The advocacy group and the police department could have kept to themselves to try and improve equity for Black children. But without proving the results to parents, the school, and community groups, they would not have had the trust of everyone that mattered. But the advocacy group did involve everyone, so the numbers were trusted, as well as the improvement efforts.

Know the contexts of proving versus improving.

In a city library, one of the goals a team was trying to improve was "libraries are community hubs". They had a few KPIs to monitor this, such as physical visits, website visits, and an average community rating on the sense of community promoted by the library. To boost the sense of community among younger people, the library team wanted to provide gaming consoles in the library. And armed with the evidence of the KPIs they were working to improve, they were able to immediately get local council funding to do this. The library team was using KPIs both to improve their services, but also to prove the impact to win more support from external stakeholders.

It’s useful to use KPIs for both purposes: to prove our results, and to improve our results. Which purpose we put KPIs to, proving or improving, should be decided based on context. For example:

If we want better engagement in performance measurement in our organisations, we need a more complete appreciation of what different people, with their different values and roles and contexts, need KPIs to help them with. And the most balanced use of KPIs will involve both proving and improving performance.

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The post “To Prove Or To Improve - What Are KPIs For?” was first published by Stacey Barr on https://staceybarr.com/measure-up.