Why hitting KPIs ≠ Achieving High Performance
Okay. Stick with me on this one, because I know the title might sound contradictory.
If you can't be bothered to read it all, here's the abstract:
KPIs focus people on the minimum performance metrics, whereas achieving high performance is all about going above and beyond this, by some measure.
For those of you who are interesting in the meandering waffling of a chirpy little fella from T' North...
First, for the uninitiated - KPI = Key Performance Indicators. Second, KPIs mean different things to different people, in different industries, and different contexts.
Here's a few:
KPIs for your front-line operative
Usually, these are volumetrics designed to achieve the minimum standard of performance and achieve the target profit-margin. E.g. Do X things in X time.
KPIs for a front-line people manager/team-leader
These people are often beholden to their front-line operative's KPIs. They may have other KPIs associated with the frequence of 1-2-1s, or maybe an aggregation of their team-members' KPIs.
KPIs for Department Leaders/Managers
Usually these people tend to have department-wide KPIs that are similar in theme to the individual/team KPIs - E.g. X Department must do X things in X time. Again, designed around attaining a minimum level of service/desired profit-margin.
KPIs for Vendors/Consultants/Partners
Often KPIs involved in these relationships are targeted towards return-on-investment (ROI) - Or again, profit margins, but they're skewed a different way to reduce cost (for under-performance) or maybe share in the rewards (for over-performance). If you are the supplier, the KPIs for your front-line employees, people managers and department/account leaders are all driven towards the contractual KPIs.
Some of your (hopefully most) will see, quite clearly, from that list that there should obviously be some kind of link between the different levels of KPI.
And you may think "Well, if everyone hit's KPIs we are, by definition, hitting the right level of performance". And you might think the rest of this article isn't for you - you clearly know your stuff! Actually - you're exactly the person who should read on.
Why KPIs can actually restrict performance
So, KPIs are designed to achieve the minimum standard, or maybe a target profit margin. And that's great. But. Even when your key indicator of performance is set at the optimum level for strong profit and productivity this can restrict performance, at all levels.
Let me put it into perspective for you.
If Person A, the front-line operative, had to do 10 things in 1 hour (their KPI) and their reward for doing 12 things in 1 hour was, well, an expectation they always do 12 things in 1 hour from now on - then unless there's some kind of performance bonus* there's absolutely no rationale in doing 12 things in 1 hour, unless you want to. But again, beyond some intrinsic desire to do more, for the same, why would you want to? Now let's look at Person A's team leader. If they have 5 people, and their hourly target as a team is 50, and Person A is doing 12 an hour, then Person B is doing 8 per hour, and People C, D & E are doing 10 an hour, we're on target. And if Person A is happy to do 12, without any real benefit to them, then what is the benefit of the team leader trying to improve the performance of Person B?
And as we throw this up the chain, why would anyone go beyond their KPI and try to achieve high performance**? What's the point? Other than working harder than you need to? Or giving more of yourself to an employer who doesn't genuinely value you?
So you you see KPIs ≠ Achieving High Performance. KPIs can actually nurture a mindset that inhibits your ability to achieve high performance. And before I continue, I'll address a couple of points I flagged above:
*Performance Bonus. A free snack, extra break-time, or an early finish (that can only be taken when you say so) is not a reasonable performance bonus. And if an individual exceeds their KPIs, but their bonus is tied to the team/company performance - this also isn't a genuine performance bonus - it's a horrible trick to manipulate your people. You know it, I know it, and they know it.
**This one's for those of you in the corporate world screaming 'That's What Performance Management is about!' at your screens right now. First of all - most Performance Management is designed with enough wiggle room to make sure people only achieve the 'minimum' rating. It's a fallacy. It doesn't drive high performance in any meaningful way. Secondly - Realise that the vast majority of the people in your organisation who actually do the thing that makes your business money (those on the front-line) are either not a part of the corporate PM scheme, not given the level of performance and development support that corporate employees are, or are focusing on KPIs (see above) that doesn't encourage them to improve because the rewards are pretty meagre (and you expect them to be grateful for it!).
Now let's get back to it...
If KPIs ≠ Achieving High Performance, what is?
Let's consider the things that actually encourage people to do their best, and be their best, at home, or work:
It's well established, among many walks of life, that when someone is aligned to the purpose of something, they'll perform better. The same is true at work. When your people are wholly aligned to the point of the 'thing' they're doing, and it's something that sits well with them, they'll perform better. So while it's important to have some KPIs, if you want to drive a high-performance-mindset, it's imperative that you create a clear line of sight between what you're asking them to do (and why) and help them understand how this supports the purpose of the organisation, and their personal priorities.
2. Tangible, meaningful Reward and Recognition
Let's cut through the bullshit. The vast majority of people in your company are there for one thing - to earn money to live the life they want (or in some cases, to simply survive!). If they're working for you, they're there because it's either their best chance of earning more money, or it's currently their only option. So when I say 'Reward', I'm talking hard cash! There's undoubtedly a balance to achieve - To little pay, people will leave, too much pay and people aren't motivated to do great work. So finding the right 'Reward' for your people is a science! I don't have the magic formula, but what I do have is a few bits of advice when defining your reward policy - either at a global, or local level: Let's start with your 'Company Benefits' tied to roles, or in your Job Ads:
> Giving people the minimum requirement of annual leave (In the UK this is 28 paid days off per year, or equivelant ratio for Part-Time). This, and I cannot stress this enough, is not a benefit, it's a legal right! Even for those on Zero-Hours Contracts. > Your 'Competitive Salary' statement usually translates to "We're going to pay you the lowest amount we can get away with". Stop it. What have you got to hide? > Hybrid/Flexible Working - all that jazz - again, this is the minimum expectation nowadays, get with the program! > Things like 'Parental Leave' or 'Learning/Development Time' - That you need to spell out these basic expectations as 'benefits' indicates that while they're technically available, it'll be a fight to actually get them. So, moving on from the general benefits, how can you reward people in a tangible way? First, reward people regularly. An annual performance bonus isn't tangible enough. Yes I'll get a payout at the end of the year, but it's sooooo far away! So maybe you kill two-birds-with-one-stone by focusing on a monthly performance bonus. Not only does this feel real, it also encourages leaders to have regular performance conversations with their people. Next, as I said, money. Proper, real, hard-cash. But make it worth it! For example, if I work twice as hard as I'm expected, giving me a 1% bonus just doesn't cut it. The logic would say double-pay for double-work, but I think that sways on the wrong side of balance. So a fair and reasonable sliding scale of improved hourly rate, or percentage of salary that's realistic would be doable - after all, if your people are performing twice as much as they need to, you're probably making close to twice the profit! If you're helping your people by aligning the purpose of their work and giving them a reasonable, regular, reward for high performance you'll probably notice that there's somewhat of a lift in their performance, even sporadically. And despite my banging the drum on reward, recognition is also increbily important when driving high performance. And I'm not talking 'employee of the month' or any other grand scheme. A simple 'Great work' is the foundation to meaningful recognition. Most people will appreciate their peers, or colleagues speaking to them - in person, or via E-mail - to say 'Hey! That was great work!'. Even by the coffee machine, in passing. This kind of open, positive feedback demonstrates to your people that their efforts are noticed, and valued.
3. Trust and fairness
Realistically, even when purpose is aligned, and rewards are good, performance will not lift across the board, and won't be sustained. It'll be up-and-down.
Long-term high performance actually needs you to do more than tinker around the edges. It requires substantial cultural evolution. And the foundation for this is Fairness and Trust.
Look, I've said already that you can't please all of the people all of the time, so don't try to. But you can make it right for most of the people most of the time. The struggle in most organisations is that from top-to-bottom there is often a perciption that 'it's not fair' and people don't trust their managers/senior managers, or they don't trust other teams.
In addition to creating a sense of purpose for your people, it's essential for you to build a fair and trusting environment. And this isn't going to happen overnight, or because you send all of your junior leaders and employees on a 'Trust-Building' programme. Your people will feel they're being treated fairly if/when you demonstrate to them that the decisions being made, everywhere, are fair, and clear, and explained!
The optics and politics in the workplace can often overtake common sense when decisions are made in a lot of organisations, so when your people are negatively impacted by a decision, without an honest and clear explanation, it feels unfair.
If, however, you're open and honest about the decision making process - from top-to-bottom - your people might not like it, but at least they can see why. This, combined with purpose, reward and recognition creates an environment where your people can trust the people they work with. This creates a strong sense of Psychological Safety. When people feel psychologically safe, there are less barriers to high performance.
There's no doubt that there are people in your organisation who currently do the bare minimum, and have zero ambition to progress, or be challenged in any way. And you know what? These work-horses of your organisation are precious! Value them. These people, however, are usually in the minority. Most of your other people will perform better when they're able to stretch themselves, move outside of their comfort zone and be empowered to try, fail, learn and do better next time. So creating conditions where everyone is empowered to stretch themselves (and acknowledging that failure is alwaysan option) will actively encourage people to move into a high-performance mindset.
Imagine standing at the entrance of an alleyway and your single objective is to start walking and only stop when you have reached the end of the alleyway, after which you get to leave the alleyway. If you don't stop at the right time, you have to go again, and again, until you do. Pretty easy right? Now imagine trying to do this with your eyes closed. How do you know you've achieved what you set out to achieve? the progress you've made has actually helped you reach your objective? Would you just guess when you think you've done enough? Or maybe you just walk on endlessly, just to make sure, before collapsing from exhaustion? Let's flip this back to the real world. How can anyone know they've done something useful if they don't get to see the results?
Making sure your people can see the outcome of their efforts can create a strong positive feedback loop! When person A does work, and feels that warm fuzzy feeling on seeing the results, guess what! They're going to want that feeling again, so they'll try to be even better next time.
I almost started this paragraph saying, in the traditionally British apologetic tone "Sorry to say this but...". The things is, I'm not actually sorry. And if this bit upsets you, you're exactly the person who needs to hear it. So here comes the 'So what' to all of my ramblings...
Key Performance Indicators have a place, I agree with that. The issue is that far too many managers, leaders and organisations believe that if people are hitting or exceeding KPIs, then you have 'high performance'. But that's wrong.
As I've explained (hopefully in a way that made sense to you), achieving high performance and nurturing a high-performance mindset, and culture, needs so much more than just some KPIs, and a token gesture. Underpinning everything else I've said in this post about achieving high performance it requires managers, leaders and organisations to create the conditions for high performance through their words, actions and behaviours, every day. So step up. Get it done, and help your people, and your business be the best it can be, every day!
About the Author - And Apples Performance and Learning
This is where you usually get the obligatory profile, and pitch - feel free to skip it, but I'd rather you didn't. If you've read one of my posts before, this next bit will be familiar :).
Hi. I'm Andy. I'd rather not bore you with a profile, when you can find out what you need here. So take a look, or don't - it's quite literally up to you.
Also - I could give you a really slick 'sales pitch' about how Apples Performance and Learning can help you navigate through the minefield that is Performance Improvement. But I won't. To be frank, this post is already too long, and I'm bored of my own 'voice'. If you want to know how we can help you - check this out, or this.
Beyond that, if you've made it this far, thank you for sticking with me. Hopefully you agree with my points, and find some value in them. If not, please feel free to correct my perspectives - I won't learn anything new otherwise! firstname.lastname@example.org