Incomplete KPIs: Worse than none? (When imbalance leads to perverse incentives)

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Incomplete KPIs: Worse than none?

All we knew was the one most obvious key performance indicator (KPI) for a project, and that was the money we wanted to bring in. Was it the primary measure of success? Was it our most important indicator? Almost certainly not.

But it was the one we knew.

The temptation was strong to start to identify measurable leading indicators of the behaviors and habits that would lead to that income goal.

But I knew that income was not the most important goal. And I’d seen too many failures that came from overlooking authenticity, respect, long-term sustainability, and other core values.

One of the best incentive programs I’ve ever seen rewarded team members on a combination of these factors:

✅ Meeting recurring revenue goals
✅ Meeting non-recurring revenue goals
✅ Measurable positive impact experienced by customers
✅ Customer satisfaction
✅ Employee engagement

The key performance indicators encompassed all of the core values of the organization. Working together, they formed an incentive program that kept plans and their respective leading indicators in balance and aligned with the organizations mission and purpose.

A plan that ignored the non-revenue factors would likely create perverse incentives that encouraged people to violate core values.

Before you set leading milestone goals to help you reach one of your lagging performance indicators, make sure you’re watching everything that’s truly important to you.

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