KPIs designed without structure and clearly defined outcomes can lead to a mindless chasing of numbers, resulting in reduced performance. Here are few bad KPI practices:
1)Using KPI as a target:
A well-designed set of KPIs serves as a navigation tool that gives everyone an understanding of current levels of performance. If we use KPIs as indicators used and owned by everyone to identify areas of improvement, then they become powerful enablers of improvement. But if we use KPIs as targets, then we get what we measure, and nothing else. The article uses the analogy of comparing KPIs to torch. When used as a target, KPI will give a spotlight and leave other parts of the room in the dark.
2)Measure everything everyone else is measuring:
Sometimes businesses end up measuring KPIs prompted by external sources or the most recent leadership book. Bad KPIs are detached from business context and as a result are pointless. In contrast, authors of winning KPIs start with an analysis of the business context, thus making their KPIs successful as a
business tool.
3)Not separating Strategic KPIs from other data:
The key message of important strategic KPI is lost when it is lumped together in one long KPI report or a huge dashboard. Business leaders are time-poor and one needs to ensure that the critical KPIs are not lost in a sea of irrelevant information.
4)Hard-wiring KPI to incentives:
When KPIs are linked to incentives, they stop being a navigation tool and become a target an individual should hit to secure a pay rise or bonus. When this happens, individuals involved can become very creative in how they can manipulate the information to ensure they receive the incentive.
Reference:
www.simplekpi.com/Articles/5-Examples-of-KPI-bad-practise
www.linkedin.com/pulse/20140324073422-64875646-caution-when-kpis-turn-to-poison
www.bscdesigner.com/sound-approach-for-kpis.htm
Key Performance Indicators For Dummies By Bernard Marr