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Are KPI's the enemy of good leadership?

27 September 2017

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organisations use KPIs to evaluate their success at reaching targets. ... Each department will use different KPI types to measure success based on specific business goals and targets.

The modern business world eats through data like nothing else. Businesses are always looking for new sources of data that allows them to connect with more customers. Those who can break down their business into a page of numbers always run in first place. The ability to do this means you have a clear idea of how your business runs.

KPI's are still fundamental to running a business, they're just not sufficient. The problem is, no one seems to realise this fact. Some businesses try and measure items that truly can't be measured. They can be assessed, but not measured. For example, employee engagement. How can you measure it? A tick or a smiley face? The distinction between assessment and measurement is important as when we take something and turn it into numbers, we can make secure decision.

The way round this is to make sure firstly that we don't measure things that can't be measured and secondly that we accept that we can't reduce business to a mechanics equation. Humans are un-predictable creatures, you can't rely on someone's emotional changes. By talking to your employees instead of doing various psychiatric tests to discover why they aren't aligned is a great idea. Even ask someone externally to come in and talk to them. A business that doesn't have aligned staff cannot move forward in an effective way. Something will break.

This does not mean that we should abandon KPI's at all, we should be open to the possibility that the data you receive doesn't have all the answers. Therefore, you can have a balance on your measures while still keeping a good judgement.

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