KPIs, or key performance indicators, are all the rage. Experts and executives present their organization’s KPIs and how they work to our DEO members. There’s a lot of faith and hope in KPIs. There is a deep allegiance to KPIs. There are courses, programs, experts, articles, and videos on KPIs; there is a reverence, a holiness, an obsession with KPIs. But after looking at the impact of KPIs for some years now, I think KPIs are overrated — and by the way, Google, Microsoft, Uber, Tesla, and GE all agree with me.
Why is the relevance of KPIs in question?
Because when it comes to performance, KPIs don’t get to the heart of the matter. KPIs measure the outcome of performance, and performance is action. It occurs in the now. Performance happens moment-to-moment: it’s not static, but rather continuous motion. Motion can’t be measured — it can only be observed. You can’t directly measure actions; you can only measure results.
If what you measure is the result of the action, the result is automatically past-based. It’s already happened. It’s done, over, complete. An outcome is a historical marker.
What is performance?
Performance is a verb, not a noun, and with the exception of theoretical physics, verbs cannot be measured. So, KPIs don’t really measure performance: KPIs measure the outcome of performance. The premise is knowledge of one’s score will directly enhance that person’s performance. This has not been proven to be true. There are many instances in which knowing the outcome doesn’t affect performance; dieting and exercise are obvious examples.
Yes, I know that KPIs are frequently used in sports. What is being measured shows up on scoreboards or stat sheets: the number of touchdowns, home runs, or baskets are considered results. Yes, you can drill down to “on-base percentages against a left-handed pitcher in a night game” in baseball, or “yards gained per carry on a grass field in cold weather” in football, but how much direct impact do these KPIs have on the performance of the players? Those kinds of numbers don’t matter much on the field.
Ultimately, it’s the player who is the result. It’s the player who performs. What digital solution can directly affect the player so he or she performs better? It needs to affect the player before they perform, not after. Performance occurs on the field: numbers appear on the scoreboard after the performance is over. Are there better digital solutions that directly touch the player, leading to better performance? Yes, there are.
The future of analytics
What is now emerging is Human Resources analytics, which are under development by major digital companies such as Google and global companies such as GE. HR analytics are self-serving applications to employees, leaders, and HR.
HR analytics is basically “Match.com.” It takes employees and executives and matches them to something else: online conventional education programs, mentors and coaches, coworkers with the same job, SOPs, training videos. It’s based on people analytics, not performance analytics.
For example, I am an ad-hoc adviser to a Silicon Valley company that is creating an HR tool for dentistry. The tool will recommend specific training and education for employees to improve job performance. The plan is to develop it as a performance-level app, which gives employees a steady stream of constructive, on-the-job feedback from their managers and team members. It’s on an individual’s priorities, personality profile, and coworker and manager suggestions for improvement. This HR tool will match employees with co-workers at the same level and function, in addition to offering online classes and reading materials.
You see, it is and always will be about performance. But it is the player you need to impact — not the scoreboard. The scoreboard is a result, not a cause.
HR analytics will be a highly disruptive technology that affects each and every employee because it will be individually tailored. It will provide daily input and feedback. Standard KPIs will still be useful, but it’s the HR analytics that will directly affect the player’s performance, which will lead to improved KPIs.
