MARKET | Jun 19, 2018

Who’s afraid of KPIs?

Measurement data and instruments balanced between quantity and quality

KPI, or Key Performance Indicator, an acronym that in Italian lends itself to two similar terms: key performance indicator (KPI) or essential performance indicator (EPI). In practice, KPIs can be defined as quantitative or qualitative indicators, used to assess performance trends: the critical variables of company processes are chosen (or should be chosen) and a target is set to then be able to measure the deviation.

Comparing them with a number/value one can easily understand the gap between the expected results and the actual ones; for example, with KPIs you can give a reference value to customer satisfaction, you can set metrics on the resolution times of a ticket, on the number of visits; in short, you can set a number, compare it with another and evaluate the differential.

And, reasoning thoroughly on this – as interesting as may be – it has, if misused, a dark side. Very dark. Because KPIs may not rhyme with performance value, or with initiative.

The dark side of KPIs

This reflection was triggered by a recent line at an airport boarding gate. On that occasion, the very kind hostess who checked my passport and gave me the boarding pass, between a smile and another, kept looking at something on top of her terminal. One eye on me, one eye on the PC. Together with the boarding pass she gave me her best 32-teeth smile, asking: “Would you be so kind as to select (and she indicates one of those display totems with the smiley buttons) how you felt about the service?”

Now, how did I perceive the service? Honestly? Normal.

You did your job, you were courteous, I have my boarding pass, I’m about to click the neutral face, but she looks at me and whispers “You know, lately the clicks we have on this totem along with the time registered (and here’s what she was checking!), counts more than everything else!”

So I press a smiley face, but in return (with the finger projected onto the smiley face) I ask: “What happens if a customer has a problem?” And she, candidly: “You try to pass it on to someone else” because a customer who takes up a long time lowers your KPIs.

So, if the staff do their normal work, in acceptable time-frames, they get cheers and a slap on the back, but if a person takes the time and energy to solve a problem for a customer, they are penalized?

The quantitative KPI disconnected from the qualitative KPI is a failure.

KPIs and failures

In Rome, recently, the TAR (the Regional Administrative Court) accepted (in my opinion, fortunately) the request of the Italian Single Trade Union of Outpatient Medicine, which had rebelled against the “Time-table of presentations” or a table that established the number of minutes that were to be used for certain specialized exams.

Now, everyone agrees about job optimization and efficiency control aimed at minimizing down-times, but a table, no. A table saying that the doctor has 15 minutes for an electrocardiogram, 20 minutes for a neurological or oncological examination, no. Because it does not increase efficiency. It reduces effectiveness, professionalism and end-result.

The achievement of excellence is often the result of hundreds of mistakes, attempts, and approximate concentric circles. It makes it difficult for me to think about the standardization of value, which – in some cases – could represent ironing out the excellence that we are striving for.

Now, I am not trying to say that quantitative KPIs are evil, I mean that we must learn to identify (and use) their real value.

I do not want to compare the quality of the work I do with the amount of work I must do. They are both important elements but have totally different temporal variables.

KPIs and excellence

Just to give an example; think of the KPIs that control machines, such as the OEE (Operational Equipment Effectiveness), a metric obtained via several variables, considered as one of the most “demanding” indicators inasmuch as it is conditioned by all types of inefficiencies that lead to lower productivity. It can represent – also thanks to the BI – the state of health of a production system, analyzing all the possible dissonances from the “excellent performance” indicators. This is an excellent KPI, since the optimal level coincides with the maximum efficiency expression.

Even the objective KPIs, those that trace a numerical variable are an excellent option for, metaphorically speaking, steering the ship. Above all in marketing, today, we have the ability to monitor data that, before, it was absolutely unthinkable to monitor.

Measuring quantity and quality

The quantity-quality KPIs are those in which one is the enabler of the other, and the goal is reached only if both validate it. This is the case, for example, of the numerical monitoring of tickets closed by a help desk alongside the value that the customer gave to the response received. This value must not be checked simultaneously with the closing of the ticket, but at a later time, when the system sends an automatic email to the customer asking if the solution provided has worked and if the ticket can be considered closed, also requesting a satisfaction rating.

Giving the customer the time to check the proposed solution, and ask for feedback after the solution is sent, and do it with an automatic system gives the customer the possibility to respond with awareness and objectivity.

KPIs and sharing

Another critical element is the sharing of a KPI, that is the possibility for the areas that will be subject to these objectives, to analyze and comment on the data in advance, to provide their contribution and validate a realistic, measurable KPI, inserted in the correct context.

Together with this, the starting points, monitoring steps and final measuring point should be defined with the staff, together with when and from which system the verification data will be taken.

In conclusion?

From my point of view – in terms of business – activities cannot be carried out without being monitored, that is, outside a context in which it is possible to determine their effectiveness. But effectiveness is and must always be quantity + quality (sometimes considerably skewed towards quality).

In physics, retroaction or feedback is the ability of a dynamic system to take into account the results of the system to modify the characteristics of the system itself. The principle of “feedback control” stipulates that a system, in order to function, needs continuous feedback to evaluate its behavior. Therefore, the “value of the system output variable must be read by the controller who reacts by modifying the system input”.

Physics teaches, quality must walk alongside.

Simona Piacenti