Do KPIs spell the death of brands?
Over the last two years or so, there has been increasing talk about accountability in the public and private sector. This backlash from the economic crisis has generated huge outcry for transparency and honesty.
Many local companies and public offices in Malaysia have over the last few years been adopting KPIs as a move towards greater accountability and performance. While I laud these organizations for the move, I must also express some concern over the ways that this has been done.
KPIs as a measurement tool is a very good tool. Like any Performance Measurement tool, it was designed with the best of intentions. But we must be mindful that the tools are only as good as the people who use it. KPIs are a short term measurement and in itself does not address many issues befalling corporations and organizations. By itself, KPIs measures tangible outputs but do not measure behavioural outputs.
Take for example someone whose KPI is to hit a certain target in sales. Taken at face value the person will do all that he/she can to hit this target. How it is done and by what means is immaterial as long as he/she hits the mark. If no other form of measurement is used the person can behave abominably or act in a silo to achieve this.
Another example the use of KPIs gone wrong would be if your national police had a KPI of lowering the crime rate and the measurement was against the numbers of police reports filed. So at the end of the quarter, the KPI seems to have been met and there are less cases of reports which leads one to believe that the crime rate has dropped and the streets are now safer. But hang on a minute, if that is the case, how come the stories of petty and violent crimes are still rife? If you follow the stories, you start to uncover a startling truth. That people are no longer reporting crimes because the do not believe the police will do anything about it. This is what happens when KPIs alone are used as a measure of performance. If the city council or the ruling government had taken the time to set behavioural measurements, they would have demanded that the police behaved in a way that looked at solving their customers problems, not their own. Behaviours such as pro-activeness, ability to solve customers problems and respect if used in tandem with KPIs may have led to a better outcome for the people that they serve.
In his book – The No Asshole Rule, Robert Sutton a Professor of Management Science at Stanford University, writes about how having one ‘Asshole’ could cost an organization roughly USD160,000 a year in recruiting and counseling. His top five definition of an Asshole is someone who:
- Uses Personal insults
- Invades one’s personal territory
- Uses uninvited physical contact
- Uses threats and intimidation both verbal and non verbal
- Uses sarcastic jokes and teasing used as insult delivery systems
The above demonstrates that ‘assholes’ belong to organizations that are perhaps more driven by sale results or KPIs rather than behavioural results derived from and driven by the brand values. Brand values and the practice and measurement of behaviours together with KPis are the key to building an organisation culture that builds loyalty and generates profits.
So why is it that there exists so many ‘assholes’ and why many companies are not adopting or using behavioural measurements?
Because a strong culture takes time to build and in this era of ‘I want it and I want it now” mentality, many leaders are driven by short term wins over long term gains. Plus culture and subsequently the brand which are intangible assets, are admittedly harder to measure. It takes about 12 – 18 months for change to really take hold following a comprehensive rebranding exercise, and no we are not talking about a logo change here.
We are in a period in time where rapid change is the only constant we can count on. But although I understand that companies need to KPIs to perform and make money, perhaps we also need to consider the bigger picture where the goal is not about the money. But instead, it is about building a culture and a brand that is strong in customer care and service, in employee empowerment and respect. Take care of your customers, give them what they want, make them happy and the money will come.
Colleen Barrett, President Emeritus of Southwest Airlines Co and former CEO use to spend 85% of her time with her people. “We do build our pyramid a bit different… at the top of our pyramid in terms of priority is our employees, and delivering to them proactive customer service. If we do a good enough job of that, they in turn spend their time trying to assure the second most important group on our pyramid – our passengers – feels good about the service they are getting. And if those people feel good enough about it, then they come back for more. And if the passengers come back often enough, that means our third group of customers, in terms of importance, the shareholders are satisfied.” http://quickbase.intuit.com/blog/2010/09/20/what-is-servant-leadership-thoughts-from-southwest-airlines-president-colleen-barrett
And that philosophy and resulting culture has resulted in a cult following and made Southwest profitable for 38 consecutive years.
Lee Jia Ping, Managing Partner, The Listening Tree