Leadent has worked with organisations who have used scorecard measures as a way to ‘punish’ poor performance based on negative KPI results. In this blog we consider how you can avoid falling into this trap and incentivise your field technicians and operational staff to deliver the outcomes your business needs.
It is important to note that negative trends are likely to be a consequence of operational problems or process issues and typically not the result of an individual’s performance, unless being measured solely at the individual level of the scorecard.
Performance indicators provide an opportunity to focus on strategically important topics that require effort and potentially investment to change and address the root cause of any problems.
Organisations should therefore use the scorecards to foster a culture focused on sharing, discussing and resolving poor performance issues in an open and constructive manner such that individuals and teams don’t ‘hide’ negative or perceived poor performance.
Linking to competencies
Competencies are descriptions of specific types of behaviour deriving from an individual’s knowledge, skills, personality, values and motives. In and itself your balanced scorecard, operational KPIs and associated strategy will not make any operational business successful, unless employees adopt required competencies to deliver on it, hence the need for training and self development.
Competency frameworks in operational roles should be in place and aligned over time to a clear definition of behaviours needed to attain desired performance. Typically this is based on employee contribution to competitive advantage, profit, efficiency and business excellence alongside the effectiveness of the individual.
As with the operational scorecards any deviation on performance against targets gives the opportunity to have conversations with individuals and teams on how to address the performance gap and take resulting (supportive) action or correction.
Linking to incentives
Linking KPIs to incentives (such as bonus or salary increases) can be dangerous because of the risk of creating unintended consequences. Where KPIs should be used to inform a business how they are performing in relation to where they desire to be, KPIs that link to individual incentive can skew the picture of overall organisational performance where individuals do whatever it takes to attain the target.
Furthermore, individual incentives can present real challenges to a business. Demonstrated by organisational behaviour therapist Elton Mayo to be divisive (back in 1930s) through his work on the Human Relations Theory. For example workers (in his case observing 30,000 workers in the Hawthorne plants in Chicago) learned which tasks gave the greatest reward and concentrated on them – cherry picking to reach the target.
When standards changed there was no incentive to improve performance and over-deliver on the new target if the individual had already attained it. In individual bonus situations best practice tends not to be shared so the whole field team loses (although an individual will gain) and the focus of the team is more on the people causing the problems rather than fixing the broken process (“it’s his fault I didn’t achieve my bonus target”). Efforts focus on beating the system rather than on achieving team goals – i.e. let’s stop at the target.
Accountability defines managerial and leadership obligation and responsibility. As digital platforms tend to cut across traditional business silos and business processes become ever more collaborative, KPIs will become even more essential for creating accountability (and dealing with individual consequences as a result).
Executives are increasingly using innovative KPIs to addresses their most sensitive and politically topical issues. For example when Airbnb was accused of racial discrimination in offering its properties in 2016, it used a shared inclusion KPI to re-focus accountability across its business.
Other organisations have started to measure not just accountability and alignment to their strategic goals but the agility with which their people respond to innovation opportunities and customer demand for these new services. Machine learning and AI should also make KPIs more anticipatory in processing, automating and then suggesting what will come next as a result of historical and current performance. When tied to improving personal performance (based on a realistic pattern of learned historical performance) there could be real scope for personal innovation.
Self-evaluation is a pretty necessary part of being successful in a business career. Most employees have to fill out a performance review at some point to evidence their areas of strengths and weaknesses. Rather than being a subjective exercise that is rushed through at the end of the year managers (and employees) can make use of KPIs to evidence their actual performance supported by data. Any good self-appraisal should have metrics and if a team's KPIs are set in the right way they can be used as a the foundation for an individual performance assessment to identify the good and the bad and discuss training and development opportunities.
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Working with many field service organisation at Leadent, we have seen at first-hand the ways organisations can improve their performance management approach and ensure their performance measures and KPIs focus on the right things.