KPIs


The steel industry is awash with performance indicators, something that I personally have contributed to with systems like traffic lights and Single Source. In a way that’s not necessarily a bad thing, but there are a number of pitfalls.

One of those pitfalls was made clear to me when I was talking to someone who works in a call centre for Sky: although the person in question was rated as performing well, in that he managed his quota of calls well, and his success rate with customers was good, he was told that the duration of his calls were of insufficient length. We were trying to figure out why this might be an issue – after all, if you can handle the call to everyone’s satisfaction in one minute, why spend more time on it – and came to the conclusion that it might well arise from someone concentrating on the value of individual performance indicators whilst losing sight of the overall objective.

Another pitfall is that many performance indicators that lend themselves to the green/amber/red rating of a traffic light system are of necessity indicators that can readily be measured. This leaves out the ones that are not so easily reduced to a numerical value, and attempts to do so can meet with variable levels if success. Take for instance the concept of a suggestion scheme: if all you’re measuring is the number of suggestion raised, or even the number of suggestion which pass the first level of evaluation, that only gives an indication of the level of participation, with very little to indicate the quality of these contributions. Or the effect on the bottom line for the business.

But the worst possible use of KPIs (which after all are meant to be KEY performance indicators) is that you’re starting to lose sight of the wood for the trees. Surely it can’t be so that you end up with hundreds of performance indicators that are all of them key? Although the traffic light system never pretended to be more than an overview of large numbers of plant performance indicators rather than being key performance indicators for the business, their exceedingly large numbers sometimes made me worry that some of them were more frivolous rather than informative, just because they could be measured.

After all, as a manager in Iscor once said in a meeting, “show me a man where everything is a priority, and I’ll show you a man who doesn’t have priorities”. Presumably you could say the same for the person whose every performance indicator is key, even if their number runs into the thousands.

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