KPIs serve as performance metrics used by employers across various sectors to gauge employee effectiveness and contribute to business growth. However, if you’re struggling to meet your KPIs, they can add stress and difficulty to your daily work life. Failing to achieve set KPIs may lead to constructive dismissal (where you feel compelled to resign) or unfair dismissal (where you’re fired due to perceived performance shortcomings).
Interestingly, the issue often lies in how KPIs are formulated rather than your actual performance. Let’s explore how KPIs can negatively impact your performance.
What Are Key Performance Indicators (KPIs)?
KPIs, short for Key Performance Indicators, serve as tools used by employers to assess employee performance. Their purpose is to align with business growth and yield results that inform strategic decisions made by management.
At the individual employee level, KPIs help identify existing achievements, facilitate improvements, and achieve performance targets agreed upon between you and your line manager.
KPIs commonly track progress in critical business areas, including:
Customers:
Measuring customer satisfaction and maintaining service levels.
Quality Control:
Ensuring internal processes and standards meet requirements before delivering products or services to customers.
Employees:
Evaluating employee standards, competencies, and job satisfaction.
Profits:
Contributing to cost control and efficiency improvement.
What Makes Good KPIs?
Effective KPIs are derived from the business’s strategic goals. When properly designed and utilized, they should be relevant to specific departments, projects, and individual employees. Most importantly, they should be easy to comprehend.
Additionally, KPIs should be ‘SMART,’ following these principles:
Specific:
Clearly defined targets that leave no room for misinterpretation.
Measurable:
Objective and unambiguous means of assessing achievement.
Avoid relying solely on subjective judgments from line managers.
Achievable and Realistic:
Aligned with your skills and experience within the key area.
Timely:
Reflecting current external market conditions rather than past years.
Examples of bad KPIs
While there are numerous effective KPIs that benefit businesses and employees (as discussed earlier), there are also many that can prove detrimental. Let’s explore a couple of examples:
Excessive Targets:
Poorly designed KPIs may set an overwhelming number of targets for employees.
This situation not only affects your job satisfaction but can also hinder the company’s overall results.
For instance, sales roles with extensive daily, weekly, and monthly KPIs (such as call targets, client meetings, and proposals) can become burdensome.
Focusing solely on meeting KPIs rather than delivering quality work can harm your overall performance.
Outdated KPIs:
KPIs that aren’t regularly reviewed for accuracy or currency can cause issues.
KPIs should provide actionable data, but relevance changes over time.
An outdated KPI puts you at a disadvantage and makes it challenging to meet expected standards.
If handed down from previous employees, these KPIs may no longer align with the company’s current goals or your job role.
Even achieving KPI targets based on outdated metrics may not yield satisfactory outcomes.
Remember that well-crafted KPIs should remain relevant, measurable, and aligned with organizational objectives.
