KPIs gone wrong

Key performance indicators (KPI) is a metric often used to evaluate any project. Management nowadays is getting metric savvy. They thrive on numbers and graphs to judge and rank performance. Thus KPI have a great role o play at least in the eyes of the management.

However, because of their affinity with higher management, KPI can be misused too. E.g. for police force, one may set the KPI as number of cases solved in a certain time. On face value this looks alright but imagine applying this KPI is areas where crime rate is low any way. Even if crime rate is equally bad in two different jurisdictions but one police force is active in patrolling and crime prevention, they may not be solving too many crimes as due to their efficiency, crime never occurred.

Sometimes KPI become a target rather than a metric. Companies tend to hit rosy KPIs to impress their clients and customers and ignore and deliberately hide other general KPIs. E.g. in the above KPI example of crime solving, police may prioritize burglaries of multiple-occupancy households because the system would count each occupant as a separate solved crime.

Another classic example comes from a Russian nail factory. When the government centrally planned the economy it created targets of output for the factory, measured in weight. The result was that the factory produced a small number of very heavy nails. Obviously, people in Russia didn't just need massively big nails so the target was changed to the amount of nails the factory had to produce. As a consequence, the nail factory produced a massive amount of only tiny nails.

So KPIs are good as long as they are not misused.

Reference:
(1).  https://www.linkedin.com/pulse/20140324073422-64875646-caution-when-kpis-turn-to-poison