Metrics Gone Bad

Quick Insight

Your metrics are not your strategy. They measure key aspects of your strategy. Employees can focus on the metrics at the expense of the company’s success. For each of your metrics, identify how your employees may act, both good and bad, to achieve the target. Performance metrics must be paired with the guardrails of strong company ethics and internal control structure.


Your metrics are not your strategy. They measure key aspects of your strategy. Employees can focus on the metrics at the expense of the company’s success.

A cautionary example of this was Wells Fargo’s cross-sell metrics. Wells put great emphasis on increasing the number of services each customer used. Selling additional services to a customer is called cross-selling. It eventually led to a massive loss of reputation and over $2 billion in fines.

For each of your metrics, identify how your employees may act, both good and bad, to achieve the target. You can’t anticipate everything, so closely monitor employee actions after adding a new metric.

One way to reduce the negative effects of a metric is to add another metric as a counterbalance. For example, high production targets may cause quality to suffer. This leads to lower customer satisfaction and lower profits. You could add a quality KPI to balance the negative incentives of the production metric.

This second metric could be a company-level KPI, or you may make it a key metric only for production people. You could keep a single production metric but penalize production amounts for quality defect rates or product return rates.

Finally, performance metrics must be paired with the guardrails of strong company ethics and internal control structure.

I wish you metrics that serve your company, customers, and employees. I wish you well.

- Rob Stephens


Further Insight


CFO Perspective Resources

  • Video: Picking KPI Metrics - Picking metrics isn’t as easy as it seems. Poorly written metrics lead to confusion. They can also lead to actions that you didn’t intend to promote. In this video, I explain: Characteristics of a well-written KPI and the benefits of having someone assigned to each metric.
  • Course: Key Performance Indicators (KPIs) and KPI Dashboards - KPIs are more than metrics. They’re the foundation of your most important decisions. KPIs define success to drive success. This course explains: how to choose metrics,  KPI dashboard tips, the process of implementing KPIs, and managing with KPIs.
  • Course: Objectives and Key Results (OKRs) - What performance secret can you learn from Google, Intel, and Intuit? Objectives and Key Results, also known as OKRs, have become very popular for improving company performance. OKRs can improve focus, engagement, innovation, and performance. I'll walk you step-by-step through how to implement OKRs at your company.
  • Book: Key Performance Indicators (KPIs) and KPI Dashboards - With well-defined and well-managed KPIs, you can align your company’s vision from the ground up and maintain steady progress toward your goals. Get tips on dashboard best practices. Avoid common mistakes managers make with KPIs. I’ll guide you through the implementation process so you can start achieving your goals ASAP.

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