Key Performance Indicators (KPI) set teams up for failure if they incentivise cutting corners, gaming numbers, and internal competition. Integrity of KPIs across a business drives progress towards strategic outcomes.
Performance indicators depend on the context each team operates within. Each team has different criteria to perform well against,
More lines of code often mean less reusability, more bugs resolved indicate underlying quality issues, and higher velocity proves nothing if outputs don't translate into customer satisfaction.
Improving these metrics in a vacuum doesn't guarantee positive business impact.
Initial response time of a team might be quick but if time-to-resolution is high, it won't result in positive customer outcomes.
In India for example, Bureau of Civil Aviation Security (BCAS) has mandated airlines to deliver the final baggage within 30 minutes of landing as the initial KPI of first bag appearing on the conveyor belt within 10 minutes of landing did not suffice for reducing the long queues. *
Another example is Wells Fargo agreeing to pay $3 billion to resolve criminal and civil investigations into their sales practices involving the opening of millions of accounts without customer authorisation. Setting aggressive sales targets for representatives encouraged this type of fraudulent activity where sales reps opened new accounts (checking, savings, credit cards) without customers' consent to reach their targets. **
Evaluating metrics in isolation can reward teams for rowing in different directions, making negative impact on overall operational and financial performance. KPIs work in favour of organisations when they reinforce each other.
Defining impactful KPIs requires alignment on strategic goals, efficient collaboration, and regular impact assessment.