By February 3, 2009 0 Comments Read More →

Rewards and Penalties with KPIs can lead to Bad Behavior

Rewards and Penalties with KPIs can lead to Bad Behavior

I've talked about it before - how KPI's and other measurements with rewards and penalties attached can lead to behavior you didn't expect.
KPI drives wrong resultsI didn't think that bad behavior would be as blatant as this or would completely invalidate otherwise valuable information the company could have used to analyze their performance and make decisions. Prompting people to give a high rating in a customer satisfaction survey regardless of the actual service is counter productive to improving results, making customers happy and improving your business results.

I'd guess at Kmart, a high score on the Customer Service survey means some kind of reward for the employees, which is why this sign was at a cash. Clearly, it's not just the cashiers who thought this up. The store manager is in on it too. The wording suggests two things. First, it actually implies you need to rate their customer service as a 9 or 10 for a chance to win a $2,500 Gift Card. Second, it says the store doesn't really care what you think of the service - they just want you to give them a high mark.

I'm sure Kmart senior management didn't think this would be the kind of behavior they'd get.

It's why every time you implement measurements, you need to consider what the reward or penalty will drive your employees (or the employees of your service providers) to do and either counteract the tendency or re-design your KPI's and the direct impact they have on the people who are being measured.

KPI's, Service Levels and other performance measurements should be a valuable source of information you can act on and manage behavior,  not a carrot and stick to force behavior. The carrot and stick is a passive, low effort way to manage and ultimately will fail to deliver the results you want. A proactive approach to managing behavior (and ultimately results) will serve you better in the long run.

About Michel Theriault

Michel is the founder of Success Fuel for Managers. He is an author, speaker and consultant focusing on topics relevant to Managers and aspiring Managers in businesses of all sizes who want to get results, get attention, and get ahead. He is also a contributor to Forbes and AllBusiness Experts . Michel is available for speaking engagements, training and consulting. Connect with him or send an email.

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