When creating KPIs or performance targets for your company or your team, are you giving much thought to how they will be implemented? Without proper forethought and analysis, it is frankly easy to choose the wrong KPIs (Key Performance Indicators), and what happens next can be downright bizarre.

There are employees who are doing radically stupid things to meet some arbitrary measure of success — or trying to game the system to appear as though they’ve met their targets so that they can receive a bonus or other compensation.

Good KPIs and performance targets can radically improve performance for a company, but bad ones are just so much wasted time and effort. Unfortunately, it is easier to create bad ones than useful ones.

KPIs tend to monitor activities that have quantifiable outputs. It means you track things like documents produced, calls answered, or keystrokes entered. But in a great many cases, the quantity of the output is not what is important; it is the quality that should be monitored.

For example, a company may have a goal of good customer service, so they monitor the number of customer complaints. When complaints go down, they assume they’re doing well towards their goal, but the number of complaints might be fewer because they have fewer customers, because the customers can’t find the number to call to complain, or because the customer service reps aren’t logging them — none of which adds up to better customer service.

Another classic example is the fallacy of trying to determine teacher effectiveness based on student test scores. The test scores only measure how well a student performs when taking a test, and there are many ways a teacher can “teach to the test” that have nothing to do with their overall efficacy, teaching ability, or classroom management skills.

Companies often create oversimplified targets and are not aware of the unintended consequences and the cheekiness of their employees to find a way to deliver a great KPI but not improve performance.

See: 25 Kinds of KPIs Every Manager Should Know

In one example, a manager wanted to encourage his team to document best practices, and he went so far as to tie their compensation to how many best practices documents they created.  The result? The employees naturally focused on quantity rather than quality, producing many short documents that lacked detail. Because the manager focused on the wrong KPI (the number of documents), it didn’t matter if anyone ever read or used the best practice outlined in a document, only that it was created.

There are many ways, then, in which a KPI might fall short and allow (or even encourage) employees to achieve the goal — but miss the point entirely.

Employees might skew a KPI:

• by ignoring any aspects of performance not specifically covered by the KPI
• by ignoring long-term objectives for short-term ones
• by concentrating on the measure of a goal (documents, lines of code, etc.) rather than the goal itself
• by deliberately underperforming to throw off the accounting or setting deliberately too easy/too difficult KPIs for other reasons
• by simply misunderstanding a complex KPI
• or by outright “creative” reporting or fraud.

A good KPI is not a goal — but it must be tied to one. So, for example, if your company wants to make a million dollars in profits this quarter, that is the goal, and the KPIs might relate to number of new customers, sales conversations, and how many sales conversations resulted in a deal.

Many KPIs are created with the best of intentions, but defined and implemented in a way that allows employees to “game” the system — delivering on the indicator, but not actually improving performance. That is why KPIs must be consistently monitored and tweaked when a problem is discovered.

See also: 5 Signs of Burned Out Leaders

Source: LinkedIn Pulse