Are Top-Level KPIs Sufficient to Manage Employee Performance?

For many companies, managing staff performance has become more systematized as the organization expands and becomes more complex. A system of KPIs, individual contributions to company targets, and regular meetings with managers ensure some sort of standardization as to how each employee is measured against their peers and the expectations of their roles. To ensure objectivity and trackability, the performance targets are often quantified in easily comprehensible and comparable ways. 

Yet, focusing on how we measure the final output of an employee in numerical terms cannot help but ignore the often not so quantifiable process that goes into achieving the output. Hitting revenue targets as a salesperson is straightforward as a KPI but there is no way to quantify the manner that one needs to speak to potential clients for the sales to happen. Likewise, contributions to a group target is fine as a team goal, but it says nothing about the favorable team dynamic to maximize output. Outcome-focused numerical targets have their limitations.

Overcoming these limitations are by no means easy. On one hand, there is little incentive for companies to include processes in how they measure employees. Simply said, short of doing anything illegal, the company wants employees to be creative to achieve targets. On the other hand, how employees achieve targets are often so varied and individualized that it is just impossible to create standards that everyone from everywhere can objectively follow. The knitty gritty of day to day people management involves creating those personalized plans based on different ways each employee does the same job.

It goes without saying that this lack of clarity on how KPIs are achieved is a significant drawback on their professional development. It all good if the KPIs are consistently met, but if they are not met, their evaluations, by immediate superiors and HR, has little to say about what they can do instead. Is there an issue with how they work? Problem with how KPIs are set? Their skillsets are not suitable for the KPIs in question to begin with? These are not questions a few performance tracking numbers can sufficiently answer. 

Yes, it should be the manager's job to provide the right training and tools to help an employee achieve targets, but it is also questionable whether the manager also have appropriate KPIs to measure how they are supporting the development of their subordinates. Their KPIs, in the form of both their personal and team targets, speak little as to what they need to do to get their team up to par. Like their subordinates, they face the uncertain prospects of being measured purely on outout, without given the right guidance on just how to, well, be a better manager.

Overcoming the ambiguous route to achieving final targets may require firms to become more willing to set small milestones and tasks as additional KPIs. Achieving revenue targets as a salesman, for instance, would require undertaking a certain number of "effective" conversations. Perhaps defining "effective" in quantitative terms, such as the frequency of achieving rapport and emotional resonance with the intended audience, is a good starting point. Digging deeper into what phrases and context represents genuine "rapport" and "resonance" further allow for quantification.

Understandably, any firm averse to excess bureaucracy (that is, pretty much any firm) would find the need to define such intermediate KPIs a nightmare. Putting in place systems to monitor deeply personal interactions would not only be deemed intrusive and thus morale-crushing by employees, but also involve massive costs in terms of man-hours and software investment. Leaving the monitoring to the employees themselves and the results are biased and self-patronizing self-reported data with zero usefulness and insight.

But for a firm to prosper at scale, good practices for achieving final targets need to be documented and propagated. New employees need to learn what exactly veterans did to hit their KPIs month after month without fail. Simply doing this through 1:1 meetings may be too slow and inefficient, especially when everyone is drowning in work and turnover of old employees are significant. As such, if a company is to grow in the long-term, investments in really thinking about those granular day-to-day goals should be done earlier than later.