Misuse of a typical KPI

An important measure of the effectiveness of some companies should undoubtedly be "On Time Delivery". It is essential that there is a measure of the relationship between the company and its customers.

True measurement of OTD can show up deficiencies in capacity, productivity, quality and supply chain difficulties.

However, in some cases, OTD is used as a measure of management effectiveness and so enormous effort can be placed on people and systems to REPORT good OTD figures.

If a senior manager is rewarded for his improvement to OTD then it is in his financial interest to report an upward trend or to maintain a high performance figure.

This can result in non-added value tasks by IT, Customer Services, Logistics etc to manipulate the figures to placate managers, directors, executives while doing absolutely nothing to improve the relationship between the company and its customers.

KPI's that are designed to improve the business MUST NOT be used to measure the effectiveness if individual managers as this will ultimately lead to the demise of the business.

Management Style

I would like to start a discussion on the way lack of skilled managers in all sectors is bringing the country to its knees. While I understand the collapse of the global economy has a major impact on the UK, I am sure we have been instrumental in this collapse by following, like sheep, some of the ideas and practices stemming from America.

Managers in the UK used to be people who were greatly respected, who were normally known as "sir", who wore suits to work etc. They had an image and a quality which everyone else looked up to. Today's managers command little respect from their employees, their peers or their business partners generally.

There is a distinct lack of professionalism and this is shown in the way that they manage. Good managers used to know their employees and know their worth. Good employees were rewarded and less good ones encourage, trained, or fired - all on the basis of the relationship between the manager and the employee.

Today, these relationships are much weaker, as is the calibre of the managers.

I strongly believe in appraising employees on a regular basis in order to identify strengths and weaknesses, and in the past this was done based on the knowledge of the manage concerning the performance of the employee.

However, today, it seems that performance must be measured in order for this process to be effective.

It is my opinion that managers have been forced into this strange position due to their lack of skills and their unwillingness to take full responsibility for the perfomance of their subordinates.

In order to measure performance a system of "Performance Indicators" has been developed as the common tool in the public and private sectors.

This has been the downfall of the banking sector for example, as employees were constantly appraised and rewarded against measured targets. If there are no safe persons to loan money too, then in order to attain targets, it is obvious that loans are made to unsafe persons.

This trend is contrary to payment methods in manufacturing, for example, 40 years ago employees were often paid a bonus on their efficiency for piece work. Managers realised that this was not productive and even encouraged the production of scrap etc. Later these types of bonuses were changed to group or team bonuses.

This is the start of a long discussion whereby I would hope to generate some serious thought about the use of Performance Indicators known as KPI's.