KPIs: The Perfect Tool for Slacker Managers

September 22, 2023

Many businesses have adopted key performance indicators (KPIs) in an effort to minimize subjectivity in human resource management. Cognitive researcher and Promaton CTO Ágoston Török explores the limitations of this approach in his blog post, “How to Avoid KPI Psychosos in your Organization?

Török takes a moment to recall the human biases KPIs are meant to avoid: availability bias, recency bias, the halo/horn effects, overconfidence bias, anchoring bias, and the familiar confirmation bias. He writes:

“Enter KPIs as the objective truth. Free of subjectivity, perfect, right? Not so fast. In fact, often our data collection and measurement are also biased by us (e.g. algorithmic bias). And even if that is not the case, unfortunately, KPIs suffer from tunnel vision: they measure what is measurable, while not necessarily all aspects of the situation are. Albert Einstein put it brilliantly: ‘Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.’ This results in perverse motivation in many organizations, where people have to choose between doing their job well (broader reality) or getting promoted for meeting the KPIs (tunnel vision). And that’s exactly the KPI psychosis I described above.”

That does defeat the purpose. Not surprisingly, the solution is to augment KPI software with human judgment.

“KPIs should be used in combination with human intuition to enable optimal decision-making. So not just intuition or data, but a constant back and forth of making (i.e. intuition) and testing (i.e. data) hypotheses. … So you work on reaching your objective and while doing so you constantly check both what your KPI shows and also how much you can rely on it.”

That sounds like a lot of work. Can’t we just offload personnel decisions to AI and be done with it? Not yet, dear executives, not yet.

Cynthia Murrell, September 22, 2023


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