On your shiny dashboard, you have some great traffic lights – green is good, amber is ok and red is bad. If it’s green you can be happy you are performing well, and let that part of that business alone because there’s some red warning lights and they need your attention now – before the boss comes down on you like a ton of bricks – or you miss your bonus. Or maybe with a little effort you can nudge an amber to green and things improve for you.
Can a Green KPI be a bad thing?
A green KPI can easily be a missed opportunity. Maybe sales are up in a sector, and there’s an opportunity for growth brewing – but no action is taken, because the KPI is green and there’s distracting red traffic lights urging action in somewhere else. The beauty of traffic light KPI’s is that they show stats in a simple, easy to grasp format – but the strength of their simplicity is also a weakness.
The traffic light KPI exploits an aspect of human nature – that we react to warning signals – and so the red light is there to urge people to act. The problem is because red pushes us to act, and green tells us all is well, we don’t think to act on a green KPI. This leads to a situation where if we don’t understand our KPI’s and what drives them we can make poor decisions. What is the point of acting on a red KPI because sales are down $20k in one sector if not acting on the sector with the green KPI means we miss out on a $100k market?
Can a Red KPI be a good thing?
The short answer to this is – of course – no. It means you are missing your targets and something needs to be done. However what is the value of a KPI that is always red? To give a personal example, many moons ago I was a call centre monkey (yup, still a simian). We had a call waiting board that beeped loudly and flashed red every time a call had been on the line over 5 minutes. Due to chronic understaffing, the only time that board didn’t beep was when it was switched off at the end of the day. So we had a red KPI all the time – it served no purpose at all.
The lesson to be learned from that example is that unless your KPI is defined with reasonable parameters – not an arbitrary value – it won’t tell you anything useful. If our board had beeped when the waiting time went over 15 minutes, maybe it would have spurred us on as a reminder we were getting behind. But a constant warning is no warning at all.
So should I just set all my KPI’s to Amber?
The implication of the above could imply that the KPI is useless – but like any tool, it has to be fit for purpose, and used well. There’s two points I hope you can take away from this:
- See Green KPI’s make as a chance to do better and just as worthy of review as the red lights
- Make sure your KPI’s are reviewed so they really are providing useful assessments of performance upon which you can act