Imagine your business has a bin full of candy. You tell one employee to keep as much candy as possible in the bin, while you tell another to use that candy to attract customers. Wouldn’t these two employees end up in a standoff?
Obviously, this scenario is one of conflicting directives. Yet many companies have difficulty understanding which measurements are metrics of companywide success and should thus be designated key performance indicators. While financial departments might measure success in cost reduction or budget efficiency, for example, marketing departments measure success on leads generated. The problem is that these goals can’t both be maximized in the same space.
Ultimately, businesses that set KPIs from the top down create cascading objectives that isolate departments and create internal stress, conflict and confusion. On the other hand, organizations that learn to identify which metrics are truly KPIs can avoid interdepartmental conflict by prioritizing those metrics that allow all teams – from the supply chain to marketing to sales – to use those KPIs to gain value.
A better approach to setting KPIs
Conflict sets up a business for losses in both finances and employee productivity. In fact, nearly a quarter of employees have taken a sick day to avoid conflict. Those employees who don’t skirt conflict spend two and a half hours a week trying to resolve disputes. Given that employees who take five sick days per year can cost a business about $700 and U.S. companies shell out nearly $360 billion annually on conflict resolution – not to mention the costs of failed projects or quitting workers – this “minor” obstacle of competing success metrics can suddenly become a major problem.