Are KPI’s causing us more harm than good? I had a boss of a business call me the other day asking: ‘Andy, what the do I do? I’m giving my guys everything; leads, media, data, we’ve set GCI targets and they’re still sitting there blaming the market.
The KPIs don’t seem to be motivating anyone.
Leaders… does this sound familiar?
The current state of play
Seen a few stressed out agents and PM’s lately?
Sales numbers are dropping across the states, in part due to consumer sentiment, which is naturally putting pressure on sales teams across the country.
When volume of results drop and rent rolls feel investors jumping off like rats off of a ship, we obviously want to do what we can internally to improve our fortunes, which inevitably includes a cutting of costs and an increased focus on the amount of work that the team is putting in to generate more outcomes.
What does that generally tend to push leaders towards? Yep, seemingly the only guiding process that we refer to…KPI’s.
But is that actually the answer?
KPI’s are becoming more of a distraction
I’ve been one to talk about KPI’s a lot over the time, because I did believe that if you reverse-engineer a set of actions from your main target (based on success ratios and data metrics) then you have a daily guide as to the amount of output you need to achieve your targets, statistically-speaking of course.
KPIs certainly have their place. They help break big goals into smaller, measurable actions and provide a way to track the effort being put in day to day.
But over the past few years, I’ve seen too many agents become more focused on ticking off their KPIs than on what really matters – building relationships, creating opportunities and ultimately getting deals done.
The number of conversations I have had with agents that are baffled because they’re hitting their KPI’s, and yet don’t seem to be achieving anything like the effort they’re putting in, is reaching an alarming level.
What this really highlights isn’t a problem with KPIs themselves, but with the way we’re using and interpreting them. Somewhere along the way, they’ve shifted from being a tool for clarity and accountability to becoming a source of stress, pressure and confusion.
When KPI’s become the target, not the measure.
Now, I’m not saying that we shouldn’t have metrics that help to quantify our teams’ efforts, but the behaviours that are being shown by the majority do strongly suggest that teams have become more interested in ‘making 100 calls’ rather than actually producing money-making action.
This shift in focus leans towards a psychological behaviour defined by ‘Campbell’s Law’, which states that:
‘The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.’
Which basically means that if we keep spending so much time focussing on KPI’s rather than seeing agents improve their outcomes for customers, we are more likely to see them take actions in order to ‘game’ the system as opposed to focussing on how to improve their actual performance where it counts.
And if that number of judgement happens to be an economical one, then humans will inevitably look for shortcuts in order to hit the target instead of working more on the skills required to serve in the best way possible.
There are countless examples of this, and it’s even drilled into us at school when we learn in order to ‘get an A-grade’ on a test rather than learn things for a greater purpose.
So what am I suggesting here? Simple; the use of KPI’s as targets instead of diagnostics has led our industry down a path of bad behaviours, misguided senses of achievement and lazy thinking towards business leadership.
We don’t want greater KPI’s, but we NEED improved behaviours
As stated, quantitative KPI’s are amazing to have in order to help figure out where improvements potentially need to be made in a business, but by their very nature they are rear-view mirror statistics that show outputs after the fact. So if we’re going to make improvements to our businesses (and the industry to be somewhat holistic about it), then we need to do two things:
- Cross-match quantitative data with qualitative measurements (e.g. reviews, opportunity conversion rates, mystery shoppers)
- Discover shown behaviours that lead to poor performance, and use our culture to influence subconscious change.
There are things out there like net promoter scores, review sites etc, but let’s face it, our teams aren’t exactly going to be chasing disgruntled customers for their feedback & scores, and customers aren’t likely to provide an abject review unless they’re really pissed off!
Qualitative measures like this aren’t accurate purely based on this, and we can’t control or make customers do them so we need to look at things we can control.
So how can we find (and change) controllable behaviours that influence our team’s performance? Well the answers might be hiding in plain sight, but we may need to look at this from another perspective.
The rise of Starbucks
You’ve all heard of James Clear’s ‘Atomic Habits’ by now I’m sure (if not, get it), but the prelude to it was an amazing book written by Charles Duhigg called ‘The Power Of Habit’, and the recount of the turning point that Starbucks went through gives us a huge clue as to how we could actually improve our fortunes.
The coffee chain was struggling whichever way you looked at it, from the P&L to the poor customer reviews, nothing was going well.
Now for the majority of business owners, measures like number of coffees sold, volume of upsells & food revenue would be the immediate numbers that KPI’s would be built around. But these rely on uncontrollable variables (i.e. human customers) playing their part, so they weren’t going to necessarily help overall performance.
However there was one ‘in-house’ statistic that highlighted a huge cultural problem; the number of recorded staff incidents with customers was really high.
Upon investigation it became clear that the level of apathy that staff had towards their jobs resulted in careless behaviours, resulting in an increasing volume of incidents with customers when dealing with any level of conflict.
So instead of going for obvious KPI’s, they made a bold decision to focus every team member on one thing – no staff blow-ups.
By focussing on one thing that was connected to everyone in the team, it made everyone take a lot more care around their actions while at work. That extra care then permeated into the care that they took in their coffee-making, which then affected the way in which they spoke to customers.
The result? Well, have you been to a city in the world that doesn’t have a Starbucks in it?!
So when we take a look at our Real Estate business, it begs the question ‘what is one thing that affects all staff & their behaviour, that can contribute towards improving performance?’.
Well if I were you, I’d stop looking ‘just’ at the numbers, and start looking for common behaviours that are across the board within the team that predicates bad form, find one (and there will be one), and build a goal that revolves around shifting that one.
For example, we know customer service is a major pain point for clients, yet few agencies make it standard practice to proactively call existing customers unless there is a problem to resolve in property management or a major milestone to discuss in sales.
And when’s the last time you called to see how one of your local business community was getting on?
Goodwill calls not only provide a feel-good for the receiver, but they also make the one making the call feel fab too, as well as helping with the systemic issue of call reluctance which everyone in the office gets at times.
So why not have a team accountability around making one goodwill call each day?
Easy to commit to, gives everyone a buzz, who knows if it’ll lead to business or not but the shift in energy will create a desire to want to make more calls.
I’m not saying that this is the answer, but it’s something that provides value to both the community and the business on a number of levels (if done consistently of course), it gives everyone something to be accountable for towards the team, and creates a habit that could well spread through other dollar-productive activities.
So maybe it’d be worth trying out, or if not that perhaps taking a different look at how you’re trying to keep everyone on track might be worthwhile.