Measure What Matters: How Managers Can Choose Better KPIs
A team can hit every target on the dashboard and still leave customers waiting.
Imagine a service team rewarded for closing requests quickly. The weekly report looks encouraging. But some customers contact the team again because their original problem was never resolved. The team has become faster at closing a record, while the customer still needs help.
Before choosing a key performance indicator, or KPI, define the result the work should produce. Then check the process that supports it and the possible cost of improving one number at the expense of another. That gives managers a more useful starting point than measuring whatever the software makes easiest to count.
By Paul Gerhardt, PhD, management professor, leadership author, and host of The Better Workplace.
Start with the result someone needs
“Be more productive” leaves room for very different interpretations. A team might process more requests, hold more meetings, or send more messages without making work more useful.
Ask who depends on the result. What should be different for that person when the work is done well?
For the service team, the aim might be reliable resolution of customer requests. Speed matters, but so do accuracy, clarity, and whether the customer must return for the same issue. Naming that result helps the team decide which numbers deserve attention.
Try finishing this sentence before reviewing your dashboard: “Our work is useful when the people we serve can…”
Use outcome, process, and balancing measures together
The Institute for Healthcare Improvement describes three types of measures used in improvement work: outcome measures, process measures, and balancing measures. In plain language, they help a team examine results, the way work is performed, and problems a change might create elsewhere.
This distinction comes from improvement guidance used in healthcare. The service-team example below is my teaching application, not a tested intervention from IHI or a guarantee of better performance.
Outcome: did the work produce the intended result?
For the hypothetical service team, one outcome measure could be the percentage of requests resolved without another contact about the same issue within a defined period.
Agree on what “resolved” means and which requests belong in the comparison. Otherwise, people may use the same label for different situations.
Process: are we doing the work that supports that result?
A process measure could be whether the employee confirmed the issue and documented the agreed next step before closing the request.
That measure examines a part of the work the team can improve. Completing the step is useful information, but it does not by itself prove the customer's problem was solved.
Balancing: what might get worse as we improve?
A balancing measure could be the number of customers still waiting for an initial response. More time spent on each case might improve resolution while leaving other customers in a growing queue.
Looking at both results helps a manager discuss capacity, priorities, or the process instead of simply demanding a better closure rate.
Ask what the number leaves out
A count needs a definition, a timeframe, and context. Ten completed assignments mean little until you understand their complexity, quality, and the time available.
Before comparing employees or teams, check whether they handled similar work. Ask whether a change in the result could reflect different demand, missing information, or an altered recording method.
Look at a pattern over time rather than treating one difficult day as a verdict. Add a conversation with the people doing the work: “What happened this week that the report does not explain?”
The aim is to make accountability more informed. Clear standards still matter. So does understanding the conditions in which people are expected to meet them.
Check whether your scorecard reflects the whole job
The Balanced Scorecard Institute describes performance through four perspectives: financial results, customers or stakeholders, internal processes, and organizational capacity, including people and capabilities.
That framework offers a useful question for a manager: have we measured the visible result while overlooking the conditions that support it?
For example, a team might track completed work but overlook rework, missed handoffs, or whether employees have learned a new procedure. You do not need a complicated dashboard to notice those gaps. Begin by asking which important part of the work has no voice in the discussion.
A balanced view does not mean collecting every possible measure. Each measure should help someone make a decision. If nobody can explain what they would do differently after reviewing it, reconsider its purpose.
A five-question KPI review for your next team meeting
Choose one existing measure and work through these questions:
Purpose: What useful result is this measure supposed to help us achieve?
Definition: What exactly are we counting, over what period, and from which information?
Influence: Which part of the result can this team reasonably affect?
Tradeoff: What could be neglected if we focused too heavily on this number?
Action: What decision will we make after reviewing the result?
Write down one possible adjustment, who will test it, and when you will review what happened. Keep the first test small enough to carry out without creating another reporting burden.
For the service team, that might mean reviewing a sample of closed requests alongside repeat contacts and the waiting queue. Discuss what the sample reveals before setting another target.
These questions are a practical discussion guide, not a validated assessment or a substitute for the controls your organization requires.
Make the next review a learning conversation
Start with one question: “If this number improves, how will we know the work is actually better?”
Invite an example from someone who handles the work. Agree on one action and a date to review it. If the result improves, check whether the improvement came with extra rework, an overloaded colleague, or a problem passed to another team.
Better measurement should help people understand the work and make a thoughtful decision. A green dashboard is useful only when you can explain what it means for the people who depend on you.
Continue with a related workplace challenge
If your team keeps repeating the same repair, read Why the Same Workplace Problems Keep Coming Back.
If a new target or rule has created unexpected pressure, explore When the Solution Becomes the Problem.
For a story about employee accountability, difficult conversations, and rebuilding trust, discover Professor G’s Guide to The Conversation Nobody Wants.
Sources and further reading
Institute for Healthcare Improvement: Establishing Measures. Guidance on outcome, process, and balancing measures.
Balanced Scorecard Institute: The Four Perspectives of the Balanced Scorecard. An overview of viewing performance from several strategic perspectives.
The scenario and meeting exercise are teaching illustrations. Review the original guidance when adapting these ideas to your organization.
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