Measuring sales staff against a predetermined gross revenue target. Sales staff are legendary at meeting their targets at the expense of the company, offering discounts, extended payment terms, selling to customers who will never pay; you name it, they will do it to get the commission.

Tying pay to low inventory levels. Stores maintaining low inventory to get a bonus and having production shut down because of stockouts.

Measuring completion of case load. Experienced caseworkers in a government agency will work on the easiest cases and leave the difficult ones to the inexperienced staff because they are measured on cases closed. This has led to tragic circumstances.

Capacity utilization rate. This is an anti–lean performance measure that prompts plant supervisors to maximize long runs, producing items for stock rather than for actual customer demand.

Delivery in full on time on all deliveries. Using this measure on all dispatches no matter how insignificant they are will lead to cherry picking by staff. It is only human nature to tackle the easy, nonimportant dispatches first, putting the major, more complex, deliveries at risk.

 

This information has been extracted from David Parmenter’s Key Performance Indicators (4th Edition) which is the highest rated KPI book on Amazon.

You may like to visit: