A flashlight has a most mundane but curious property: the moment you flip the switch, the room becomes both brighter and darker. Wherever the light beam hits, details are rendered in sharp focus, and objects you hadn’t realized were there become clearly visible. At the same time, the opposite occurs everywhere: the rest of the room not illuminated by the flashlight beam falls into deeper shadow. The darkness is not a flaw of the flashlight; it is a necessary trade-off for the light it produces. The same is true of performance measurement. Each KPI illuminates one dimension of a company’s operations, whether that be revenue growth, customer satisfaction, employee productivity, inventory costs, or operational efficiency. KPIs make it easier for executives to understand, analyze, and (one hopes) improve organizations, converting complexity into data points that facilitate decisions, rather than gut feeling or anecdote alone. For decades, the standard solution has been the same: if one KPI helps uncover something important, perhaps 10 KPIs can provide a better understanding, and 100 can illuminate everything clearly. That’s the rationale behind the modern dashboard: displays of gauges and graphs, crammed with performance indicators, accompanied by meetings to debate the resulting data, all aimed at dispelling ambiguity.
For all intents and purposes, this is a completely reasonable yet equally impossible aspiration. That may sound startling given how much more access we have to data than ever before. We store it on massive servers at minimal cost. We use sophisticated analytics and AI to glean insights from terabytes of information. It seems that if we just gather enough data and track enough metrics, we should eventually be able to eliminate the shadows completely, but we never do. This isn’t because organizations aren’t diligent, or their dashboards are poorly designed, or due to management failing to pick the right KPIs. It is because measurement always has its limitations. The first step in any measurement is deciding what we want to measure, a step often so mundane that it slips below notice.
Someone first decided that customer retention was a worthwhile thing to track.
Someone first determined that employee productivity could be represented and measured in an operational way.
Someone decided to define and track inventory turnover.
While individually unremarkable, these choices coalesce to determine how an organization understands itself, and this is where a conversation about management science turns toward a more ancient philosophical inquiry: is it possible to represent all aspects of reality? As the history of thought suggests, the answer is no. All representations of something omit something from it. Every descriptive attempt leaves something else out. A given perspective must, by its very essence, exclude other perspectives. The limitation of KPIs is not that they don’t capture enough, but that they cannot capture everything simultaneously…and maybe they shouldn’t. Imagine that a cartographer were asked to draw a complete map of a country, including every road, every river, every building, every tree, every shifting cloud, and every stone on its surface. If the map were rendered with perfect accuracy down to the atomic level, it would no longer function as a map – it would be indistinguishable from the country itself. In that case, its utility would depend entirely on what it had omitted.
The Argentine author Jorge Luis Borges nailed this with his short tale “On Exactitude in Science.” The empire there had grown so hung up on perfection that the imperial cartographers had produced a map so detailed and at precisely the same scale that it mirrored the entire empire. This was an incredible (and utterly useless) feat of accuracy.
A map as large as reality provides nothing useful because it has forfeited the very abstraction that made maps useful.
Organizations seem to be striving toward the same ambition when they set out to create dashboards. Each new initiative seems to yield yet another metric. Each new blind spot feels solvable if we can just add one more indicator. Along the way, however, we realize that the dashboard has ceased to represent reality by abstracting from it and has begun to become reality itself by trying to represent every aspect of it.
Rather than helping us understand the world by reducing its complexity to a set of meaningful patterns, the dashboard simply introduces its own brand of complexity. It becomes another source competing for our attention, rather than helping to direct it. The ultimate irony, of course, is that by attempting to eliminate uncertainty, we’ve somehow succeeded in regenerating it.
Therein lies the discomfort. Performance measurement has never been about completeness. It has always been about selection. The pertinent question isn’t whether or not our dashboards contain blind spots. They always will – that is a foregone conclusion. The truly germane question is this:
On which blind spots have we collectively and knowingly chosen to focus, and what price does this quietly cost us?
Every Map Leaves Something Out
Abstraction is the very reason measurement exists.
1933: a philosopher and scientist named Alfred Korzybski made a statement that has endured as one of the most profound observations about the nature of human knowledge: “The map is not the territory.” Maps work precisely because they are incomplete.
A road map omits soil conditions.
A geological map omits speed limits.
A weather map omits property boundaries.
A subway map omits actual geographic distances.
A political map omits mountains and rivers.
None of these maps is wrong per se; they simply emphasize certain features by ignoring others. In other words, every map imposes an opportunity cost.
By helping you see one thing more clearly, it forces you, however temporarily, to stop looking at countless others. The same subtle truth underpins every single KPI we have ever created.
Imagine a manufacturing plant decides to elevate production speed to the top of its list of indicators. Almost immediately, the company begins to view itself through that lens. Conversations about throughput take center stage, and managers trumpet short cycle times. None of that is necessarily bad in itself, but the problem lies elsewhere. As the spotlight shines brighter on the speed-of-production-indicator, other valuable activities start to fall into the shadows. Craftsmanship becomes hard to recognize because it never moves at maximum velocity.
Careful experimentation with new processes is slowed by the urgency to produce.
Mentoring inexperienced workers becomes harder to justify because it doesn’t contribute directly to immediate output.
Knowledge sharing is quietly abandoned because documenting lessons learned doesn’t increase this month’s production figures.
Preventive maintenance suddenly feels like a costly delay rather than a wise investment.
None of those things become any less valuable; they just become less visible, and that is a critical distinction.
Organizations don’t typically abandon what matters because they consciously decide they don’t care about it. More often, they abandon it because attention shifts. Like a river changing its course, attention reinforces whichever pathway it flows through, gradually starving its adjacent tributaries of life. Every KPI generates the current:
Measure costs mercilessly, and resilience is slowly yielding ground to pure efficiency.
Measure speed aggressively, and craftsmanship begins to politely negotiate for a little bit of air to breathe.
Measure customer acquisition relentlessly, and customer loyalty quietly slips into the background.
Measure individual performance exclusively, and collaboration starts competing for recognition.
Measure short-term results obsessively, and long-term capability becomes an investment nobody feels they can afford.
Measure productivity and some amount of creativity has become the opportunity cost.
These aren’t implementation problems but a natural consequence of choosing one map over another. No organization, however sophisticated, escapes this inherent trade-off. The only question is whether it acknowledges it.
To believe otherwise is to believe that light can exist without shadow, or a river can flow down all of its tributaries simultaneously. Neither is possible regardless of how much wishful thinking we may engage in.
Self-reflection: What parts of your organization exist only because they were left off the map? What have your dashboards quietly trained you to stop seeing?
The Things We Know but Cannot Measure
A lot of an organization’s most significant strengths never make their way into a spreadsheet or a performance dashboard. That doesn’t mean they’re worthless. It simply means they’re unquantifiable.
There was once an old tale about a master luthier. Years ago, his apprentice learned how to master every single measurable aspect of the luthier’s art. They learned the ideal wood thickness, neck angle, and sound box dimensions. They learned precise moisture levels for every species of wood. They learned about ratios honed by centuries of master violin makers.
One afternoon, after completing their masterpiece, a violin so technically perfect that it was a work of art, the apprentice presented it to the master. The old craftsman peered at the instrument, ran his hand over its smooth, polished surface, and asked the apprentice one simple question: “Did you listen to the wood?” The apprentice stared at him, confused. He’d measured everything to a T, but he’d never thought to listen. “What does it even mean to listen to wood?”
The story may be apocryphal, but the phenomenon it describes is undeniably real. There’s a form of knowledge that cannot be expressed in mathematical equations or codified in best practices manuals. However, we can recognize it immediately when we see it, though we have difficulty pinpointing its nature.
The experienced doctor whose intuition alerts them to a problem that’s not yet showing up on the medical monitors.
The teacher who somehow senses that a perfectly attentive student with straight A’s is secretly struggling.
The firefighter who somehow knows when a building’s imminent collapse.
The negotiator who intuitively understands when utter silence will be more effective than a persuasive argument.
Ask any of these individuals how they knew, and you’re likely to get equally unsatisfying answers: “It just didn’t feel right.” / “Something was off.” / “You get a feel for it.“
From the perspective of someone seeking concrete data, these explanations can feel maddeningly elusive. Nevertheless, organizations implicitly rely on such judgment calls all day long.
For example, most of Michael Polanyi’s thought process was organized around that observation. He had the famous concept, “We know more than we can tell,” as a challenge to the notion that any valid knowledge eventually would be captured, measured, standardized, and written down. Some knowledge can easily live in a spreadsheet, yet other knowledge lives in people. They accumulate it from experience and mistakes, from gut feeling and intuition, and the kind of pattern recognition and observation which is rarely explicit enough to measure, which Polanyi referred to as tacit knowledge.
Maybe one of the best illustrations comes from something as simple as bicycle riding.
All but the most clumsy can ride a bike, hardly thinking, balancing, managing pressure and momentum, timing the minute variations in the bars, and coordinating muscles all at once. Now try asking someone to describe every single detail needed to balance, and you get a clear sense of just how much their knowledge lies beyond their words.
Knowing how differs from knowing about.Organizations have vast storehouses of this tacit knowledge:
The repair specialist who can listen to a car engine and sense what needs repair down the line.
The customer service rep who detects someone’s incipient dissatisfaction long before the complaint is lodged.
The project leader who picks up on tensions in a team meeting long before the employees are even conscious of it, or the survey forms do.
The production supervisor who notices a subtle change in a machine’s rhythm before any sensor or maintenance report flags an issue.
The sales manager who recognizes that a long-standing client is preparing to leave, not because of declining revenue, but because of a slight shift in tone during routine conversations.
All those things, those pieces of organizational know-how, don’t fit into a nicely curated dashboard, but that doesn’t make them less true. Unfortunately, just because they don’t fit, that can be an excuse to ignore them, since what can be measured tends to take precedence over what cannot.
It is here that another philosopher enters the picture, not to tell anyone how to run a meeting, but because he wrote so clearly about human thought: Nobel laureate and psychologist Daniel Kahneman, who coined the acronym:
WYSIATI –“What You See Is All There Is.”
His point was simple: human beings naturally construct stories based on the information available to them in the moment. We seldom consider what’s missing. This makes our lives easier in countless day-to-day decisions. Within organizations, it quietly sculpts our culture.
Imagine two leadership meetings.
The first features executives spending an hour analyzing revenue trends, customer acquisition costs, production efficiency, and employee utilization.
All the charts are ready. All the numbers are current.
The second meeting begins with a question that causes a flicker of discomfort: “How much institutional knowledge have we lost this year?”
Now, everyone is hushed, almost deathly silent. This is not because the question is irrelevant, but because no one has a chart tracking decades of experience retiring with long-time employees. No dashboard shows the slow erosion of mentorship. No KPI reports on the silent confidence a junior engineer accumulates watching a senior colleague solve tough problems over half a decade. Thus, the conversation inevitably circles back to the numbers, not necessarily because they are more important, but because they are present.
This is the subtle peril Kahneman described. Visibility masquerades as importance so powerfully that the longer a metric appears on a dashboard, the more likely we are to assume it deserves our attention. Soon enough, the organization behaves as though the measurable world is indistinguishable from the genuinely important world. Hardly. We don’t see trust appear on a dashboard. Nor does curiosity, judgment, wisdom, humility, psychological safety, institutional memory, craftsmanship, talent, or brilliance.
These qualities do not diminish in value because they defy quantification; they simply attract less attention, and attention (arguably more than money or time) is an organization’s most scarce resource. Consider the origin of a great river. Initially, it has countless tributaries – some narrow and tortuous, others wide and majestic. It cannot flow down all of them simultaneously, and once it commits to one path, the others quickly recede. Attention works the same way.
Every meeting agenda, every dashboard, every quarterly objective, every KPI selects one path for the organization’s energy and focus, while the rest begin to fade into the background. This is the opportunity cost of our dashboards, which we seldom discuss. When leaders choose to measure productivity, they aren’t simply choosing to observe productivity; they’re choosing to commit meetings, incentives, conversations, budgets, promotions, and intellectual energy to it.
Something else will inevitably receive less attention: maybe it’s creativity, mentoring, experimentation, or reflection. What is certain is they won’t vanish overnight, but, like an abandoned riverbed, they’ll receive a little less water each season until we eventually wonder what happened to the current. Organizations often assume culture changes because people change. In fact, culture sometimes changes simply because attention changes. The dashboard didn’t tell employees to stop mentoring one another; it simply stopped reminding them to do so. This is the quiet paradox of measurement: not that it tells us what to value, but that it gently nudges us to value what it tells us.
It is perhaps why the most enduring qualities within an organization often remain nearly invisible: the quiet conversations after meetings end, the intuitive grasp that builds over decades, the acts of kindness that, while never appearing on a quarterly report, fundamentally shape the workplace over many years.
No dashboard will ever fully capture them, and maybe it is for the better that none should ever try. After all, the purpose of a map is not to be the territory itself, but to guide our journey through it, without allowing us to forget that the territory is always infinitely richer than the paper upon which it has been sketched. Self-reflection: If your dashboard vanished tomorrow, what knowledge within your organization would still be accessible? What invaluable capabilities might have quietly receded, not for want of value, but for want of attention?
When Measuring Changes Reality
As soon as a metric becomes important, people will start to restructure their lives and their behaviour around it, and, in doing so, the organization has quietly transformed into something new.
Imagine you take a walk through a forest and carry a compass. When you are in wild country, confused as to which way to proceed, it gives you absolute assurance.
It consistently points north regardless of which direction any of the trees are oriented, and no matter how uniform all the trees look. Despite all of this, the compass does not tell you about cliffs. It says absolutely nothing to you about riverbanks or unstable ground, about poison berries or an oncoming storm. It performs perfectly for the set purpose, and it says nothing to you at all about most of the rest of the landscape.
We know that this instrument exists for the sake of asking one particular question, and not for the asking of all these questions. The problem arises when we start treating an instrument as the territory itself. It is on this basis, among others, that KPIs may have gotten themselves into trouble.
When they are first instituted, they do not, at the start, look so obviously bad as things become. What they are expected to do is help people find the way: help us see where things stand, where we are with regard to the world around us. Over time, however, they morph into something rather different.
Instead of helping people make sense of the world, they actually start to shape and create it.
What people ask no longer comes out as: “How can I do something that will help me add value over the longer term?” Instead, people begin to ask: “How can I do something to make the number for this month better?” That is not a good change at all, and neither is its effect.
This is a thought that spills over beyond the confines of business and out to the philosophers again.
German philosopher Martin Heidegger argues that technology does more than simply provide us with tools to perform useful tasks. Technology can also fundamentally change how we see the world. Heidegger’s notion of “enframing” or “Gestell” means, more simply, our tendency to see the world only in relation to how we have divided and framed it for organizing purposes.
The forest can be many things depending on how you see it:
A painter’s inspiration
An adventure park for a child
A natural ecosystem of incredible complexity to a biologist
A resource for a timber company, ripe for extraction
At its core, the forest remains unchanged. The lens through which we view it shifts.
The same phenomenon often occurs in performance management across an organization:
One manager might view an employee just as an 87% score on one dashboard.
A second manager, however, may believe this employee is the lynchpin holding a team together and should be regarded as an experienced mentor.
A third might see them as an untapped potential who will eventually revolutionize company culture.
A fourth could turn to them when a critical problem has no documented solution.
The person hasn’t altered, only their apparent visibility, and this is why the dashboards you install to “measure performance” may end up having a much more profound impact: they do not just capture a representation of an organization – they actively teach that organization what it should consider meaningful.
Take, for example, a call center team for which “Average Handle Time” is the primary KPI. At the outset, this is an appropriate metric. Nobody wants their time on hold, nor for calls to drag on indefinitely, so reduced handling times should, in principle, improve the customer experience. After a period of months and a growing emphasis on meeting the metric, you might see some subtle shifts:
Customers might find their calls cut short, and complex queries are often quickly passed on to someone else.
Calls requiring additional customer support may be concluded sooner than necessary to avoid negatively affecting the metric.
Eventually, employees might be actively encouraged to make calls as brief as possible, even when there is a clear need to spend more time with an individual. No one asked or directed the staff to stop being caring, but they learned that caring did not reflect well in the KPI. This effect isn’t isolated to call centers.
We’ve seen it time and again in organizations:
Hospitals boost patient throughput, but the time available for each patient to connect with their nurse decreases.
Universities champion graduation rates, but in practice, they have reduced the number of required in-person teaching hours to free up resources to process more students.
Software companies are on track to close out their backlog, but accumulate huge amounts of technical debt in the process, which will be handed on to someone else down the line.
Retail chains are promising ever-faster delivery times but work their warehouse employees to the point of burnout during peak periods.
Banks reduce average loan processing times, but the depth of conversations needed to truly understand a customer’s financial situation becomes increasingly rare.
Construction companies meet aggressive project deadlines, but quality inspections become compressed, allowing small defects to accumulate into larger problems later.
The KPI is a success. Reality simply adjusted to accommodate it and, in doing so, became the embodiment of Goodhart’s Law. However, this doesn’t mean people are gaming a metric. We are observing the metric changing the environment, which it was always meant to reflect.
Imagine you put a large rock in a river. ↩️
The river doesn’t stop; instead, it has to reconfigure itself around the obstruction. The water flow is altered, new streams emerge, and debris begins to accumulate in various places. The river becomes something new as a result of a piece of infrastructure that wasn’t built to redefine its flow, but that had that very effect nonetheless.
↪️ KPIs are much the same.
If you introduce a KPI within an organization, it naturally triggers a cascade of reconfigurations. Budgets change, conversation topics shift, job titles are reassessed, and career progression criteria implicitly shift as people respond to whatever behaviour is sanctioned or rewarded. None of this happens as the result of deliberate manipulation; it simply emerges from the fact that people, just like rivers, respond to their environment and incentives in quite natural ways.
Nassim Nicholas Taleb can help us understand why. His career has been dedicated to distinguishing between systems that appear efficient and those that are actually resilient.
Picture a bridge for which a designer aiming to optimize for efficiency might shed every pound of weight considered extraneous. The structure is lighter, streamlined, less costly to build, and mathematically perfect. In theory, it is nothing short of an engineering masterpiece…until an earthquake shakes its foundation or heavy traffic grinds it mercilessly. Suddenly, what was so-called “excess” turns out to be strength. It was resilience, which to an inexperienced eye looked like inefficiency.
Organizations do the same thing every single day.
A business that meticulously limits its inventory appears brilliantly efficient-until supply chain networks fail.
A company paring down its staff to achieve peak productivity appears financially responsible until demand surges, and there’s no one around to respond.
A factory delaying routine maintenance to keep machinery humming may look great on utilization metrics-until an easily avoidable mechanical failure brings everything to a standstill.
An organization minimizing cybersecurity spending appears fiscally disciplined until a single breach costs more than years of preventive investment.
Every optimization quietly borrows against resilience, and every optimization comes with a price tag paid in foregone opportunities. The problem is that resilience is silent until it is needed. It’s like the unseen roots of a wise old tree, readily ignored as long as the wind doesn’t howl, yet absolutely essential once it does.
Perhaps this is why we so often hail visible efficiency while neglecting invisible capability.
Resilience is expensive, slack is wasteful, redundancy feels inefficient, curiosity feels unproductive, reflection is just a delay, until uncertainty strikes and the very things we criticized for slowing down progress become the reason progress remains possible.
This isn’t a case against optimization; it is rather an argument against ignoring its cost. Every optimization narrows the river, forsaking countless tributaries. Every intensification of a beam of light plunges another part of the field into shadow. The practice of leadership is therefore not merely about pursuing improved performance against metrics. It is about the disciplined recall of all that this pursuit inadvertently leaves in the shadows.
Self-reflection: If the uncertainty we know is lurking should arrive tomorrow, what might your dashboard wish it had kept safe? What unseen resilience has it already surrendered in favour of something far more tangible?
The Blind Spots We Choose
Leadership is not about the search for perfection or visibility. It is the wisdom to choose which shadows you can live with.
If there is one temptation that has been with us in every civilization, in every scientific breakthrough, it is the notion that the next tool will at last allow us to see it all: a better telescope, a more detailed microscope, a faster computer, a larger database, a smarter algorithm, a more inclusive dashboard. With each passing generation comes this same silent belief: this time, maybe this time, the blind spots will be gone. Inevitably, history shows a different pattern. Every innovation expands our view only to make evident what we had not yet seen.
The telescope opened the sky only to reveal a far larger universe than we had ever imagined.
The microscope unveiled worlds unseen, only to reveal how much more complex life was than we had ever known.
The process of discovery is the same again and again. The more we illuminate, the more we realize what remains to be illuminated, and businesses are no different when it comes to this topic.
Every metric answers a question but raises ten more. Every dashboard reduces uncertainty in one area while allowing for endless uncertainty to persist elsewhere. The goal, then, was never to create a dashboard that had no blind spots (Borges’ perfect map). The goal, instead, was something far humbler & more valuable: to understand what blind spots we have accepted.
Herbert Simon offers another key insight here. He famously noted: “A wealth of information creates a poverty of attention.”
Businesses today, almost without exception, do not lack information. Quite the contrary, they have way too much of it. Every department, every software system, every meeting, every team, every person – everyonepours information ceaselessly, splitting attention like atoms.
Yet, attention is a very limited resource; like sunlight, it brightens the spots where it lands but does little elsewhere.
Every meeting on one topic takes time that might otherwise have been devoted to another.
Every incentive reinforces one behaviour and subtly undermines another.
Every promotion tells employees (intentionally or unintentionally) what is valued.
Every promotion carries an opportunity cost, just as surely as a cash purchase.
It may also explain how an organization seems to lose characteristics it never deliberately gave up:
Curiosity gives way to Conviction ➔ Thought becomes Action ➔ Action becomes the new Thought ➔ Reflection cedes to Urgency ➔ Long-term Thinking collapses under the weight of Quarterly Performance Reviews.
No one sets out to make a career of being certain or impatient. The river simply shifts its course: a bit more attention to one side, a bit less to the other, and so it continues, day by day, until the landscape has changed beyond recognition. That may be the paradox of measurement.
When we measure, people move in the direction we point the lens. They engage with what is presented in meetings and what leaders routinely ask about. Everything else slowly slips out of view, not for lack of value, but because it has fallen out of organizational focus.
Thus, we arrive at the point that measurement always requires humility. Humility reminds us that no dashboard, however powerful, is the absolute truth of the world. Every measure is a perspective, and every perspective is incomplete. The question is not to eliminate our blind spots, but to come back to them again and again and ask:
What have we stopped noticing?
What assumptions have become so deeply embedded that they no longer warrant questioning?
What capabilities have we quietly allowed to atrophy because they didn’t make their way into a report?
These questions are important because organizations are dynamic systems in constant flux.
There’s a famous observation attributed to the ancient philosopher Heraclitus: “No one steps into the same river twice.”
The person has not changed, but the river has moved on. An organization is similar in this regard: it itself might not have changed, but the markets it operates in, the customers it serves, the technology it uses, and the culture it promotes have changed.
Even if a KPI reads the same numerically, the underlying reality it represents may have morphed beneath the surface. An 85% customer satisfaction rating now may not reflect the same customer expectations as five years ago. A current employee engagement survey, using the same wording as previous surveys, may be interpreting an evolving sense of what meaningful work means today.
The numbers endure, but their meaning shifts, which is why our dashboards can never be sacred. The minute we cease to scrutinize our metrics, we cease to scrutinize the reality they represent. It may be that the best leaders aren’t the ones with the most sophisticated dashboards or who track the most metrics. Maybe the best leaders are those who:
Never mistake the map for the territory
Remember that each illuminated beam also casts a shadow
Know that every river in the organization might have flowed somewhere else
Have the insight to put down the dashboard now and again, and wonder what it cannot show us
Final Thoughts
Learning to Respect the Shadows
Every photographer chooses a frame. Every sculptor removes stone to reveal a statue. Every author leaves unwritten pages behind. Every traveler follows one road while countless others disappear beyond the horizon. Every act of creation is also an act of exclusion. Every KPI is a decision about what deserves to be seen. Every dashboard is a statement about what an organization believes is worth discussing. Every target shapes behaviour long before it records it. Every number carries an opportunity cost that cannot be eliminated, only accepted. The problem has never been the existence of these tools, but more so forgetting that they are tools in the first place. A map is invaluable precisely because it is not the territory. A flashlight is useful precisely because we understand it cannot illuminate the entire room. Likewise, a KPI is powerful precisely because it simplifies reality enough for us to act, yet that simplification comes at a great cost:
It purchases clarity with incompleteness
It exchanges breadth for focus
It gains certainty by accepting blindness elsewhere
This is the opportunity cost of knowledge itself.
Therefore, we can infer that the purpose of performance management is neither to eliminate uncertainty nor to measure everything that matters, but to consciously and deliberately choose where we wish to shine the light, and to remember that, somewhere just beyond its edge, the rest of reality patiently waits in the shadows.
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Every organization remembers its numbers: revenue, profit margins, cost of customer acquisition, employee utilization, defect rates, NPS scores, or average resolution times.
Pull open any dashboard, and you’ll see hundreds of highly selective data points meticulously tracking almost everything happening within the business. Organizations today are astoundingly adept at capturing data. However, they often can’t answer simpler questions.
Why is this team performing so well when they are tracking only average productivity metrics?
Why are customers loyal to this account manager?
Why did our innovation efforts grind to a halt when our key engineer left, even though the KPIs remained unchanged?
What, beyond hitting deadlines, contributed to that project’s success?
Some of the most crucial assets any organization holds cannot be conveniently pinned on a dashboard. As conversations naturally become centered around measurable outputs, organizations gradually risk developing a kind of “KPI memory loss” – an inability to recall the details that fail to fit within a given metric.
This is not a criticism of KPIs. Not at all, quite the contrary! Businesses must have these metrics to measure performance, diagnose issues, understand thresholds, and make decisions. The issue starts when metrics become less tools for observing the world and increasingly the world itself.
When Metrics Become Memory
Picture a brand-new manager being hired to run a thriving customer service department. They’ve taken over a fantastic dashboard, their average response time has dropped, customer tickets are being resolved faster than ever, and overall productivity is growing each month. From their perspective, they’ve inherited a picture-perfect operation.
Six months down the line, customer churn is on the rise.
But why? What gives?
After interviewing veteran staff members, the manager learns that agents have stopped investing a few extra moments to build rapport with their customers. All the targets were being met; everything looked fantastic on the dashboard, but they had slowly let the human side of it all slide: those little interactions that helped customers feel like they mattered. There was nothing in the dashboard to indicate this.
Nothing in the dashboard was accounting for this. This is one of the greatest strengths (and biggest weaknesses) of performance measurement: KPIs can highlight things we would otherwise never know, yet they also narrow our attention to an unhealthy degree, turning focus into horse blinders.
As much as an organization obsesses over what it can measure, it begins to overlook everything that it cannot. When people start aiming for a metric specifically, that metric eventually fails to reflect what it was intended to reflect.
You’ve almost certainly seen this play out in a large organization:
A sales team prioritizes quick-close deals over long-term customer value because its quarterly target emphasizes sales volume.
A call center has reduced the Average Handle Time (AHT) by ending calls abruptly, leading to more inbound repeat calls from irate customers.
A software team has achieved a high number of resolved tickets while allowing technical debt to fester in the codebase silently.
An HR team fills open positions faster by prioritizing speed-to-hire, but the quality of new hires drops, leading to higher turnover within the first year.
A manufacturing plant reduces production costs by using cheaper materials, only to see warranty claims and customer complaints increase months later.
The metrics look good, but the underlying reality does not. This often has nothing to do with bad motives or intentions, but more with incentives.
Incentives have been at the basis of human behaviour since the dawn of time. Therefore, if success is defined by what appears on a dashboard, people will focus their attention there. Over time, companies develop excellent memories for metrics but an almost complete memory loss for everything else.
What Gets Left Behind?
Try to think of the best colleague you’ve ever had. What was it about them that made them excellent? Were they the emergency adult everyone called to soothe volatile clients before a situation erupted? Maybe they instinctively knew when a project was careening off course. Perhaps they just knew which other departments would be required long before an issue was apparent, or they just knew how to mentor a junior person in the office from scratch.
Knowing all these aspects, we are posed with a series of questions:
How could you quantify these skills?
How could you put a number on them?
How would they feature on a spreadsheet?
It might not be possible. Is it possible? Is it feasible? Now we are left with more questions than we had before we knew about the aforementioned series!
Let’s take a look at a different example.
What about a company trying to build itself on measurable, trackable KPIs and not much else? We have a massive body of work in knowledge management that draws a line between the explicit and the tacit: the former can be written down and shared, the latter can only be understood and absorbed through experience and judgment, in context, through interaction.
There are numerous studies that indicate that organizations that have solely relied on measurable performance-only systems fail to capture value and knowledge, even in areas that are absolutely critical to long-term organizational success.
Interestingly, it’s often the people who do not appear on many charts in any system, or who have nothing visible to put on a spreadsheet, who make the organization successful.
The experienced cardiac nurse may have noticed subtle changes in the patients’ physical condition much earlier than the monitors do.
The savvy machinist may hear an anomaly in the noise from an old tool and just know the machine requires maintenance.
The proficient project manager might have noticed the relationship between two key stakeholder groups deteriorating well before the tangible signs of breakdown were evident.
The well-versed account manager may recognize that a client is quietly disengaging long before declining renewal rates or negative feedback makes it obvious.
These can be moments where organizational failures are averted long before anyone even sees an indicator on a dashboard. These are moments that create and deliver value to an organization every day, yet remain invisible to most of its people and many of its systems.
The Things Dashboards Cannot Remember
The majority of businesses believe their decisions are based on facts. In reality, they generally base their choices on whatever facts happen to be quantifiable. Culture is one of the clearest examples of such behaviour.
Companies commonly try to measure culture through surveys, retention data, absence rates, and employee satisfaction scores. While such information is useful, culture itself is not a figure. It is actually the unwritten principles and practices that establish whether workers report errors early or cover them up. It’s that thing that makes junior employees feel empowered to question those higher up. It’s that je ne sais quoi that leads groups to readily volunteer their expertise rather than guard it or choose to assist their colleagues, even when no one is watching.
Boiling these activities down to a handful of quarterly data points has the threat of mistaking the map for the land. The same is true of reliance on craftsmanship, mentorship, interest, durability, and expert judgment. Organizations seldom lose these features overnight. Rather, they simply fail to mention them because they stop measuring them and ultimately stop noticing them.
As soon as something is missing from the discussion, it tends to be absent from decisions on the whole. That is possibly the major peril of KPI memory loss: organizations do not intentionally cease caring about what is most important; they become so adept at remembering their numbers that they fail to remember everything those numbers can not tell them.
The Hidden Costs of Measuring Everything
Most companies do not wake up one morning deciding to disregard culture, relationships, or craft. It happens more subtly, often barely perceptible to the senses.
A new dashboard gets added.
An additional KPI arrives.
Quarterly reviews become more number-focused.
Charts, scorecards, graphs, and trendlines support decisions.
Conversations turn to the question of what we can measure versus what we ought to be asking.
It appears to be a reasonable transition. At the end of the day, numbers are objective, are they not? They establish commonalities and help control a complicated organization. However, numbers are also a source of our most profound blind spots.
Think of onboarding. Think really well. While it seems prudent for a company to track the number of days before a new employee reaches full productivity, there are typically no measures around building trust with other staff, the organization’s unspoken rules, or the logic behind past decisions. This results, six months and two seasons later, in a productive individual who, by all accounts, repeatedly makes the exact same mistakes the company had already overcome a decade earlier.
The knowledge had existed, scribbled on meeting minutes or stored in the heads of long-serving staff or within an unheard conversation, but it had never reached the recipient in need. This tendency pervades almost every field of work.
An oil and gas operation may monitor equipment uptime and production volumes with remarkable precision, while overlooking the field operator whose practical experience prevents a minor anomaly from escalating into a costly shutdown.
A government agency can report on service delivery targets and policy milestones with detailed dashboards, yet fail to recognize the informal relationships between departments that quietly determine whether complex initiatives succeed or stall.
A real estate firm may measure listings closed and average time on market with ease, while overlooking the seasoned agent whose local knowledge and trusted network resolve problems before they jeopardize a sale.
A hospital may monitor how long patients wait with a stop clock, yet it would struggle to assess the level of trust a pair of experienced nurses builds.
A legal firm could chart the time partners log on individual cases with great precision, while ignoring the unstructured mentoring that cultivates new associates from rookies to confidants.
A manufacturing operation can track its output by the hour, but may miss the insight of the retired engineer who stops a press before it breaks down, preventing a sensor from triggering.
With all of these cases, tangible output may increase; however, the intangible abilities that support that output go largely unnoticed until they can no longer be ignored.
When Efficiency Begins Replacing Craftsmanship
Nowhere may the dichotomy be stronger than in craft. Craft isn’t limited to woodworkers and machinists – there’s an equivalent for every role. A software engineer’s craftsmanship might not be about delivering features as quickly as possible but rather about writing testable and maintainable code. A customer success manager’s craftsmanship might be recalling some tiny, human detail from a conversation with a customer and using it to make them feel deeply seen. These are habits you practice into being, not lessons you teach into being.
Picture two identical table factories.
One rewards everyone for output alone (units per shift). The other one measures output AND craft (the ability of seasoned employees to mentor and teach the younger ones). Thus, the most experienced artisans have time to think of better ways to practice their craft, and they reject pieces they deem inadequate, even if it slows output, while prepping a new generation that comes after. One year in, the output factory is ahead.
Five years later, the craft factory might have developed an entire workforce capable of creating not just more output, but better & smarter output without sacrificing quality or values. Their competitive advantage wasn’t about today’s output; it was about tomorrow’s capabilities, and quarterly KPIs don’t easily capture them.
It grows over years so subtly you usually only realize it’s gone after you notice its absence.
The Things Employees Stop Doing
Not only do metrics influence what employees do, but they also influence what employees quietly stop doing. Take a veteran project manager who routinely spends their Friday afternoons working through colleagues’ complex, messy projects. There is no metric for mentoring, no dashboard tracking generosity, and no quarterly goal to help other departments meet their targets.
Nevertheless, when the company adopts a utilization rate that values nearly all hours spent on billable activity, the manager is never explicitly asked to halt his mentoring, only that “we’d love for you to be 100% utilization and work your shift’s duration on billable projects”. Over time, the manager has trouble justifying mentoring anyone.
Then, in an instant, poof, it’s gone!
The company gets 3% points of utilization and a loss of something far harder to repair. Moreover, those who, at this point, would be tempted to say “it’s just an individual matter” should remember that a company is made up of hundreds to thousands of living, breathing individuals. It’s not so much that one person stops functioning; entire departments stop sharing knowledge, because collaboration time could be allocated to departmental goals. Managers stop coaching team members because getting stuff out the door right now takes precedence over people’s development and future growth. Employees hesitate to try innovative projects because failed attempts have consequences for their personal evaluations. These things are not deliberate managerial decisions; these are inevitable responses to organizational cues and the incentives we keep mentioning.
Peter Drucker observed well: “What gets measured gets managed.” Yet what is not measured will be ignored, seldom discussed, forgotten, and will surface as unforeseen consequences later on.
When Good KPIs Produce Bad Decisions
The KPIs themselves may not be wrong; they’re just limited. A good metric can become a bad one when it shifts from a guidepost to the destination itself. Organizations of all shapes and sizes have had the same experience.
Software Development
For many years, developers were measured by the lines of code they wrote. On the surface, the logic seemed fine – the more code written, the more productive the developer. Unfortunately, developers were incentivized to write more code, not better code – ye’ ol’ quantity-over-quality shenanigan. Conversely, modern software engineering holds that good solutions often involve writing less code.
Healthcare
Patient throughput in the emergency room is routinely monitored for a range of reasons, not least to reduce wait times and improve access to care.
This metric is clearly important, but clinicians are aware that meaningful conversations, nuanced observations, and shared decision-making cannot always be neatly slotted into pre-set time boxes. Hospitals that focus solely on speed do so at the risk of missing key aspects of care.
Aviation
Even in this highly quantitative field, there is an understanding that not every important thing can be represented by a number.
Commercial airlines meticulously monitor thousands of variables, from fuel efficiency to maintenance schedules. Nevertheless, they spend a considerable amount of time and resources on developing Crew Resource Management (CRM), an approach focused on building communication skills, mutual trust, leadership, and a safe psychological environment within the cockpit. These aspects are not ignored because they are hard to measure. They are carefully nurtured because, as history shows, they save lives.
Automotive
Perhaps one of the most widely known examples in the business world comes from Toyota, the Japanese automaker. The Toyota Production System (TPS) is well known for its metrics and continuous improvement methodology. Concurrently, it also strongly emphasizes people development, encourages employees to halt the line if they detect quality issues, and views improvement as a collective learning process rather than a numbers game. In essence, the numbers do matter, but so do the conversations that occur around them, and that can be easy to miss.
Companies struggling with KPI memory loss tend to assume that if a metric is not displayed on the dashboard, it cannot be strategically important. The healthiest companies take the opposite approach. They understand that the dashboard offers only a partial picture of the organization’s health.
Some of its most vital components – trustworthiness, judgment, craftsmanship, curiosity, mentorship, and shared experience – remain alive, regardless of whether they are measured. The real problem is not whether to rely on numbers or intuition, but rather the failure to remember that one can never replace the other.
What High-Performing Organizations Choose Not to Measure
That raises an interesting question: if some of the organization’s greatest capabilities are elusive to measure, what do the best organizations in the world do?
They can’t just abandon performance measures, right? RIGHT?
Right, they don’t. In many cases, high performers recognize that measurement has its limits.
Take a look at Pixar. For years, the animation studio has turned out films that win hearts and minds and create core childhood memories for parents and children alike. Of course, Pixar monitors budgets, schedules, and production milestones. Yet some of the real magic happens because the company is willing to make room for what can’t be quantified by a KPI: candid dialogue.
One of the most widely discussed Pixar traditions is the Braintrust, a circle of seasoned directors and writers who regularly gather to roast works in progress.
No scores, no charts, no dashboards, no key performance indicators. What matters is genuine feedback, a psychological safety net, and a willingness to push ideas (not people) to their breaking point. The organization creates room for judgment.
Now let’s go back to Toyota for a second.
Not everything gets translated into a number. The famous Toyota Production System may be well known for its metrics and focus on continuous improvement, but one of the company’s enduring guiding principles is respect for people.
Its workers feel empowered to halt a production line when they spot a flaw not because a performance measure mandates it, but because their judgment is trusted and valued.
This doesn’t mean that Toyota avoids measuring. It has more to do with the fact that it appreciates that its greatest assets reside alongside its measurements, not within them. That theme will appear time and time again across top-tier companies.
Experienced executives don’t just ask, “What should we measure?” ❌
They ask, “What do we need to keep talking about even if we can’t measure it perfectly?” ✅
Beyond Dashboards: Remembering the “Why“
One theme that echoes throughout the literature on organizational memory is that organizations are pretty good at recording what happened. They’re a whole lot worse at remembering why it happened.
Minutes of meetings show what was decided, project plans show when the decision was made, dashboards show what the result was; however, even with all that, the reasoning behind the decision (the trade-offs it required, the alternatives it rejected, the hunches it relied on) often remains elusive.
Think about walking into a company where the same customer policy has been in effect for a decade. Everyone adheres to it, but nobody knows why. Its memory has been lost among dusty desks and cramped file cabinets. A manager suggests tweaking it, as it seems stale and no longer aligns with the organization’s current state. Their peer protests that “it’s always been done this way,” yet none of them can tap the original logic behind it all. It’s not just that information is missing. The entire context for the origin of the information is missing.
This is the plight of most KPIs as well.
We recall that our customer satisfaction score dropped four points, and not that our recent reorganization had frayed our client relationships months prior.
We recall that productivity grew by 12%, and not that our employees started shunning one another to get there.
We recall that costs declined, but not which abilities those reductions simultaneously hobbled.
We recall that revenue exceeded its target, and not that a handful of unsustainably large discounts drove it.
We recall that safety incidents declined, and not that workers had become increasingly reluctant to report near misses.
Numbers capture results or the end product. Stories capture context or the journey to said end product. The best companies value both.
Building Organizations That Remember More Than Numbers
None of that is to say that companies shouldn’t measure less. Often, they should probably measure better. A balanced performance system understands that metrics are evidence, not adjudication.
When your engagement metric drops, it should start a conversation, not conclude it.
When your productivity metric improves, you should question your leaders: “What did you change? What may have suffered as a consequence?”
In the same way, when there’s an unexpectedly great result, don’t just look at it on a celebratory dashboard and gloat to everyone near & dear. Dig into it: What did we do differently to get here? Was it more collaboration? Did a senior, intuitive employee make a gut call at just the right moment? Did the team have enough faith in each other to say, “Hey, this isn’t working?”
Some companies consciously strive to keep institutional memory alive through mentoring, after-action reviews, storytelling, communities of practice, intergroup collaboration, and discussions focused on reflecting on the past. These are more than just tools for transferring knowledge. They are tools for transferring judgment because, as the adage goes, judgment doesn’t live in the data alone. It lives from person to person, conversation by conversation.
Final Thoughts
Performance management has revolutionized modern management. Organizations would have a hard time understanding performance, gauging results and failures, allocating resources, or identifying potential risks without KPIs. The use of metrics remains the strongest lever available to leaders. However, every tool has its limitations.
A map shows us the path around a city; it’s not the city itself. Likewise, a dashboard illustrates organizational performance; it’s not organizational performance itself. Organizational performance is much more than just mere engagement numbers; leadership is much more than productivity metrics; organizational innovation is much more than just the number of ideas spewed forth by lateral thinkers; organizational customer loyalty is much more than Net Promoter Scores, and our organization’s memory is much richer than any data we collect in reports and dashboards.
The single largest risk may be that we measure too much, rather than recognizing that there are more ways than measurement alone can provide. Organizations do not become exceptional by quantifying everything; they become exceptional by discerning what must be quantified and what must be conversational, observant, coached, and trusted.
Numbers tell us what happened; people explain to us why the numbers happened.
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Every day, organizations face difficult questions: Which KPIs truly matter? How can strategy move from planning to execution? What practices lead to stronger organizational performance? The articles in this roundup address these and other pressing challenges.
Based on the latest readership data, these are the 10 Performance Magazine articles readers returned to most often so far in 2026.
If you’re looking for practical insights to strengthen strategy, performance measurement, and decision-making, this collection is a good place to start.
1. How Apple Uses the Balanced Scorecard
If your KPIs fail to tell the full story, it may be time to rethink how you measure performance. Learn how Apple uses the Balanced Scorecard to translate strategy into measurable outcomes across the entire organization. Read the article here.
2. 5 Levels of Organizational Maturity in Performance Management
Why does your organization feel busy but still struggle to turn performance data into meaningful results? Discover the 5 levels of organizational maturity—from inconsistent processes and unclear KPIs to an optimized, strategy-aligned system that drives continuous improvement. Check out the article here.
3. KPI of the Day: Utilities: % Electricity supply not restored within 2 hours
Power outages are frustrating—but the real performance issue is how quickly you restore them. This KPI measures the % of electricity interruptions lasting beyond 2 hours, helping utility providers identify restoration bottlenecks, strengthen response strategies, and improve reliability for customers. Find out more about this KPI here.
4. Is Benchmarking Worth a Company’s Investment and Time?
Measure. Compare. Learn. Improve.
Benchmarking transforms isolated performance numbers into meaningful reference points—helping organizations uncover gaps, learn from best-in-class practices, and make smarter improvement decisions. See what our performance management expert says about it here.
5. Southwest Airlines: From Benchmarking to Benchmarked
Your competitors aren’t always your best teachers. Southwest Airlines looked to NASCAR pit crews for lessons in speed, task clarity, and teamwork—then used those insights to transform its turnaround time and become a benchmark itself. Get the details here.
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Whether you’re discovering these articles for the first time or revisiting them for fresh ideas, we hope this collection helps you tackle today’s performance challenges with greater clarity and confidence. If you have any questions or ideas for future articles, don’t hesitate to reach out: [email protected]
Picture the following: a customer service team boasting average response times under two minutes. Customers are always getting responses right away. Every target is being met. Yet, customers keep complaining, and complaints are only growing.
How is that possible?
After investigation, you find that while customers are receiving rapid responses, those responses may be doing little to resolve their issues. The team members have been incentivized to close tickets quickly because that is what’s being measured. The original purpose (making customers happy) is now secondary.
This can be a very common issue within companies of any size. KPIs that once represented success are slowly becoming success itself. They stop asking “are we accomplishing what we intended to accomplish?” and start asking “are we meeting the target?” The difference between these questions might seem negligible, but the implications can be significant.
KPIs have a place and are indeed beneficial. Companies need a way to evaluate performance, track progress, and understand where improvement is needed. Without measurements, we operate based on assumptions and intuition alone.
The difficulty is that there are many things that organizations care about that are not easily measured. A single number can’t capture employee loyalty. Employee engagement isn’t the same as a survey score. Collaboration, trust, innovation, and long-term business value just don’t fit on a dashboard. As a result, companies use leading indicators, which we assume represent a desired outcome.
Response time is often seen as a sign of good customer service. Attendance is assumed to show employee commitment. Productivity numbers are assumed to prove effectiveness. This is okay to an extent; in fact, these are often necessary indicators to track. Problems arise when the leading indicator outweighs the outcome it was originally designed to represent.
Economist Charles Goodhart explained this concept best in a statement now known as Goodhart’s Law: “When a measure becomes a target, it ceases to be a good measure.” This may sound academic, but the underlying concept is easy to grasp. The moment people are measured, rewarded, or punished by a metric, they naturally seek to optimize for that metric. This optimization might increase performance, but sometimes it only improves the metric.
Consider training for employees. We often measure learning by tracking whether training has been completed. Seems fair on the surface – if an employee completes the training, they are surely learning, right?
Well, not necessarily. When the number of completed trainings becomes a target, the focus shifts.
Employees quickly click through > managers ensure there’s 100% completion before deadlines > dashboards turn green > knowledge retention, skills development, and behavioural change stagnate. The company succeeded in increasing the number but made little to no progress on the desired outcome.
This trend plays out across various industries and sectors. Salespeople push for revenue through deep discounts, thereby impacting long-term profitability. Marketing campaigns aim for engagement numbers even though engagement might be disconnected from real customer value. Project teams celebrate on-time delivery even though the project might not provide tangible benefits. The issue here is not that the metric is necessarily incorrect. The problem is that it only represents a piece of the whole.
A useful analogy for KPIs is to think of them as road signs instead of destinations. Signs tell you if you’re going the right way, but we don’t mistake the sign for the destination itself. Organizations often make this mistake:
Customer satisfaction is not a survey score. ❌
Productivity is not a speed metric. ❌
Attendance does not show employee contribution. ❌
These are signals used to help us understand reality, not reality itself. This difference becomes even more critical when organizations prioritize results while ignoring the actions that lead to those results. A revenue number from last month tells you what has occurred; it doesn’t tell you why. A customer satisfaction number indicates the outcome of a given interaction; it does not show the behaviour displayed during that interaction. By the time a revenue number changes, the behaviours that affected it may have been in place for weeks or months.
That’s why increasingly successful organizations are beginning to differentiate between outcomes and the actions that produce them. Outcomes serve as scorecards, letting you know where you stand. Actions and drivers help you understand how you got there and what you should do next. If leaders focus solely on the scoreboard, they are more likely to react to events after they have occurred. If they understand what causes the score to change, they will be able to influence future outcomes before they become problems.
Through this shift in thinking, we can reach an important conclusion: not all KPIs should be created equal. Some measures help us assess progress towards desired outcomes; others serve as proxies for those outcomes. For leaders, the biggest challenge is recognizing which is which. If the measure becomes the mission, organizations risk optimizing for the numbers rather than for the results they represent.
How Proxy Metrics Quietly Take Over
If most organizations know that KPIs are just indicators, how do so many organizations end up managing the indicator rather than the outcome?
The simplest reason is that proxy measures are convenient.
It’s often hard to measure the actual outcomes we want to influence. For example, real outcomes can take years to show any real results, often can’t be easily isolated from other variables that also affect the outcome, and usually don’t fit well on a dashboard. Proxy measures, on the other hand, are easily and readily available to be captured, reported, analyzed, and benchmarked.
Consequently, organizations tend to get caught in a cycle. Instead of asking “what would indicate we are truly successful?“, they ask, “what data do we already have?“. The available metric slowly evolves into the performance measure.
While this sounds relatively harmless, it quietly creates a shift. Individuals stop focusing on how well they are achieving the actual outcomes and begin talking about achieving the numbers on a dashboard.
Discussions focus on “have we hit the target?” rather than “have we made real progress toward achieving our goal?” The indicator becomes the lens through which we interpret performance, even when it tells only part of the story.
This isn’t to say proxy measures are useless; many of them can provide helpful insights. It’s simply assuming that the proxy and the outcome are one and the same, which is the problem.
For example, completing a training course may indicate that learning has taken place, but it doesn’t confirm any real change in capability. A high customer engagement rate can indicate interest, but does it lead to customer value? An increase in sales calls doesn’t always mean more quality customer conversations were held. These proxy measures may be useful in isolation, but they don’t tell the full story.
Unfortunately, once a metric is valued, people tend to drive it. Usually, this is not due to manipulation or intentional bad practices; it is simply how human beings behave. If a KPI target is linked to rewards, positive feedback, promotions, or performance reviews, people will make sure to meet this metric regardless of whether it aligns with desired outcomes.
The problem then becomes that an increase in a KPI may not necessarily lead to the desired increase in the outcome. There are countless examples throughout history of this behaviour, such as using the enemy’s body count as a measure of success in wars. Such a heinous & vile metric was easier to achieve than actual strategic objectives, and, eventually, simply measuring the metric became the objective itself. The measure dictated the outcome, rather than the outcome shaping the measure.
Now, whether we look at armies or organizations, both can fall victim to the same thinking pitfalls, for they are comprised of people who often err on what is “easier”. Leaders can start managing what’s easy, rather than what’s important.
In a much less combative example, take the instance of a decrease in cost-per-lead: at face value, it doesn’t make much difference if lead quality falls dramatically; an improvement in customer service response times does little if customers still have the same unresolved issues, and a team celebrating meeting all its targets still doesn’t achieve its business goals. Each example shows that the KPI rose or fell as intended, but the desired outcome didn’t.
Perhaps the most intriguing part is that organizations and their people usually know the source of the disconnect:
The sales team knows when target numbers promote busywork
The customer service department knows that quick responses are not the same as solving customer problems
Managers know that an increase in attendees does not necessarily correspond to greater commitment or contribution
However, when people feel a sense of control and certainty that a KPI is moving in the right direction, it becomes difficult to abandon the number, even if we know the real outcomes aren’t shifting as desired.
Numbers, nonetheless, seem more objective and reliable. They are concrete and clear, and they appear to remove uncertainty and complexity from a situation. Clarity, though, is not always accuracy.
A dashboard displaying green lights may suggest great progress, while unseen problems begin to fester beneath the surface of these simple indicators. As an organization becomes adept at performing the actions that achieve the highest success scores on a given metric, it simultaneously develops considerable inertia in achieving its real objectives.
This is why mature performance management systems do not focus on individual metrics, but rather on the overall view. A mature system must incorporate a mix of qualitative data alongside quantitative metrics, so that no individual KPI carries too much weight in determining perceived success.
The real question is not whether there should be proxy metrics at all; it’s whether they are remembered for what they represent. If leaders forget what a proxy metric is supposed to indicate, an organization will spend its energy improving the number rather than the actual desired outcome.
The Five Most Common KPI Traps in Modern Organizations
This quest for proxies seems to manifest itself in infinite ways, yet it follows the same several templates that recur over time, across industries and across hierarchical levels. Although the metrics might vary widely, the error appears eerily similar: the metric eventually succeeds in displacing the thing it was intended to measure.
Response Time Replaces Customer Care
Many customer service teams monitor response time for good reason. Customers typically appreciate quick communication.
The issue is when that speed becomes the primary goal. A team might respond to every single inquiry within minutes, but the response could be generic and fail to resolve the issue. Customers are acknowledged quickly, but still require multiple touchpoints to reach a solution.
This looks good on paper, but in practice, it increases customer frustration. Response time is an important measure, but it isn’t customer service. Customer service is all about understanding problems, solving them, and generating positive experiences. Speed may well be an important factor in achieving these goals, but it alone cannot do so.
Engagement Replaces Value
Engagement has emerged as perhaps the most ubiquitous performance measure in the digital age. Businesses track page views, click-throughs, comments, shares, downloads, logins, and a million other interactive behaviours. Such figures are often collected automatically and can be updated in real-time.
The problem is that this engagement does not necessarily mean any value is being created.
Some content receives millions of page views, while its consumers gain minimal new information. A few software platforms log millions of user logins – their consumers remain stuck performing rudimentary tasks. Several meetings involve many staff members, yet only a handful contribute to improving outcomes.
Engagement does not necessarily mean useful things are happening. It signals that people are attentive. If organizations focus solely on engagement, they create organizations that focus on visibility.
Productivity Replaces Effectiveness
One of the oldest and most frequently measured indicators of performance is productivity.
The number of tasks performed, phone calls made, e-mails sent, reports generated, and tickets closed can tell you something about how busy things are and about operational efficiency. However, you should never confuse activity with effectiveness.
One salesperson can be two or three times as active (in terms of calls made) as another, while identifying far fewer useful sales opportunities. One project team may tick off all the task items on their schedule without having solved the problem the project was designed to fix.
Productivity asks, “How much work got done?“
Effectiveness asks, “Does it matter?“
Organizations that focus on productivity often become incredibly busy without ever becoming more effective.
Attendance Replaces Contribution
One of the easiest measures to monitor is attendance.
People either turn up or they do not. The measurement of contribution, however, is far more involved: someone can attend every meeting and add nothing, whereas another may contribute only two or three times, yet those points may be instrumental in forming key decisions.
It may also be the case that an organization equates attendance with contribution when, in reality, contribution levels depend on involvement, knowledge, collaboration, and the ability to solve problems. Attendance is a good operational measure. That said, it is NOT an indicator of success.
Output Replaces Outcomes
The most frequent KPI pitfall is the confusion between outputs and outcomes.
Outputs are the products an organization puts out.
Outcomes are the effects of these outputs.
Although obvious when articulated, it is often lost when trying to measure things.
Think of a facility team whose job it is to clean an office building. What the facility team measures might include the number of floors cleaned, the time spent cleaning, or the amount of cleaning supplies used. These are all outputs because they show activity. The number of floors is an output; the number of floors scrubbed (to the point they were clean and didn’t feel sticky) would be an outcome.
What if the employees continue to complain that the floors are sticky? The output numbers suggest the team is successful, but the outcome proves otherwise.
The same logic applies to training programs, change management initiatives, marketing campaigns, and transformation projects that are measured by training completion, logins, impressions, and milestones. The output metrics tell us that we did things, but the outcomes measure whether we actually made anything happen. Both are needed.
When we are so focused on outputs, however, we run the risk that they become the sole measure of success, so the team can meet every goal, complete every task, and satisfy every reporting requirement but do absolutely nothing. That’s why there is such risk associated with proxies – they allow us to progress on paper while standing still.
What High-Performing Organizations Measure Differently
At this point, it may sound like the answer is just to get rid of KPIs entirely. Far from it. The matter of fact could not be farther from the truth.
While organizations need measurement, leaders need visibility into performance, and teams need feedback to understand whether their actions are moving the organization in the direction the leadership intends.
The problem is not measurement itself; the problem is making sure the measurement is connected to the thing it’s supposed to be measuring. High-performing organizations understand that KPIs are learning and decision-support tools, not outcomes in themselves. They use metrics to understand performance, and they avoid the urge to turn a metric into an outcome.
I) One of the most critical adjustments they make is to separate outcomes from the behaviours that lead to them.
Many organizations focus almost entirely on outcomes: revenue, customer satisfaction, retention, profitability, market share, and similar figures that often top executive dashboards. These numbers are important, but they are also trailing indicators – they tell you what already happened. When customer satisfaction scores start to slip, the underlying reasons may have existed for months. When revenue declines, the factors that led to the drop may have been building for quite a while.
Whilst high-performing organizations do keep a close eye on outcomes, they also identify the behaviours and performance drivers that contribute to these outcomes:
A sales team might be concerned with revenue as an ultimate outcome, but it also looks at the quality of prospects it’s working on, the level of activity its team has-how many calls and meetings-and its closing rate. All of these will affect revenue and allow leaders to spot problems before they significantly impact sales figures.
A customer service team will continue to track customer satisfaction scores, but it will also look at how many times a customer contacts it for a single issue, how quickly agents respond, the quality of communication, and customer effort.
The objective is not necessarily to replace outcome measures with behaviour measures, but to tie them together.
Outcomes tell you where you are, behaviours give you an idea of how you got there, and where you are likely to go in the future. This changes how you use KPIs from simple reporting tools into proactive management tools.
II) Another difference in mature performance systems: these organizations rarely use a single metric for an important organizational objective.
Let’s use customer experience again: organizations often turn to NPS or customer satisfaction scores. These have value, but no single metric adequately describes the concept. It may make more sense to use customer satisfaction metrics alongside retention rates, complaint counts, resolution speed, customer effort, and actual customer feedback.
Each one captures a different piece of the puzzle, which is why they should be looked at together. The same logic applies to nearly every other aspect of the business.
Revenue should be examined along with profitability.
Productivity along with quality.
Employee engagement along with retention and performance.
Efficiency along with effectiveness.
When measures are viewed as interconnected pieces of information, the temptation to optimize one measure at the expense of another diminishes significantly.
III) Lastly, and probably most important of all, high-performing organizations retain an element of wonder about what they might be missing with their KPIs.
They understand that metrics are a form of simplification and allow us a glimpse into the world of perceptions. No dashboard can fully capture customer trust, employee loyalty, innovation, culture, teamwork, or the ability to adapt; yet all of these can be profoundly important drivers of organizational success.
Instead of assuming that every important thing can and must be expressed as a number, leaders at mature organizations accept the inherent limitations of measurement and complement their data with conversations, observations, customer inputs, employee knowledge, and professional judgment.
In other words, they use data, but not as a replacement for decision-making, since the purpose of performance management is not perfect reports but reports that provide a deeper understanding of performance. Such work takes more than merely watching numbers on a screen.
A Simple Test for Every KPI You Use
The risk of proxy metrics is that it is uncommon for a bad metric to be bad to begin with.
They usually begin as rational indicators of important goals and slowly take on a life of their own as companies get increasingly obsessed with bettering the indicator itself. This necessitates periodic reevaluation.
Each of your KPIs should, on occasion, be examined with a basic but critical question: Is this metric still telling us something about our performance, or has it become the performance?
The answer may not be crystal clear, but a few practical questions can reveal a KPI that might be losing sight of the original goals.
What outcome is this KPI supposed to represent?
Each metric should relate clearly to an organizational goal.
If the goal is unclear or hard to articulate, the KPI might be measuring activity rather than progress. One helpful test is the question “Why should we even care about this number?” The answer often highlights whether the metric is still relevant to the desired outcome.
If the KPI improves, does the outcome necessarily improve?
If you can improve the metric without improving the outcome, there is a risk that the KPI serves as a surrogate for something weaker.
Training completion can increase without any skills being gained.
Website traffic can go up without any value being added.
Response times can increase without the customer’s problems being solved.
You should be very wary whenever it’s possible to optimize a KPI independently of an outcome.
What behaviours does this metric encourage?
Performance metrics influence all actions. Some actions will be productive, some less so.
A sales performance metric can prompt positive customer outreach. It may also prompt undue discounting.
An activity performance metric can prompt work, but it may also prompt busywork.
So, the question is not simply whether a KPI triggers activity, but whether it triggers beneficial activity.
Can people hit the target while missing the point?
This issue seems to be at the very core of Goodhart’s Law: if it is possible to obtain the metric without producing the desired result, then the KPI may become the goal.
A lot of the examples mentioned within the article fall into this category – where the team “hit the number” and still made little real progress toward the overall aim. In these cases, other indicators may be necessary.
What important outcome are we not measuring?
Each KPI measures just one dimension of the business. As attention to any specific KPI increases, another aspect of performance will likely fall into a “blind spot.”
Customer acquisition may be analyzed, while customer retention is neglected.
Productivity may be measured, while quality is left out of the discussion
Operational efficiency may be increased at the expense of innovation
The ongoing question of what is not on the dashboard will ensure that important business outcomes do not fall completely out of the organization’s mindshare.
Final Thoughts
KPIs remain one of the most powerful tools for leaders to align efforts, monitor performance, and allocate resources.
With that said, they are but a tool. They break down when an organization forgets the difference between the metric and the outcome the metric is supposed to capture.
A fast response isn’t great service.
High engagement isn’t value creation.
Productivity isn’t effectiveness.
Attendance isn’t a contribution.
Output isn’t impact.
The best organizations remember and manage accordingly; they use numbers to inform judgment rather than replace it. They focus on outcomes while being acutely aware of the behaviours that produce them. They remain attuned to the fact that a helpful metric today can become a damaging target tomorrow.
At the end of the day, a KPI’s value isn’t in proving that we can win at numbers. Its value lies in helping us improve our numbers. That’s when KPIs truly fulfill their potential as indicators of success rather than proof of it.
In high-stakes industries like oil and gas, human resources (HR) is more than an administrative function; it’s the engine of operational stability. With over 18 years of corporate experience, Mariham Magdy has built a career navigating the high-pressure demands of this field. As a facilitator for The KPI Institute, she leads the Certified Employee Performance Management Professional, empowering practitioners to bridge the gap between individual output and departmental goals.
A versatile expert, Magdy also delivers the other certifications: Certified KPI Professional, Certified Strategy and Business Planning Professional, Certified Balanced Scorecard Management System Professional, Certified Agile Strategy and Execution Professional, and Certified Strategy and Performance Maturity Assessment Professional. Moreover, she is an award-winning researcher, receiving the Best ROI Article 2018 award from the ROI Institute for her contributions to the field.
In this feature, Magdy shares her approaches to professional development. She explores how leaders thrive in fast-paced environments by treating individual strengths as milestones in a larger narrative. By moving beyond one-size-fits-all briefings, Magdy provides a roadmap for integrating employee well-being into performance discussions to ensure that measurable results never come at the cost of the individual.
Can you describe your current role and how your daily responsibilities relate to HR strategy and performance management? I’m deeply involved in a wide range of HR functions. I’m a strategic HR leader in end-to-end recruitment, ROI-driven talent initiatives, and organization design. By integrating sophisticated selection tools like Competency Based Interview (CBI) and the Myers-Briggs Type Indicator (MBTI), I align human capital with business objectives. My expertise spans HR governance, total rewards, and leadership development (GLA 360), ensuring operational compliance and a sustainable competitive advantage for global clients.
Have you worked in fast-paced or high-pressure environments? If so, can you describe your experience? If not, how do you think employee growth should be included in performance discussions without losing focus on operational results?
Yes, I do have extensive experience thriving in demanding settings, particularly within the oil and gas industry, which is known for its dynamic and high-pressure nature. I have over 18 years of corporate experience, starting from building HR departments from scratch to managing all HR functions.
My experience spans from handling HR operations in the oil and gas sector, including offshore personnel coordination. This has required me to respond swiftly and effectively to unexpected challenges, ensuring both operational continuity and support for the team. Furthermore, leading strategic management and planning initiatives has allowed me to align HR practices with business needs in rapidly changing environments, while implementing performance systems and KPIs that have ensured organizational goals are met even under pressure.
Moreover, delivering training to various management levels in fast-paced sectors has allowed me to maintain quality and engagement, even when timelines are tight.
With your experience in HR, consulting, and training, how do you see the connection between individual development and organizational goals?
In today’s dynamic business environment, organizations are constantly seeking ways to align their strategic objectives with the evolving needs and aspirations of their workforce.
I see the connection between individual development and organizational goals as a catalyst for sustainable growth and innovation for both the organization and the individual. When people see clear pathways for advancement and understand how their growth aligns with broader company goals, they are more likely to innovate and go the extra mile.
Our role then as organizations and learning and development (L&D) professionals is to integrate personal development plans with organizational KPIs. Thus, leaders can transform their teams into engines of achievement and resilience.
When setting performance expectations, what approaches help clarify goals while reflecting each employee’s strengths?
Imagine a team meeting at the start of a new quarter. Instead of delivering a one-size-fits-all briefing, the manager gathers everyone and begins with a question: “What does success look like for each of you, and how can your unique talents help us get there?”
As each team member shares their perspective, the manager listens intently, making note of individual strengths and weaving them directly into the team’s targets. By breaking down overarching objectives into personalized, strength-based tasks, everyone feels seen and valued. Over time, these goals become more than mere metrics; they transform into milestones in an ongoing story where each person’s specific abilities move the team forward.
I always love to apply Steve Jobs’ philosophy with my team: “We don’t hire smart people to tell them what to do, we hire smart people to tell us what to do.”
How do you identify the competencies that matter most for employees in different functions, such as training, consulting, or corporate HR?
Identifying the right competencies for employees in diverse functions like training, consulting, and corporate HR starts with understanding both the unique demands of each role and the broader goals of the organization.
The key is to combine data-driven methods—such as analyzing top performers and collecting feedback from stakeholders—with an appreciation for the evolving landscape of each function. We also have to review job requirements, stay attuned to industry trends, and invite input from employees themselves to ensure that competency frameworks remain relevant and empowering across all areas.
How do you align employee behaviors with performance criteria while keeping assessments flexible and practical?
Leaders should start by clearly articulating what successful behaviors look like in the context of specific roles and team objectives. These criteria should be transparent and directly linked to the company’s values and goals, ensuring that everyone understands how their work and behaviors contribute to the big picture.
To keep assessments practical, organizations can incorporate regular check-ins, peer feedback, and self-reflection opportunities. This creates a dynamic feedback loop where employees are empowered to adjust their approach and see how their behaviors drive results. Flexibility then comes from recognizing that excellence may manifest differently across individuals and situations. As such, performance criteria should allow room for creativity and personal strength.
Based on your experience, what role do informal feedback and day-to-day interactions play in helping employees reach their performance goals?
Let’s imagine a typical scenario that we witness: a busy office where, between project deadlines and team meetings, small conversations happen in the hallway or over coffee. These everyday moments of feedback, often spontaneous and genuine, create a culture where improvement feels natural and supportive rather than intimidating. When employees know their efforts are recognized in real time, they’re more likely to adjust behaviors, reinforce positive habits, and stay motivated.
Informal feedback acts as a compass, keeping everyone on course toward their performance goals, one conversation at a time.
How do you balance structured evaluation processes with opportunities for personal growth for employees?
Structured evaluations, such as annual reviews, goal setting, and competency frameworks, provide clarity and consistency in measuring performance. However, these formal processes must be complemented by avenues for personal growth that acknowledge each employee’s unique talents and aspirations. This could be by encouraging employees to pursue stretch assignments or by allowing space for mentorship, skill-building workshops, and self-directed projects that foster creativity and initiative.
I believe that managers can use performance check-ins to discuss both progress on specific targets and areas where the employee wishes to grow. This dual focus helps employees feel valued for their achievements and empowered to shape their own professional journeys.
When planning development initiatives, what factors guide your choices about which skills or behaviors to focus on?
I prioritize skills and behaviors that not only address current performance gaps but also anticipate future challenges, such as technological changes or shifting client expectations. Gathering input from employees and managers helps ensure that our focus areas are relevant and impactful. This creates opportunities for growth that are meaningful and aligned with our business objectives.
How do you measure progress in employee development beyond standard metrics?
I look for signs such as increased initiative, adaptability to new challenges, and a willingness to take on stretch assignments. Qualitative feedback from peers and managers, examples of creative problem-solving, and evidence of willingness to mentor others are strong indicators of development.
Additionally, I consider how employees pursue self-directed learning, seek feedback, and contribute to a positive team culture. These factors help paint a fuller picture of professional growth that metrics alone cannot capture.
From your perspective, what trends in performance management are influencing HR practices in Egypt and the wider region today?
In Egypt and the wider region, performance management is increasingly shifting toward continuous feedback and development-focused conversations rather than relying solely on annual reviews. There is also a growing emphasis on leveraging technology platforms to streamline performance tracking and data-driven decision-making, which makes the process more transparent and accessible for both employees and managers.
Additionally, there is a trend toward integrating employee well-being and engagement metrics into performance discussions, reflecting a more holistic approach to talent management. As companies are increasingly recognizing the importance of aligning individual and team objectives with organizational strategy, they are focusing on building a culture of continuous learning and adaptability to remain competitive in a rapidly evolving market.
How do you manage the balance between meeting immediate targets and developing longer-term skills in your teams?
I encourage team members to identify learning opportunities within their current projects, so that skill-building becomes part of daily work rather than a separate activity. I also support both the achievement of business objectives and the cultivation of future capabilities within the team
When employees have high autonomy, what practical steps help maintain accountability and alignment with performance expectations?
When employees have high autonomy, it’s important to establish clear goals and regularly communicate expectations to ensure accountability and alignment. Setting measurable criteria, along with frequent check-ins or progress reviews, helps maintain focus and provides opportunities for feedback.
Additionally, fostering a culture of transparency—where team members openly share updates and challenges—encourages mutual responsibility and ensures everyone remains aligned with performance standards.
From your experience, how should feedback be structured to support learning and measurable performance outcomes?
By including well-being and engagement measures, organizations can promote continuous learning, adaptability, and a culture of shared responsibility. Effective feedback in high-autonomy teams should be clear, timely, and actionable, focusing on specific behaviors and measurable outcomes while fostering open dialogue and a growth-oriented mindset.
What strategies work best for keeping motivation and engagement when teams face heavy workloads or tight deadlines?
When teams encounter heavy workloads or tight deadlines, maintaining motivation and engagement hinges on several key strategies. It begins with the clear communication of priorities, which helps individuals focus on the most critical tasks and reduces overwhelm. To sustain this focus over time, breaking large projects into manageable milestones and celebrating small wins can sustain momentum and reinforce progress.
Additionally, regular check-ins support sustaining the efforts in order to acknowledge effort, offer support, address challenges, and create a supportive environment that values both results and well-being.
Throughout your career, which leadership practices have had the greatest impact on employee performance in demanding work settings?
We can summarize leadership practices that have the greatest impact on employee performance in three simple steps: setting clear expectations, communicating priorities effectively, and fostering an environment of open dialogue.
Additionally, recognizing and celebrating incremental achievements sustains engagement and reinforces progress even during high-pressure periods. Promoting transparency around workload and inviting team input also empowers employees to co-create solutions, building trust and a sense of shared responsibility.
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Inspired by Mariham Magdy’s perspective on aligning employee growth with organizational performance?
