Are KPIs really Key PERFORMANCE Indicators or are they actually Key PROFIT Indicators?

There is plenty of noise in the wider world around the way that KPI’s have driven staff behavior – but not in the way that the companies involved were probably envisaging!

The stories that hit the news head-lines are the ones where the focus on particular KPIs has driven unethical behavior harming reputations and/or company value.

Which is your preferred story of woe?

  • That Victorian police have been reported to have blown into breathalyzers themselves in order to meet their targets – and to have done this more than 250 000 times.
  • That employees of one of the big banks fraudulently activated children’s bank account to meet their new account targets.
  • That a prominent and well-regarded car company doctored their cars to show falsely low emissions during testing to sell more cars.

So are KPI’s uniformly bad and what should the veterinary world learn from the transgressions reported in the media?

Fact 1 – KPIs can definitely drive behavior.

Yep, there is no doubt about that.

Well designed KPIs can drive positive change. And they come with other benefits. KPI’s can;

  • Provide a succinct snap-shot of the financial health of your business
  • Highlight trends in your practice and allow early intervention if there is a problem
  • Measure your progress on important goals
  • Allow you to set an outcome whilst allowing team members autonomy on how to achieve it
  • Identify opportunities for training or coaching
  • Assess the response to training and coaching
  • Be used to benchmark against similar practices
  • Be an objective measure of success and a cause for celebration

You can see why many practices and businesses have adopted KPIs.

But the question is, has the pendulum swung too far on KPIs? Are they driving the right behavior? And are they motivating people and creating positive change?

Fact 2 – Poorly designed KPIs may drive the wrong behavior. 

It is often said that what gets measured gets done. When people feel pressured and unsupported to achieve numbers, they may choose to take the shortest and most direct route to the number that is being tracked – with big effects on other behaviours that may not be measured. You need to consider the knock-on effects when designing your KPIs.

For example, think of the “procedural vet”. They may do a lot of the surgery in the practice and hence their $$/visit are high. But this person does not work in isolation – it takes a team for a procedural vet to be able to get through a lot of surgery – from reception to nursing to other vets who may take on the client interface or the hospital care of the surgery patients. All of these people allow the procedural vet to kick the $/visit goal.

How will these other people be recognized and rewarded? And what is stopping the procedural vet from discouraging the support team from taking breaks or from helping other people in the practice if it interferes with the flow of surgery or from cutting corners which may compromise the safety of the patients? Is the vet profession free from the bad behavior seen in other industries?

Fact 3 – Poorly designed KPIs can be demoralizing and demotivating.

This happens when people don’t believe in the validity of what is being measured. A good example is when a KPI is set around the percentage of dogs in the practice on heartworm prevention in a geographical area with incredibly low incidences of heartworm.

How can a person believe that this KPI is truly about doing the best by clients and their pets and not about making profit?

So, what are we to do? How can we maximise the good and minimise the bad in KPIs?

Here are our best tips.

1. A KPI is only as good as the relevance of what it measures and its ability to create positive change. Your KPIs should include measures of what is important to your practice. Hopefully this is reflected in your clinic values or mission statement. Do your KPIs reflect the fact that you think integrity or teamwork or excellence or compassion is important? Or are these just words you have on the wall?

2. Set achievable targets and support/train people to achieve them. Competition is rarely helpful.

3. We can not all be superstars – Probability theory suggests that the KPI numbers for a group of individuals or teams are likely to be normally distributed. Most of us will fall in the middle of the Bell curve. We cannot make everybody perform at the level of the highest KPI.

4. Be curious about the outliers. Numbers that fall at the top and the bottom are the outliers. Have a conversation and aim to identify what it is that the positive and negative deviants are and aren’t doing. Here is your training opportunity.

5. Set KPIs for the team rather than the individual. Veterinary practice is a team sport. Behaviours that help the team such as being a fun and positive person in the workplace or supporting your team mates or training people or providing feedback will increase the more financially based KPIs for everybody.

6. Compare apples with apples. If you are benchmarking against other practices, ensure that they are measuring their KPIs in the same way and that the practices are similar in their management practices, policies, staffing ratios etc

If it is true that what gets measured gets done, what is getting done in your practice? Are you measuring good performance or are you measuring profit?