Whether it’s a salesman selling a car or a policeman writing a speeding ticket, people begin to act very strangely 
toward the end of the month. One may wonder if there’s a full moon out and whether its possible for humans to have a lupine streak. Actually, the answer is much simpler. There is an easy way to understand and predict the strangest of social norms. Take a look at people’s KPIs.
Kips – that’s what the larger-than-life Maintenance Manager called them when I arrived at San Juan to implement MIMS in 1990. I asked him how he could tell whether maintenance was in control in his mobile equipment workshop. Not overly impressed with traditional KPIs, he retorted “just take a look out the window; if the workshop is full, there’s a problem.” I guess that’s a very good visual queue, even though it’s a lagging measure. However, Mr. Gates did have a point.
For decades, business leaders have attempted to direct and control their organisations as though people were marionettes. Pull the first string, the arm will rise; pull another one and it’s the leg. If only it was that easy! Perhaps yes, if the business is simple, the measures are well-designed and people do what they are supposed to. If.
It’s been said that leadership is the biggest factor causing weak business performance; with poorly designed KPIs running a close second. Whenever I’m invited to consult to a new organisation, I dare not pass judgement on the incumbent leaders. That would be ludicrous (and bad for business). However, I have no problem with observing dysfunctional behaviours and immediately asking to see the KPIs.
What happens when you divide an organisation into distinct teams and give them specific measures and targets to aim at? If you’re not careful, people will do precisely what their measures ask of them. They “skips to their kips” and the organisation can feel like its being drawn and quartered.
In my first role as a principle Reliability Engineer, I was asked to resolve a low production rate problem that had persisted since commissioning. No. 3 Paint Line at Lysaghts Port Kembla was rated at 180 mpm, but the operators only ran the line at 150. For eight years Lysaghts had sacrificed 16% of its production because of persistent problems that only surfaced at top speed. Every time they attempted 180 mpm, the number of electrical exit end problems went through the roof. Each time the line stopped, a coil was scrapped, losing $20k (in late 80‘s dollars). After several weeks of chart recordings, delay analysis and sitting at the exit desk, observing the operators, the problem finally became obvious.
CPL3 was a typical paint line with a constant speed painting section and entry and exit buffers to give operators time to stich coils at entry and remove them at exit without stopping the line. At 180 mpm, the amount of time in the exit section buffer was reduced to two minutes, while the amount of unpainted steel requiring removal increased, creating extra work before the recoiler could be engaged. As the operator ran low on time, he would panic, take the line out of Auto and attempt to recoil in manual. Big mistake. Take your pick – recoiler overspeed, recoiler over-volts, tight centre coil collapse or all of the above, stopping the line. Sometimes, the exit tower filled, stopping the line. Either way, $20k of prime product was lost, but the backside that got kicked depended on where the delay was booked.
The previous CPL3 leader had told the operators to minimse Production stoppages, while the electricians were told to minimise Electrical stoppages. The operator was both the chief culprit and the meat in the sandwich. Running out of time, but not wanting to cop a Production stoppage, he would create an Electrical issue instead, by attempting a manual restart. For eight years, significant damage and loss was experienced because of poorly conceived KPIs and the dysfunctional behaviour they engendered. Thankfully, the new CPL3 Manager was adamemt: “we are going to run the line at 180 mpm no matter how many stoppages we have. Just work on eliminating the root causes.”
Years later, I learned about Root Cause Analysis, discovered Senge’s “Shifting the Burden” complex systems 
archetype and the need for “non-tribal super-ordinate goals” (thanks, Mr. Duggan). Looking back, I wish I knew then what I know now; the problem would have been resolved more quickly. Nevertheless, we did achieve our 180 mpm goal through a series of small, yet powerful changes. Although the root cause was a lack of TRUST in the Auto process due to not knowing how much time was left in the exit buffer, the resolution came when the leader focused on the broader measure of success and reshifted the burden.
In the later 90’s, I leveraged this experience through the GMN to help reinforce the need for a measure that united Operations and Maintenance in a common cause – the reduction of Uptime losses, wherever they were. I was very heartened over the years to see the measure taken seriously, firstly by Ed Neil and Garry Battye at Westernport, and then later picked up by most BHP Billiton sites.
Einstein told us “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.” We cannot expect good performance from poorly conceived kips. When the the pied piper plays his tune, we skips to our kips. What are we to do? Well, here are some of my ideas on this tricky management topic. I’d be keen to hear yours.
- Understand clearly the purpose of the business (https://jvpienew.wpenginepowered.com/to-what-end/).
- Establish non-tribal, super-ordinate measures that help everyone find common ground.
- Discuss with key stakeholders how they see their contribution toward this measure.
- Define KPIs with the key stakeholders, always asking “what behaviour is this trying to engender?”
- Don’t rely solely on KPIs. Discuss with people what good performance looks like regularly and change the measures if they aren’t helping people to do the right things.
Finally, if you are a leader, don’t use KPI’s as a stick; as a way to rob people of their bonuses. Rather, try to catch your people doing the right thing. As the old idiom goes: “You catch more flies with honey than you do with vinegar.”