Within the vast domain of human resource management, performance management emerges as a significant yet frequently underestimated or misunderstood aspect. Particularly, the metrics used to gauge an employee’s performance occupy a pivotal position.

Allow me to emphasise from the start: I wholeheartedly support the use of performance metrics. They act as guiding lights for employees, managers, peers, and the entire organisation.

These metrics offer tangible, measurable benchmarks that help mitigate bias, ensure equity, and empower employees with a roadmap for success. When implemented effectively, performance metrics cultivate a culture of accountability, where accomplishments are celebrated and weaknesses are seen as avenues for growth rather than reprimand. They can even imbue individuals with a sense of purpose and clarity.

However, underneath all the good performance metrics can bring to organisations and their people, lies a nuanced reality. In their relentless pursuit of metric-driven success, modern organisations have become breeding grounds for unintended consequences that can and have compromised their long-term success, their cultures, values, and even the very business objectives they aspired to and created all these metrics to achieve. 

Let me get the obvious out of the way first, when metrics are excessively focused on outcomes rather than processes, employees may resort to short-term tactics to meet targets, sacrificing quality and ethical conduct in the process. This tunnel vision can erode team collaboration, creativity, and innovation, leading to a myopic pursuit of numerical milestones at the expense of holistic organisational health. 

Furthermore, metrics need to be… well… measured, consistently, all the time, and this feeling of being constantly under surveillance, can create a culture of fear and stress, where employees feel like mere cogs in a machine rather than valued contributors. 

Excessive emphasis on individual metrics may also foster unhealthy competition, undermining teamwork and fostering a cutthroat environment detrimental to organisational culture.

And finally, we need to accept that some things cannot be so easily quantified as others. An over-emphasis on metrics such as sales targets, customer satisfaction, or even attendance may and usually does lead to other more qualitative aspects being overlooked, aspects like innovation, leadership, teamwork and integrity.

And with that, we covered the more obvious challenges associated with performance metrics, and now let us dive into the much more subtle challenges that usually remain hidden until it is too late.

Let us start with a simple example: Call centers the world over deploy a plethora of metrics to assess performance, one metric in particular has been considered the gold standard for quite some time now, and that metric is Average Handling Time. 

Average Handling Time or AHT for short, appears straightforward—a measure of how long an agent spends on a customer interaction. However, the obsession with minimising AHT can inadvertently lead to a host of negative consequences, particularly in terms of customer satisfaction, a value and/or metric many companies claim is their number one priority.

As a customer yourself, I am sure you made a call once or twice to the customer service center of your mobile carrier or bank or pet food delivery service. In that moment, which of the following two scenarios would have made you a happier and a more satisfied customer.

1. Call duration was super short but that meant having to have another follow-up call or calls later.
2. Call maybe took a tad longer but your issue was resolved right there and then.

Unless I am wildly mistaken, most if not all of us would prefer option two. Yet, companies all over the world still use AHT as their metric of choice without the relentless drive to reduce AHT can incentivise agents to rush through calls, sacrificing the quality of service delivered to customers. Rather than focusing on resolving issues comprehensively and ensuring customer satisfaction, agents may prioritise speed, leading to incomplete resolutions, escalated issues, and frustrated customers.

Furthermore, AHT fails to capture the complexity and nuance of customer interactions. Not all issues can be resolved swiftly, and some may require more time for empathy, active listening, and thorough problem-solving. By fixating solely on AHT, organisations risk overlooking the importance of these qualitative aspects that contribute significantly to customer satisfaction and loyalty.

This is a classic examples of the unintended consequences of performance metrics and the solution is rather simple albeit requiring of a bit more effort on the side of managers and HR.

AHT is a very important metric in general terms, it will give insight into average times, which can inform staffing decisions, overtime, workforce planning for HR, it can give product teams insight into how complicated the products are for customers and that troubleshooting and fixing issues is taking longer than expected which can lead to better customer education protocols, but one thing AHT should never be is a metric to measure the performance of an employee, at the very least not as an isolated number without factoring in other variables as well.

If the behavior you want in your customer service agents is a focus on customer satisfaction then a metric like first call resolution rates would serve you much, much better than AHT. The same applies to virtually every job in every function in every industry.

Patient wait time metrics in healthcare lead to a tendency to rush patient consultations, cut corners in examinations, or prioritise less urgent cases over more critical ones simply to meet time targets.

New sales targets will lead business development managers to overlook existing customers which as everyone knows are far easier to keep than it is to acquire new ones.

In retail, metrics such as Sales per Transaction (SPT) lead sales associates to engage in aggressive upselling tactics, pushing customers to purchase unnecessary or expensive products/services to inflate transaction values. This can create a transactional, pushy sales environment that prioritizes short-term gains over long-term customer relationships and satisfaction.

In tech, (LOC) or Lines of Code is a common metric to measure engineers performance, but when developers are evaluated primarily based on the number of lines of code they produce, there may be a tendency to write verbose and redundant code to inflate their productivity metrics artificially.

The examples are endless and the moral of the story is this:

Metrics are valuable, even indispensable, but their significance lies in proper contextualisation and alignment with the desired behaviours. It is essential for a company to meticulously consider the behaviours it wants to encourage and choose metrics that support these aims.

Moreover, while it is important for a company to monitor a diverse array of metrics, not every measurable aspect should influence employee performance evaluations. 

It is crucial to distinguish between metrics employed for informing business strategies and those utilised for performance assessments. Metrics in the latter category profoundly impact long-term success and organisational culture.