KPIs are Dead, Long Live the KBIs!
About a year ago, the head of logistics and purchasing asked me to carry out some observations on the floor. Their new ERP system had been implemented about two years ago, and he wanted to know where knowledge was still lacking so he could use the information as input for a training plan. So off I went to talk to some of the employees. I asked an employee to tell me exactly what she did while she was working on something, a bit like TV-chef Jeroen Meus. "And now I change this printer to the correct printer ... This has been wrong in the system for a long time." She felt no regrets to report the issue and get it solved once and for all, instead she solved the problem herself on a daily basis. And she was certainly not the only one I noticed doing this during my observations. The employees certainly knew what the final output should be, but they were less concerned about how it should be achieved, or even how efficiently it should be achieved. Is this the behavior and the consequent results you want to achieve as an organization?
Do you manage your culture or does your culture manage you?
The implementation of a certain tool may bring about on-time and on-budget performance, but the tool must also be used efficiently once it has been implemented. It is all very well to have nice tools; however, it is the behavior of leaders and employees that will determine the final results. An insight from the Shingo Model™ explains it beautifully: “Only via ideal behavior we can achieve ideal results.” If we want to have a 100% safe environment, we want to see the staff talk to each other if they see unsafe behavior. Do you want to achieve a culture of continuous improvement? If you do, you should look for new items to constantly place on the improvement board, and you should see tips and tricks shared spontaneously. As leaders, we want to set a good example; and if a leader sees inefficient behavior among his/her employees, he/she must speak to them about this in the correct manner. But how do we get the ideal behavior that we want to see in our organization?
“The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.”
Professor Edgar Schein of the MIT Sloan School of Management, MIT Leadership Center
Key Behavior Indicators: 5 steps in the right direction
Step 1: The very first question you must ask as a leader is: what culture do you want in your organization? The desired culture is a collection of all the desired behaviors you want to see, from the CEO to an operator.
Step 2: Translate the ideal behavior so it is relevant to the entire organization. Co-creation is a success factor: involve managers and employees in the decision-making process. Communicate about the kind of behavior you expect within your organization and work with the employees to determine how this ideal behavior translates into their daily tasks within the department/team. People can only be expected to display this desired behavior if they really understand what is expected from them.
Step 3: While measuring results, also measure the ideal behavior that you want to see.
Performance is often measured using KPIs, for example, growth in market share, customer satisfaction, turnover, etc. We find it perfectly logical to implement the ideal process from a blueprint and to measure the performance using performance indicators. But do we also find it logical to do the same for the most basic element of our organization, our culture? Of course, it is very important to measure results and to monitor KPIs, but is it also important to monitor how our behavior is evolving in the right direction. For example, it is possible that zero safety incidents occurred at a particular production site in the past year; but if no safety inspections have been carried out, or preventive measures taken to ensure safety (or even increase safety), this historical figure has no predictive value. It is certainly very interesting to know the extent of any savings that have been made as a result of the implementation of improvement ideas, but how many of these ideas were initiated by employees? Besides the usual KPIs, we should also have KBIs – key behavior indicators. These should be used to see the extent to which the behavior we want to see in the organization is already present. An additional advantage of these indicators is that they often have a “leading” character—they are a predictor of future performance.
Step 4: Visualize these measurement points
As a result of our intention to visualize, our success rate increases from 4% to 40%. Visualizing makes it clear what is important. Hang a white board with the measurement points on the wall in all departments; take the measurement points to existing platforms, such as the daily start-up meeting or weekly/monthly performance meetings. The KBIs are signposts showing the way to the ideal behavior that will achieve the ideal results. So it is very important that they belong on your balanced scorecard.
Step 5: Go to the gemba
A presence on the floor is important, but simply being present is not enough. Now the ideal behavior is known, a gemba walk no longer has to be an unstructured walk around. Look and observe whether you perceive the ideal behavior, and try to find out whether there is a difference between the current behavior and the desired behavior. Your gemba walk is actually a manifestation of your belief and subsequent behavior—that value is created on the floor and that managers should spend a significant amount of their time walking around observing, asking questions and appreciating.
Do you know what behavior you want to see in your organization already? Do your employees already know it? Gandhi said, "Be the change you want to see in the world." We can start with, "Know the change you want to see in your organization."