How to Cheat KPI?

In many organizations, KPIs (Key Performance Indicators) are established to monitor the performance of the company and its various departments. Typically, there might be monthly meetings with executives. During these meetings, everything seems fine, but when facing real-world scenarios, problems can arise. In our previous article, we discussed what KPIs are and how to set them (click here). However, KPIs themselves can also be manipulated. How can this be done? Let’s look at four common ways to cheat KPIs.

1. Setting Unclear or Inaccurate KPI Definitions
   For example, setting a sales target might focus only on the total sales amount in currency, without considering the number of items sold. If monthly sales aren’t looking good, one might choose to report weekly sales to make the numbers appear better. Another critical example is setting a sales target without considering whether high sales lead to company profits.
2. Incorrect Data Collection
   For instance, setting a high customer satisfaction target for a hotel, but employees only send satisfaction survey links to customers with good experiences. Another example is stating that products are shipped within one day, but employees might mark them as shipped in the system to meet KPIs, even if they haven’t been shipped yet. This also includes changing data collection methods, such as switching from using social listening tools to Google Trends.
3. Displaying Incorrect Data
   This includes selectively displaying data and rounding off figures. For example, 98.5% can be rounded to 99% or almost 100%, which can change the perceived meaning. Using irregular scales, such as showing a scale from 34-42% instead of 0-100%, can make a small increase (e.g., from 35% to 39.6%) appear more significant than it is. Source: Dishonest Fox Chart Bush Tax Cut Edition
   
4. Incorrect Data Analysis
   For example, if sales increase and there is a promotion, one might conclude that the sales increase is due to the promotion. However, the real reason could be that a competitor raised their prices significantly or stopped selling altogether. This also includes selectively presenting only favorable data, such as showing weekly sales figures to highlight an increase from the beginning to the end of the month, even if monthly sales are low.

Consequences of KPI Manipulation

Manipulating KPIs can lead to significant negative consequences, particularly in terms of decision-making. When KPI data is inaccurate or misleading, it can cause executives and managers to make poor decisions based on false premises. For instance, resources might be allocated to areas that appear to be underperforming but are not, or successful strategies may be abandoned because their true impact is hidden. Over time, this can erode trust within the organization, demotivate employees who see their true efforts obscured, and ultimately harm the company’s overall performance and reputation.

Therefore, even if you have a Dashboard, you must ensure that the KPIs included are not easily manipulated. If you are concerned about KPI manipulation, feel free to contact us at Line: @davoy

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