A Love Affair with KPIs
In professional service firms, especially in the Architecture, Engineering and and Construction (AEC) world, our love affair with KPIs just keeps growing.
We’re a sector that values numeracy. We like the clarity that comes from measuring inputs, outputs, and everything in between. And more often than not, companies in the industry are linking their KPIs to reward and recognition systems.
But as I’m reminded every time I help leaders design KPI frameworks, Daniel Pink’s book “Drive” offers a critical caution: traditional reward systems rarely deliver high performance, creativity, or deep engagement. In fact, they often do the opposite.
There’s a dawning recognition across professional services that “carrot and stick” approaches simply don’t work. More rounded, well-considered KPI frameworks can help build healthier, more sustainable, multiple-bottom-line organizations. But even with the best of intentions, poorly designed KPIs often lead to deep and unintended consequences.
Take utilization. Nearly every AEC firm measures it. But when utilization becomes a standalone KPI, without a counterbalancing measure such as:
- Were the hours actually billed? Did the work create value?
The unintended outcomes can be significant:
- timesheet padding,
- margin erosion,
- unreliable data for organizational planning,
- burnout, and
- a slow leak of trust inside the workplace.
All of it harmful. All of it avoidable.
I often hear leaders say in response, “We have good people who won’t cheat the system.” And I agree wholeheartedly, most people are good people. But as we know, what gets measured gets managed… and gets done. It applies equally in professional service firms and in the public sector.
Look no further than studies out of the UK’s National Health Service. Ill-considered performance metrics have, at times, led to compromised health outcomes, not because clinicians lacked integrity, but because the system rewarded the wrong things. People naturally align to what the organization signals is important.
The magic happens when we slow down and intentionally design KPIs that reinforce the culture, strategy, and outcomes we genuinely want, not just the ones that are easy to count.
Where have you seen KPIs elevate performance and culture? And where have you seen them fall short?