To KPI or Not To KPI?

KPIs – or key performance indicators – have been a staple in sales and recruitment offices across the globe since time immemorial. Okay, I’m being a tad dramatic, but they sure have been used for a very, very long time. And not without reason; KPIs are a useful tool for measuring productivity and performance, along with assessing whether your team will hit their quarterly goals. But overreliance on the KPI can be detrimental to your team in ways you might not have thought of. Let’s discuss both sides:

Why KPIs are a Good Thing

Many recruitment firms, if not all, implement KPIs in some way without giving it a second thought. Admittedly, there are some distinct advantages to using KPIs. First, they offer a clear way to measure your consultants’ work. The show just how productive your consultants are, they show whether consultants are putting their time in the right place, and show how they benchmark against their colleagues. So, if your consultants are spending all their time calling candidates, but zero time calling for new business – you’ll quickly catch them out, and correct their failings easily.

Second, it gives you (as manager and founder of your shiny new recruitment firm) a solid mandate for making decisions within your team. The KPI system allows you to assess consultants objectively. It’s the recruitment version of standardised testing. It eliminates bias, and gives you the framework and mandate to make tough decisions about letting consultants go or correcting unwanted behaviour.

Third, KPIs can be clear indicators of what your results will be. This is an essential tool for a startup, where cashflow can be difficult and you want to hit a few deals as quickly as possible. If you know for certain that 100 calls will result in 20 new candidates, converting to 40 interviews and then 2 placements –  you can easily work backward to know how much activity there should be on a daily/monthly/quarterly basis. It’s a simple case of maths at this point. This is crucial because while there are other ways to measure success in recruitment, money is really all that matters. And to get money, you have to make placements – which means submitting CVs, finding candidates and making calls. And these need to be measured.

However, there are a few things to keep in mind when considering setting up your team KPIs. And it involves a deep understanding of human motivation and behaviour.

Let’s Get Scientific

To be blunt – KPIs can be hugely detrimental to your consultants’ motivation and productivity. It all relates to the difference between intrinsic (internal) and extrinsic (external) motivation. Intrinsic motivation is the deep, guttural drive that pushes you forward. The force that motivates you to work past midnight. It’s the dream that someone has that they’re working towards – whether that’s family, success, or to survive. If you, as a manager or boss, can tap into this internal motivation of your employees, you will always get the absolute best out of them. They will fly.

However, KPIs are sadly a perfect example of the opposite; the extrinsic motivators. These are goals that are outside of the individual. Money, bonuses, commission. Shockingly, these extrinsic motivators (which many companies buy into as the only way to motivate employees) actually de-motivate people.

Don’t believe me? Check out this stellar Ted Talk by Dan Pink, where he discusses the Candle Problem study. It found that where there is a cognitive element to a problem (which usually is the case in recruitment tasks), the science says that people are strangely demotivated to complete their task. For purely menial tasks, on the other hand, extrinsic motivators work very well.

How to Do It Better

There are clear advantages to KPIs, yet some clear disadvantages as well – and this can make things confusing. In the end, a successful leader will rely on several different methods to inspire productivity in their employees. Tapping into internal motivators (and knowing your consultants well enough to be able to do this) will help productivity in some circumstances, and relying upon KPIs for reward-based motivation will work in other circumstances. So, next time your consultants are lagging behind, reach into your arsenal of tools to find the most effective method of getting the most out of your consultants. You’ll be surprised at the results.

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