Unintended Consequences

KPI Key Performance Indicator for Business Concept to illustrate Unintended Consequences

Written by Bob Lester, DVM for Today’s Veterinary Business

Did you hear about Wells Fargo? For years, the company served as a role model in the banking world for exemplary customer service. Wells Fargo set a goal, or key performance indicator (KPI), to sell eight products to every customer. To accomplish this, they created the “Eight is great” motto, which incentivized employees to cross-sell more products. Did the campaign lead to greater customer satisfaction? Hardly. Instead, Wells Fargo employees created 2 million fake accounts, which led to fraud allegations, $185 million in fines, lost customers and tremendous damage to the brand. Oops!

Was the KPI designed to meet consumer needs? Did it drive the right employee behaviors? Did it serve the bank’s needs? The consequence was not what was intended.

How about another unintended consequence? Sugar cane beetles caused tremendous damage to cane fields in Queensland, Australia. To combat the beetles, the government introduced cane toads from Hawaii in the 1930s. Problem solved? Nope. The poisonous toads thrived in the wild, had little effect on the beetles and caused tremendous ecological damage. Not good.

Here’s one more. Have you tried to solve an issue through a call center representative? Did you feel rushed to conclude your call and hang up? That’s because call centers track a KPI known as AHT, or average handling time. Workers are incentivized to shorten calls. The KPI is not concerned with resolving the issue or satisfying the customer. Perhaps it is the intended consequence.

KPIs Help You Keep Score

Don’t get me wrong, key performance indicators are critical to the success of your veterinary practice. In the same way diagnostic values can assist in determining the status of your patients, KPIs can indicate the health status of your practice. So, let’s back up for a second. What the heck is a key performance indicator and why should you care?

For many of us, KPIs are measures of things like average client charge or the number of pets seen per day. KPIs are meant to monitor goals, reach targets and “keep score” on the things that matter. After all, if you don’t know the score, how do you know if your team or practice is winning? As the old business saying goes, what you measure is what you get.

Intellectually, KPIs are not good or bad. When the right performance is tracked, and that measure results in improved performance, it’s a wonderful thing. But when the wrong KPIs are tracked, or the wrong behaviors are incentivized, you may see unintended outcomes.

Well-meaning KPIs are set with the intention to motivate behaviors that result in successful outcomes. While this is a great idea that often works, getting lost in the weeds is easy.

With that in mind, here are a few tips for developing effective and meaningful KPIs:

  • Keep them simple. Focus on the critical few, not the trivial many.
  • Ask yourself and the team, “What are measures of importance?” The measures must drive the most important factors in achieving success.
  • Make KPIs relatable on all levels of your team. Financial metrics are often not meaningful to your team.
  • Ensure that the team buys into the value of your KPIs. Are you and your team after the right outcome?

In the veterinary world, I would consider these KPIs, all of which are good measures that can result in desired outcomes.

  • Average patient charge. Or average transaction charge, which is a similar measure.
  • Number of pets seen per day.
  • Revenue each doctor produces per day.
  • Monthly profitability (profit and loss).

Blank sheet, clean slate, fresh start. Pick your metaphor. We’d start with the desired outcomes and work backward, or “Begin with the end in mind,” as my hero, Steven Covey, says. What are the desired outcomes? What is it we really want from a successful practice? I’ve thought long and hard and come up with four things. You might come up with others.