march2021 - 42

MANAGEMENT

Keeping honest KPIs
Performance metrics can be manipulated to look
better, but this offers no real benefit to the fleet.
A key performance indicator (KPI) is just one
of many types of metrics, but the phrase is
wildly overused. KPIs should be measures critical to the success of the enterprise. If a business
has a good KPI, it will typically be successful.
An organization should only have a few KPIs
(not a dozen, or even more) since it is tough to
manage more than five or so.
I remember a heavy equipment fleet meeting that concerned the team's performance
measured by some standard metrics. The
company maintained large haul trucks, excavators, bulldozers, and a variety of smaller
pieces. In the meeting, fleet managers were
reviewing performance month-over-month
and discussing longer-term trends.
This fleet, like every large organization, uses
metrics for a variety of reasons.
Ü The metric might be globally important, such
as ton-mile or cost per ton.
Ü The metric might measure improvement,
such as a positive trend in preventive maintenance (PM) compliance.

By Joel Levitt

PRESIDENT, SPRINGFIELD RESOURCES
Joel Levitt is the president of Springfield Resources, a
management consulting firm that services a variety of
clients on a wide range of maintenance issues. Levitt
has trained more than 17,000 maintenance leaders from
more than 3,000 organizations in 38 countries. He is also
the creator of Laser-Focused Training, a flexible training
program that provides specific, targeted training on your
schedule, online to one to 250 people in maintenance
management, asset management, and reliability.

42 Fleet Maintenance | March 2021

Ü Metrics might be an input to a bonus scheme.
Ü Metrics might rate the location on its mission
to " do no harm " (measure: lost time).
Metrics are essential in a large business for
all types of measurements. A shop manager
will use metrics to alert them that the backlog is getting too large so they can intervene
before the operators notice the problem. All
kinds of profitable business practices are based
on metrics.
Humans can be brilliant when it comes to
manipulating measures to make ourselves
look good.
Some people play to win the KPI game by
running around at the end of the period trying
to complete every overdue PM, or by placing
orders for every out-of-stock item. That is not
a problem, though. KPIs are designed to set
people in action in the right direction.
There is a dark side to metrics, however.
The dark side is when the metrics are manipulated to show something that is not true or
display improvement in something that is
not improved.
Another conversation at the fleet meeting
was about how to calculate a particular KPI.
One of the computer-savvy people in maintenance reported that she looked at the script
and saw that many numbers were added
together and divided by the hours. The discussion then veered off in what seemed like an
unhealthy direction.
They were changing some of the KPI inputs
to make them look better without any real
improvement. Some of the information can be

»KPIs are designed to set people
in action in the right direction.
164101192 | Ksenia Kolesnikova | Dreamstime

" The whole point
of KPIs is to
create an opening
for action. Don't
render them
useless, or worse
- render them
incorrectly. "
Joel Levitt

changed easily and without consequences; this
appeared to be a win-win situation, but in reality is gaming the number. KPIs can be gamed by
increasing or decreasing an extraneous factor
that improves performance without anything
having been done better.
An example is schedule compliance. It
is supposed to measure how much of the
scheduled work was completed during the
scheduled period. This is calculated by
adding up the earned hours for scheduled
jobs completed, then dividing by the number
of hours scheduled.
If someone plays with the hours scheduled
(the denominator) by claiming more emergency hours, compliance can appear to improve
without actually improving anything.
The whole point of KPIs is to create an opening for action. Don't render them useless, or
worse - render them incorrectly.

march2021

Table of Contents for the Digital Edition of march2021