---
title: "As Long as You Take It Seriously, No KPI Can't Bring Down a Company"
description: "Why does Wang Shi say that performanceism is the pus of an enterprise? This article tells the story of a small company owner, Zhang, who faces the dilemma of implementing KPI assessments. Initially, he avoids KPIs, but after problems arise, he adds more and more indicators, leading to a situation where the company's revenue stagnates while sales managers' performance scores increase. The article explores the pitfalls of KPI-driven management and suggests that high pay might be a better alternative."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2018-01-17"
language: "en"
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---

# As Long as You Take It Seriously, No KPI Can't Bring Down a Company

> Why does Wang Shi say that performanceism is the pus of an enterprise? This article tells the story of a small company owner, Zhang, who faces the dilemma of implementing KPI assessments. Initially, he avoids KPIs, but after problems arise, he adds more and more indicators, leading to a situation where the company's revenue stagnates while sales managers' performance scores increase. The article explores the pitfalls of KPI-driven management and suggests that high pay might be a better alternative.

Why does Wang Shi say that performanceism is the pus of an enterprise?

1/6
From a top salesperson to a true manager
Two years ago, Mr. Zhang obtained the sales agency rights for a German brand and started his entrepreneurial career.
Relying on his deep connections in the industry, Mr. Zhang managed to grow the company to a scale of tens of millions—according to a survey agency, the success rate for first-time entrepreneurs is less than 12%, so Old Zhang was doing quite well.
But his bottleneck also appeared: the few major clients he had were all acquired and maintained by him personally. If he wanted to expand new business, he couldn't spare the energy.
From a top salesperson to a true manager, this is the first operational bottleneck every entrepreneur must face.
Mr. Zhang consulted a friend who worked as a management consultant. On the consultant's advice, Mr. Zhang decided to promote three sales managers with good performance to regional sales managers, each responsible for clients in three major regions, while he himself would only directly handle local major clients. This way, he could shift his energy to expanding new brand agencies, employee training, and internal management.
But then, on the question of whether to implement KPI assessments, Mr. Zhang hesitated: he was still a small company and didn't need to do KPI like big companies. So he only gave the three sales managers basic sales targets.
Half a year later, the results were surprisingly good. But just when he thought he had achieved a smooth transition, the company's financial manager raised a serious financial warning.

2/6
You have to use some measures
The financial statements showed that sales in the first half increased by 20% quarter-on-quarter, but sales profit only rose by 5%.
It turned out that their agency products were divided into two categories. Category A had no domestic competitors and high gross profit, but the problem was that market demand was not large, and sales had been stable. Category B products had a large market space and were relatively easy to sell, but competition was fierce, and the brand's agency gross profit was also low.
Previously, Mr. Zhang had controlled the sales ratio of the two categories well, both bringing sales to the brand and preserving his own profits.
But now, the three sales managers, facing pressure from sales performance targets, naturally chose to push the easy-to-sell Category B products.
In fact, Mr. Zhang always knew where the problem was, but he had no better solution. He could only repeatedly emphasize that both categories were important, but now it seemed that in the face of interests, some KPI measures were necessary.
Mr. Zhang found his management consultant friend. The friend said: "You're not familiar with KPI? Well, you can still follow the plan from your previous company. I'll give you three tips here. When you encounter difficulties, open them in order."
But Mr. Zhang remembered the huge shadow KPI had cast on him before. He had also boasted that if he ran a business, he would never adopt KPI, that number-only theory. He thought, let's keep it simple: the core indicators are just two: sales and profit margin.
It must be said that KPI works. Within less than three months, sales of the high-profit Category A products gradually recovered.
Just when Mr. Zhang thought everything was fine, he received a call from an old client he had worked with for many years, which shocked him. He quickly asked for the customer statistics table he hadn't looked at for a long time.

3/6
How did KPI become API?
The customer statistics table showed that the old customer churn rate had increased several times this year, including the company's earliest batch of customers, who had not placed new orders for more than half a year.
Mr. Zhang immediately called these old customers, and sure enough, it was the same problem.
It turned out that among Category A products, there was a special product X with very small demand but very rigid demand, and no other brand made it. This was a trump card in hand. Previously, Mr. Zhang used it as a reward for old customers: only when they accumulated a certain order volume could they get the corresponding quota of X products.
But now, the three sales managers, in pursuit of performance, actually used product X as a bargaining chip to win new customers. As a result, the quotas for old customers were not guaranteed, and they cancelled new orders one after another. But because the number of new customers grew relatively quickly, this problem was masked, and Mr. Zhang didn't notice it for more than half a year.
Mr. Zhang was furious and really wanted to go back to the old way, but honestly, after being away from business for half a year, he couldn't return to the state of traveling every day for sales.
Only then did Mr. Zhang remember that his previous company had made KPI so complicated, all because they were forced by employees who exploited loopholes.
After thinking it over, there was no other way but to add another KPI assessment item—customer churn rate.
Soon the customer churn rate stabilized, but the finance department came to Mr. Zhang again.
It turned out that in order to maintain performance, the sales managers often promised long payment terms. As a result, payment collection became a big problem, and cash flow had been negative for several months.
So let's add the assessment of payment terms.
However, Mr. Zhang knew that the next problem would definitely be the "sales expense surge" caused by high rebates—aren't these all the tricks he used when he was a salesperson?
Better to add the "sales expense" assessment item in advance...
In frustration, Mr. Zhang suddenly remembered the three tips from his management consultant. He curiously opened the first one, which contained a note with two lines:
> KPI is a good thing: whatever you assess, you will definitely get;
>
> But KPI is also a bad thing: whatever you don't assess will become a performance black hole.
>
> So KPI (Key Performance Indicator) will eventually become API (All Performance Indicator).
That day, Mr. Zhang finally recalled the terror of being dominated by KPI, and the humiliation of being imprisoned in Excel spreadsheets.
But Mr. Zhang's fighting spirit was also ignited: I don't believe it. I will not only assess performance, but also attendance, company culture, loyalty...
Come on, let's hurt each other.

4/6
Real assessment or fake assessment?
In fact, Mr. Zhang's troubles were just beginning.
This quarter, the company's revenue growth was 0, but the KPI performance of various sales managers increased by 30%, and they were all happily waiting for bonuses.
Mr. Zhang couldn't believe his eyes. He asked for the KPI assessment data of all employees. After looking at it, he was dumbfounded: the sales revenue assessment accounted for less than 30%.
Mr. Zhang was about to call the employee responsible for KPI to question him, but then he thought: weren't these all set by himself one by one?
All indicators have to be deducted from 100%. With too many indicators, each one becomes unimportant.
Mr. Zhang felt at a loss. He remembered there were two more tips, so he opened the second one:
> But KPI serves the company's strategy. If there is no focus, it's better not to assess.
>
> So once you adopt KPI, you can only choose between "real assessment, but with performance black holes" and "fake assessment, giving employees a little psychological pressure."
Damn! It's clearly one sentence, but it's split into two. Mr. Zhang angrily threw the tip into the trash can.
But his mind was still pondering those two sentences. If he really had to choose between "real assessment, but with performance black holes" and "fake assessment, giving employees a little psychological pressure," which one should he choose?

5/6
Is performanceism the pus of an enterprise?
KPI is a battlefield for games between the company and employees, but on this battlefield, the company has almost no chance of winning. Because the company has to manage a bunch of people's KPIs, while employees only need to watch their own KPIs.
Someone might ask: didn't the company design KPIs for every employee? That's right. Let's see how Mr. Zhang's sales targets were derived. Basically, it was based on his experience when he was doing sales: last year he did 10 million, this year a 30% increase, so 13 million should be no problem.
If you expect quantitative assessment to solve all problems, you'll have to wait until the era when humans are ruled by AI. Currently, to truly understand the rationality of these indicators, the number of people responsible for assessing KPIs would definitely be more than those actually doing the work.
Most KPIs will change from a tool for the company to assess employees to a tool for employees to cope with the company. This is not a problem with KPI itself, but with assessment itself.
There is no doubt that KPI assessment is a very effective short-term management tool, but that's all. A large number of behavioral studies have shown that in some professional positions, pure material rewards can reduce employees' professional honor, work enthusiasm, and desire to learn.
So Wang Shi said after a series of quality incidents at Vanke in 2012: "Performanceism is the pus of an enterprise." A director of Sony wrote an article titled "Performanceism Ruined Sony," and a former vice president of General Motors also wrote a book called "Performance Kills: The Bankruptcy Revelation of General Motors." Both reflected on the negative impact of data-driven management.
Mr. Zhang thought: From this point of view, "fake assessment, giving employees a little necessary psychological pressure" might not be a bad option.
What about the last tip? Let's open it now, so as not to give ourselves another "surprise."

6/6
The last tip
The last tip contained three sentences:
> Why did Ford's production line transformation succeed, while other imitators failed?
>
> Because Ford doubled workers' wages and reduced working hours by one-third.
>
> So if you can implement KPI with double the salary, then the advice from the first two tips is all void.

-END-


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