Once upon a time, KPIs (key performance indicators) were considered the gold standard of performance management. But have KPIs turned out to be just fool's gold?

"Key Performance Indicators in many organisations are a broken tool," opines writer and KPI expert David Parmenter. "KPIs should be measures that link daily activities to the organisation's critical success factors (CSFs), thus supporting an alignment of effort within the organisation, in the intended direction... However, poorly-defined KPIs cost the organisation dearly."

Therein lies the irony: with more companies clued in on the benefits of efficiency, fewer companies seem to be able to measure internal metrics properly, much less leverage them to optimize their own operations. For instance, call centers might set KPIs based on faster call turnover, resulting in callers being repeatedly foisted off on other departments instead. Poorly-designed KPIs in this case lead to reduced customer satisfaction--creating more problems than they solve!

"There is a mismatch between what science knows and what business does," explains Dan Pink, author of Drive. "Too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science."

Pink proposes a new approach that centers on intrinsic motivation, or Motivation 3.0, that revolves around three elements: "Autonomy: the urge to direct our own lives. Mastery: the desire to get better and better at something that matters. Purpose: the yearning to do what we do in the service of something larger than ourselves."

Enter gamification at work. These Gamification Platforms involve the use of game design elements and principles to fulfill business objectives--a way of managing performance through gamification. By having employee performance reflected to them using game mechanics and rules that dovetail with the needs of the enterprise, work KPIs can be measured and scored in real time, which is much better than the once-a-year performance metrics used in most performance management systems.

"Properly implemented, enterprise gamification can bridge the gap between employee motivation and the quest for better KPI results, as it addresses mastery, autonomy, and purpose," says Gal Rimon, Founder and CEO at GamEffective, a performance gamification platform. "Gamification allows managers to easily communicate what the next tasks and goals should be for every employee; it also sets expectations for learning and for performance and can show employees in real time how their goals are aligned with the company's. It is like a fitbit for work," he adds.

Fair rules encourage autonomy

Because feedback is based on hard performance data and common parameters, participants in a gamified work environment can transcend petty politics and focus on the corporate goals set by management and codified by the rules of the game. When employees own their success or failure--when there's no room for excuses--they tend to self-motivate to direct their own performance in pursuit of the goals of the game.

Real-time feedback encourages mastery

Gamification sets up a feedback mechanism that tracks progress as it happens: employees can see how they're doing as they work, and change their performance on the job. Compare that to traditional KPI performance management, where feedback is provided after the fact--long after employees are in a position to do anything with the information, with some systems offering feedback that is almost a year old.

While incremental, real-time feedback is anything but insubstantial: making even a small amount of visible progress is a powerful motivator for employees to develop mastery over their skills. It also helps employees self-correct.

"Our research showed that, of all the events that have the power to excite people and engage them in their work, the single most important is making progress--even if that progress is a small win," explains Teresa Amabile, co-author of The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work. "Because people are more creatively productive when they are excited and engaged, small wins are a very big deal for organizations."

Social context reinforces purpose

The old system of ranking employees makes them feel as if they're competing with one another, forgetting that they're colleagues sharing a common goal within an enterprise. KPIs and other conventional performance management techniques often forget that employees, as human beings, are social beings as well: we compare our accomplishments with others, and we also derive joy from the successes of our favored peers. Being ranked can be a threatening and disquieting experience.

Performance gamification, in contrast, embraces our social nature. Personal relationships can be harnessed to balance competition (seeing one's progress on a leaderboard, for example) with teamwork ("liking" other teammates' accomplishments). In the process, purpose is reinforced, as one's own work can be more easily seen as part of a bigger whole, moving something much larger than ourselves.


Is gamification due to entirely replace workforce KPIs? It's more likely that gamification will supplement KPIs instead of supplanting them: a performance management and assessment tool that better engages stakeholders, giving them a sense of control and freedom over their tasks--and a sense of ownership over the outcome--that conventional tools cannot.