ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy
Karnak Logistics uses a KPI of 'percentage of deliveries made on the day promised'. The operations team has begun refusing difficult, remote orders so that the percentage stays high, although this reduces total sales. Which weakness of KPIs does this behaviour best illustrate?
This illustrates dysfunctional behaviour. Managers are meeting the KPI by refusing difficult orders, which improves the reported percentage but damages sales and the real objective. The measure is being gamed instead of guiding genuinely better performance.
- ADysfunctional behaviour, where managers manipulate activity to hit the measure rather than the underlying objectiveCorrect
- BLagging indicator bias, where results are reported too late to act on
- CLack of benchmarking against competitors
- DExcessive number of measures causing information overload
Explanation
The team is distorting its behaviour to improve the reported figure while harming the wider objective of growth. This is dysfunctional behaviour or gaming of the KPI. The other options describe different weaknesses and are not shown in the scenario.
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