Exercise · Performance Management with AI
How to Game a KPI
See the loopholes in metrics and learn to close them with a balanced set.
Time30 minutes
Participants3 teams
MaterialsFlip chart
From the trainingPerformance Management with AI
Why this exercise
When a measure becomes a target, it ceases to be a good measure — this is how Goodhart's law is often summed up. Count calls and you get short empty calls; count only margin and sales managers turn away large clients. Participants first play "crafty managers" and then the manager who closes the loophole. The role relieves tension, and the findings are very precise.
How to run it
- Briefly show how individual metrics get "gamed" and the idea of a balanced set: result, quality of the result, client, development.
- 10 minutes: the teams are sales managers who want the bonus with minimum effort. How do they game their set? Team 1: "revenue + number of meetings". Team 2: "margin + new clients". Team 3: "repeat orders + average discount".
- 10 minutes: the teams are the manager. Which metric should be added or replaced to close the loophole?
- Presentations, 3 minutes each.
Debrief questions
- Which loophole have you already seen in your team?
- Which metric in your set needs counterbalancing?
Tips for the facilitator
- Typical findings: empty box-ticking meetings, margin achieved by turning away large clients, splitting orders, a discount hidden in "free delivery".
- To "my people don't do that", answer: most people are honest, but if the system rewards a loophole, someone will use it — and everyone else will see it.
- If the group drifts into discussing the company's bonus scheme, bring it back to their area of influence: which metrics are discussed at the weekly meeting is the manager's decision.