When Metrics Become Targets and Hurt Business Results
Laerte Finotelli analyzes how purely quantitative goals distort operations and jeopardize long-term business sustainability.
When key performance indicators are turned into isolated operational targets, teams often hit their numbers without delivering real value. Laerte Finotelli explores the impacts of Goodhart's Law on management and highlights the importance of aligning metrics with lasting business goals.
In a conversation with Bruno Gimenes on Marketing - The Podcast, product coordinator Laerte Finotelli discussed the impacts of Goodhart's Law on managing teams and data products. The concept describes what happens when a performance indicator loses its diagnostic value once it is turned into the primary operational target, encouraging behaviors that hit numerical reports while drifting away from the core business objective.
The operational distortion when metrics become targets
In the video above, Finotelli illustrates how poorly designed goals create misaligned incentives on the operational front line. As a practical example, he points to call centers pressured simultaneously to reduce average handle time and increase the volume of completed calls.
"And then you say, for example, that the telemarketing team's calls need to be quick and high-volume. What will they do? They'll start dialling frantically; you'll answer, they'll hang up, or they'll hang up right while you're talking," Finotelli explains, highlighting the distortions that arise when chasing a metric overrides service quality.
Aligning with sustainable business growth
By hitting speed and call volume goals, the operation technically meets established parameters, yet it hurts customer support. For Finotelli, leadership must ensure indicators reflect the long-term health of the organization.
"Generally, a company wants to maximize its profits, but it can't be at all costs; it needs to be sustainable and enduring," states Finotelli, emphasizing that targets must support customer satisfaction and real value delivery. "So whoever designs goals must be careful not to chase numbers just for the sake of numbers," he concludes.