Leadership Must Precede Management

Why Your KPIs Might Be Sabotaging Your Culture

"Key performance indicators, when not linked to the organization's purpose, can lead to perverse incentives and unintended consequences." ~ Phoenix Performance Partners

What You'll Learn

• Why metrics disconnected from purpose create perverse incentives and harm culture

• The critical difference between leadership (vision/purpose) and management (measurement)

• How to structure KPIs: outcome indicators, process indicators, and input indicators

• Leading vs. lagging indicators and why both matter

• The accountability principle that makes metrics actually work

Imagine a hospital decides to reduce emergency room wait times. Good goal, right?

They set a clear KPI: No patient waits more than 30 minutes before being seen by a doctor. They track it religiously. Managers are held accountable. Wait times drop dramatically.

Success?

Not in this scenario. Here's what could happen: Ambulances start getting diverted because the ER can't accept new patients without breaking their 30-minute rule. Patients in genuine crisis get turned away. The metric improves while patient care deteriorates.

This is what happens when management precedes leadership. When you measure without purpose. When KPIs become goals instead of tools.

Leadership must precede management. Always.

Leadership vs. Management: Tools, Not Titles

Let's clarify what we mean by "leadership" and "management"—because these aren't roles or titles. They're tools. Two different approaches to getting work done.

Leadership is about the why. It's making sure people are clear about where they're headed, the mission they're on, the purpose driving the work. Leadership creates clarity about direction and meaning.

Management is about the what and how. It's making explicit agreements about what to do next in pursuit of that why. Management creates clarity about execution and accountability.

You need both. But you need them in the right order.

Leadership without management is inspiration without traction—people know where they're going but have no plan to get there.

Management without leadership is activity without purpose—people are busy but don't know why it matters or where they're headed.

When we say "leadership must precede management," we mean: Get clear on the why before you measure the what. Establish purpose before you build systems. Create vision before you demand accountability.

This is why metrics disconnected from purpose are so dangerous—they're management without leadership. Measurement without meaning.

Purpose Before Metrics

A KPI isn't your destination. It's your compass. And a compass only helps if you know where you're trying to go.

When metrics aren't anchored in organizational purpose, people optimize for the measurement at the expense of the mission. They manipulate numbers. They game the system. Not because they're bad people, but because they're doing exactly what you're measuring them on.

The ER optimized for the 30-minute metric while losing sight of the actual purpose: providing quality emergency care that saves lives.

This is why leadership must precede management. You have to be clear about why you exist before you decide what to measure.

Otherwise, your KPIs won't guide transformation—they'll sabotage it.

The Framework: Three Types of Indicators

Once you're clear on purpose, you need the right structure for measurement. Here's the hierarchy:

1. Outcome Indicators: Did We Get the Job Done?

Outcome indicators measure results—the actual achievement of your purpose. These come in two forms:

• Lagging Indicators: Measure ultimate success or failure after activities conclude (revenue, customer retention, graduation rates, patient survival rates)

• Leading Indicators: Predict success or failure well in advance of ultimate outcomes (pipeline health, student engagement scores, early intervention rates)

Lagging indicators tell you the final score. Leading indicators tell you what's coming and give you time to act.

2. Process Indicators: Are We Doing It Right?

Process indicators measure compliance, efficiency, or effectiveness of specific processes. They answer: "Are we following the system we designed?"

Process indicators feel safer because they assure you "I'm doing it right"—but they don't tell you if you're getting the job done. You can follow the process perfectly and still fail to achieve the outcome.

Process indicators are useful in conjunction with outcome indicators, never instead of them.

3. Input Indicators: Is This Sustainable?

Input indicators measure resources consumed during the generation of outcomes—time, money, energy, materials.

You might achieve great outcomes, but if the input cost is unsustainable, you're burning out people or depleting resources. Input indicators ensure you can keep winning, not just win once.

The Hierarchy Matters: Always start with outcome indicators (what success looks like), then add process indicators (how we'll get there), then input indicators (at what cost). Never reverse this order.

What This Looks Like in Practice

Let's apply this framework to a real transformation goal: Building a culture where managers develop people effectively.

Outcome Indicators (Lagging):

• Team retention rate by manager (shows which managers develop vs. deplete people)

• Internal promotion rate for roles led by each manager

• 360 feedback scores on developmental leadership behaviors

Outcome Indicators (Leading):

• Number of developmental 1-on-1s per manager per month

• Percentage of team members with active development plans

• Frequency of coaching conversations vs. directive conversations

Process Indicators:

• Manager participation in development training

• Completion of 1-on-1 documentation in system

• Use of a developmental conversation framework

Input Indicators:

• Time invested in manager coaching per month

• Manager workload (to ensure they have capacity to develop people)

• Resources allocated to development programs

Notice the structure: Outcome indicators tell you if managers are actually developing people (results). Process indicators tell you if they're using the tools provided (compliance). Input indicators tell you if the system is sustainable (resources).

And notice this: The leading indicators predict the lagging indicators. If developmental 1-on-1s increase (leading), retention will improve (lagging). But you'll see the leading indicator shift months before the lagging indicator confirms it.

The Accountability Principle

Here's what makes KPIs effective or worthless: One individual must promise to be accountable for ensuring that each targeted KPI is achieved.

Not a committee. Not a department. One person.

That person doesn't have to achieve the KPI alone—they likely need help from others. But they own the promise. They track progress. They sound the alarm when the metric trends wrong. They coordinate the response.

Without individual accountability, KPIs become "everyone's responsibility," which means no one's responsibility. The metric drifts, and no one intervenes until it's too late.

For every KPI on your dashboard, ask: "Who owns this? Whose name is next to it? Who's making the promise?"

If you can't answer clearly, the KPI won't drive action.

The Challenge This Week

Review your current KPIs through this lens:

Step 1: Check Purpose Alignment

For each metric, ask: "Does this measure progress toward our organizational purpose, or have we lost the thread?" If you can't connect the KPI to purpose, it's creating noise, not clarity.

Step 2: Audit Your Indicator Balance

Do you have outcome indicators (lagging and leading)? Process indicators? Input indicators? Or are you over-indexed on process compliance at the expense of actual results?

Step 3: Identify One Missing Leading Indicator

What's one leading indicator that would predict a lagging outcome you care about? Add it to your dashboard. Start tracking it now, before the lagging indicator tells you it's too late.

Step 4: Assign Clear Accountability

For your most important KPIs, name one person accountable for each. Not responsible for doing all the work, but accountable for ensuring the promise is kept.

The Truth About Measurement

Metrics are powerful—which means they have the ability to be dangerous.

They focus attention. They drive behavior. They communicate what's valued.

When metrics are anchored in purpose, they guide transformation. When they're disconnected from purpose, they create perverse incentives, manipulation, and unintended consequences.

This is why leadership must precede management.

Make sure your compass is pointing toward something worth reaching.

Try This Today

Pick one of your organization's most important KPI. Ask: "Is this anchored in our purpose, or have we lost the thread? Is it an outcome or just a process? Who's accountable for it?"

If you can't answer all three clearly, you've found your work.

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