In 2025, I facilitated a strategy review workshop for a Medium Sized Sacco. The SACCO’s strategic objective was to deepen member value and grow quality lending. However, the KPIs emphasized loan disbursement volumes, number of new accounts opened, and branch activity reports. Credit officers were rewarded for pushing loans out quickly, not for loan quality or member sustainability.
Predictably, non-performing loans rose quietly in the background. Member complaints increased. Liquidity pressures surfaced periodically. Every year, management explained the results as “market conditions” or “temporary challenges,” yet the same risks kept resurfacing.
This is how KPI misalignment quietly kills strategy execution.
When KPIs are designed around routine activities rather than strategic outcomes, institutions end up measuring motion instead of progress. People become excellent at hitting numbers that do not actually move the organization forward. Boards receive reassuring reports, while the underlying strategic intent remains unfulfilled.
Effective KPIs must start from the end, not the middle. The first question should always be: What strategic outcome are we trying to change? In a SACCO context, this might be improved member retention, sustainable loan growth, stronger capital adequacy, or reduced credit losses. Only then should indicators be defined.
Equally important is eliminating KPIs that reward busyness. Counting meetings held, reports submitted, or loans processed may show activity, but they rarely show impact. Every KPI should clearly answer one simple question: How does this advance the strategy?
Alignment is also critical. Board scorecards, management KPIs, and staff performance measures must point in the same direction. When boards focus on strategic resilience, management on short-term targets, and staff on operational volume, misalignment is inevitable.
Finally, KPIs must evolve. Strategies change, markets shift, regulations tighten, and member expectations grow. Indicators that once made sense can quickly become obsolete. Regularly reviewing and retiring KPIs is a sign of strategic maturity, not failure.
The real lesson is this: Strategy rarely fails because people do not perform. It fails because people perform exceptionally well against measures that do not matter.
So here is the uncomfortable but necessary question for leaders and boards:
Which KPIs in your institution look impressive on paper—but are quietly holding your strategy hostage?