5) The KPI Trap – How We Got Here

If you are a mine executive, you probably ask this question often:

“How is it that we work harder, measure more, and report endlessly, yet we struggle to lift productivity improvement to where it was 25 years ago?”

Is this merely a mining problem? No, says Yves Morieux of Boston Consulting; Fortune 500 companies have also experienced a similar productivity slump. Productivity growth among Fortune 500 firms has fallen from 5% annually in the 1950s and 1960s to below 1% since 1995. This decline persists despite technological advances such as the internet and AI.

Meanwhile, the KPIs for senior executives have increased significantly, from 4-7 in 1955 to 25-40 today.

Poor productivity often links to low employee engagement. Does one cause the other? Morieux suggests they both originate from a deeper issue. In our pursuit of efficiency, we have overused what is called the "holy trinity" of clarity (rigid job descriptions), measurement (endless KPIs), and accountability (individual responsibility). While this approach may seem logical, it can sometimes lead to unintended negative effects.

Morieux explains how this creates a vicious cycle:

Firstly, to ensure clarity, we provide detailed job descriptions and processes to define roles precisely. However, we now often create silos, with people concentrating on their own tasks and saying, "That's not my job." Trust is damaged when we overlook the big picture, as everyone tends to focus on protecting their own domain.

Secondly, measuring through KPIs fosters individual accountability. Managers rely on metrics for everything, overwhelming us with reports, dashboards, and audits. Morieux's research shows that complexity has increased by 6.7% annually over the past 50 years, and procedures have grown by 50-350% in the last 15 years. In the most complex organisations, managers spend 40% of their time on reports and 30-60% in meetings. This wastes human effort, as people now focus on what is measured, rather than what creates value. Collaboration suffers because helping others is not reflected in our individual metrics.

Thirdly, forced accountability encourages blame. When things go wrong, we seek out culprits instead of solutions. This creates additional layers of back offices, coordinators, and committees to "align" everything, which increases interfaces and barriers. The result? Injustice and inefficiency. Employees become disengaged—77% worldwide—are disengaged because their efforts seem pointless. Productivity declines as organisations become inflexible and struggle to adapt to changing challenges.

Morieux uses a relay race analogy: The fastest runners lose if they don't cooperate in passing the baton. Metrics reward speed rather than the handoff, so the team fails.

Essentially, our desire for control adds complexity, hampers cooperation, and lowers productivity and engagement. As Morieux states, "We pay more attention to knowing who to blame in case we fail rather than creating the conditions to succeed."

And mining follows the same pattern.

We are balancing safety, costs, output, environmental compliance, and more. However, despite our best efforts, productivity stalls and engagement drops. Maintaining a steady product flow remains a constant challenge.

We have used the same approach with ERP-driven budgeting, functional KPIs, and local efficiency targets, and we have found ourselves in the same trap: a site that looks well-managed on dashboards but struggles to maintain product flow. We have followed the same path and ended up in the same hole.

A Global Decline Hidden in Plain Sight

When McKinsey first released its MineLens Productivity Index, it caused a stir across the industry. Even after accounting for deeper mines and declining grades, globally productivity is still 25% below the level of 2004.

EY’s Productivity in Mining: Now Comes the Hard Part painted a similar picture. Executives ranked productivity as their number one challenge. They acknowledged that despite all the talk of efficiency, the more their mines grew, the more complex and unmanageable they became.

The irony? Everyone understood that the solution was to "break down silos and empower the workforce.” However, the tools we chose to enhance integration—such as ERP systems, detailed KPIs, and budgeting models—ultimately reinforced silos and undermined cross-functional collaboration.

Mining isn't failing because of laziness or a lack of effort. It struggles because of the philosophy underlying our control systems.

The Birth of the Modern Trap

To understand today’s productivity paradox, we must look back to the early 20th century.

When Alfred Sloan built General Motors, he introduced a groundbreaking management idea: dividing the company into specialised divisions, assessing each division’s efficiency, and making managers responsible for their own results.It was logical and clever — for its time.

Decades later, computerisation amplified that logic. ERP systems like SAP promised a single, unified source of truth. Every transaction, cost, delay, and variance could be captured and displayed in real time. Finally, leaders could see everything.

But seeing everything isn’t the same as understanding what matters. The flood of data created a false sense of control, with managers managing reports instead of reality.

Over time, this logic became ingrained in the mining industry’s DNA. Budgets, KPIs, and ERP systems turned into the unseen operating system of every site — shaping what mattered, how performance was measured, and how careers were safeguarded. Accounting language evolved into management language.

When Efficiency Kills Flow

Here’s the fundamental flaw: When every department is judged by its efficiency, then every department optimises for itself. Maintenance seeks higher utilisation of fitters and equipment, and finance limits expenditure to meet the budget, and planning keeps everything “in balance.”

Each decision makes sense locally, but when combined, these actions weaken the flow that influences the overall mine performance. The system ultimately aims to maximise the efficiency of individual parts but ends up making the whole system less effective.

A mine that aims to keep every link in its production chain fully utilised often exhibits a “stop–start” flow pattern. When one link fails, the entire chain stalls. The average capacity might be 10 tonnes per hour across a six-unit chain, but the actual output at 80% availability, factoring in interdependencies, is closer to 5 tonnes.

Every report claims that all the teams are busy, but total production tells a different story.

How Budgeting Closes the Trap

Now add budgeting into the mix.

When budgets are based on “balanced capacity,” the whole operation is set to fail before the year starts. Budgets assume that every part of the system — people, machines, and processes — will all perform at standard efficiency simultaneously.

But a mine doesn’t operate that way. Variability, breakdowns, and interruptions mean that protective capacity — slack in non-bottleneck areas — is essential for its stability.

Unfortunately, protective capacity appears as “fat” in a budget spreadsheet. So, it gets cut. This leads to fragile systems that break at the first sign of trouble, forcing managers into firefighting mode.

Worse still, ERP systems enforce the budget with ruthless accuracy. Purchase requests are blocked, hiring is postponed, and operational flexibility vanishes. As one frustrated mine manager said, “The accountants have captured operations.”

Everyone is accountable for their own performance, but no one owns the flow.

Why Working Harder Makes It Worse

When the system underperforms, the usual response is to push harder. More KPIs, more dashboards, and more meetings to review why the targets aren’t met.

Every layer of “accountability” adds more complexity — and another reason for people to play it safe, defend their metrics, and avoid cooperation. As Yves Morieux showed, over the last 50 years, the number of performance requirements for Fortune 500 companies has increased sixfold, from about seven in the 1950s to more than forty today.

Each new target added a new process, report, or interface, resulting in a collapse in productivity.

Mining has taken a similar route. We create organisations that deliberately fail — with straightforward accountability when issues arise — and lack the ability to reliably succeed.

The Fortune 500 Parallel

Morieux illustrates this problem perfectly with the relay race analogy.

To his great delight, some years ago, the U.S. women’s relay team, made up of the world’s fastest sprinters, lost to a slower French team. Each runner optimised her individual performance, but the U.S. team lost the race because they dropped the baton.

The same happens in complex organisations. When clarity, measurement, and accountability become the “holy trinity” of management, cooperation tends to decline. People concentrate on their own part of the race, rather than the efficient passing of the baton.

This is exactly what happens in mining when departments focus only on local KPIs. Drilling, loading, hauling, and processing each chase their own targets — but the baton, the flow of ore through the constraint, gets dropped.

The Way Out – From Balance to Flow

The escape isn't in working harder but in changing how the system works. The Theory of Constraints (TOC) provides the map.

Every mining operation has a constraint — a single point that controls the total output. When we identify that point, focus our KPIs on it, and safeguard its flow, everything else falls into place.

This is the principle behind the Flow Room. A short, daily dialogue focused on the constraint aligns planning, maintenance, and operations around the one thing that matters most.

Instead of forty efficiency charts, teams focus on one clear score — the constraints run-rate. Instead of lengthy post-mortems, they discuss what might hinder or block tomorrow’s flow.

Protective capacity is not considered waste; it becomes our insurance against volatility. Decisions are made at the right level, by the right people, with immediate feedback.

Executives say that within weeks, the chaos eases. Meetings are reduced, output stabilises, and trust is rebuilt. Managers find time to lead again because the system finally works with them, not against them.

Reframing the Executive Challenge

Mining executives are not confronting a “people problem.” They are dealing with a systemic issue that Fortune 500 leaders have been grappling with for decades.

Both are trapped in a management mindset based on false assumptions: that measuring everything guarantees control, that efficiency in every department leads to profit, and that accountability ensures performance.

These assumptions weaken our cooperation, divert us from our focus, and impede ongoing improvement.

And as Yves Morieux says, we don’t have a productivity crisis because people are lazy — we have it because we’ve made work too complicated to succeed.

The Takeaway

Your teams are not the problem; it is your ERP and KPI architecture.

Focusing on the right things makes the path forward straightforward.

• Prioritise flow over balance. Recognise the constraint and make its health clear to everyone.

• Simplify coordination. Replace a complex array of metrics with a few Flow KPIs that guide daily decisions.

• Rebuild trust through cooperation. When everyone sees the same data and shares the same goal, collaboration becomes sensible again.

• Build in protective capacity. Allow your system the flexibility to handle fluctuations.

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The Fortune 500 learnt this lesson the hard way. Mining doesn’t need to go through it again.

We don’t need bigger dashboards or tighter budgets. We need a simpler system logic — one that rewards cooperation paired with the right level of control, and flow over efficiency of all the parts.

That’s how we avoid the KPI trap, and that’s how mining can finally regain the productivity we’ve been chasing for twenty-five years.