Our oldest has been playing summer basketball, and because they’re young, the whole thing is mostly chaos. Our son will practice at home like he’s preparing for the NBA. Then the whistle blows in the actual game, and half the time he’ll stand there, the other half he’ll run up the court trying to step on all the lines.
So I did the classic parent move. I picked one measurable thing and tried to tie a reward to it.
“If you get a rebound, I’ll get you a slush after the game.”
He didn’t get a rebound. But he did make a few real attempts, got bumped around, and started going after the ball instead of spectating. So I bought the slush anyway, because that’s what I wanted: some effort and engagement.
Before the next game, he tried to connect the dots the way any human would.
Mom asked if he was going to get a rebound and he responded, “Dad got me one even though I didn’t get a rebound last time. So he’ll get me one either way.”
There went a good idea down the drain… I put the reward on a number, but then gave the reward without the number. So of course, he caught on immediately.
But I realized, it’s not so different from us. When we put a reward behind a number, people optimize for that number. And if the number isn’t right, you create problems. This problem started with labeling a rebound as the measure for the reward.
A rebound is an output. The inputs are everything that makes the rebound more likely: getting in position early, boxing out, going to the ball, staying engaged when you’re tired, and reacting instead of watching.
If I only incentivize rebounds, I’m telling a kid I only care about the scoreboard. If I incentivize the inputs, I’m saying I care about the behaviors that create the result.
Most businesses do the first one. They pay people for rebounds.
WHY THIS HAPPENS
Most owners don’t have a “KPI problem.” They have a measurement problem, and when you measure the wrong thing you accidentally train the wrong behavior.
Here’s what shows up over and over.
1) LAGGING METRICS FEEL SAFE
Revenue, profit, cash, utilization, gross margin. Those numbers feel like the truth because they’re on the financial statements, and they do matter.
But they’re lagging. By the time you see the miss, the miss already happened, and a monthly P&L can’t tell you what to do on Tuesday. It can only tell you what you should have done three weeks ago.
This creates a natural lag, which means it takes you longer to recognize the issue and slows down your iteration cycle.
2) WE PICK A METRIC AND PRETEND IT’S THE GOAL
Goodhart’s Law says, “When a measure becomes a target, it ceases to be a good measure.”
Most teams aren’t trying to cheat. They’re trying to win. So if you tell them “win = this number,” they’ll push everything toward that number, even if it quietly harms the business.
You’ve seen the pattern. You incentivize jobs closed and quality drops. You incentivize utilization and people stop helping each other. You incentivize revenue and discounting becomes the strategy. You incentivize gross margin and service gets slow because people stop doing the hard stuff that makes customers stay.
3) OUTPUTS ARE EASY TO TRACK; INPUTS REQUIRE THINKING
Outputs are convenient. They’re clean, reportable, and easy to put on a dashboard.
Inputs take work. You have to define them, teach them, track them, and build a rhythm where they’re reviewed. That’s why most incentive plans are built backward, starting with the scoreboard instead of the playbook.
WHAT TO DO IN YOUR BUSINESS (SO YOU’RE NOT “PAYING FOR REBOUNDS”)
This is the part most owners skip, because it forces a simple but uncomfortable question: what behaviors actually create the outcome I want?
If you get that answer right, your KPIs and incentives get easier. Here’s a simple way to do it.
1) START WITH THE OUTCOME (ONE LAGGING METRIC)
Pick one lagging result metric you genuinely care about for the next 90 days. Keep it to one, maybe two if you have to, because more than that dilutes focus.
This could be cash collected (not revenue), gross margin percentage, project overrun percentage, churn, or close rate. The specific metric matters less than clarity on what you’re actually trying to improve.
2) BUILD THE CHAIN BACKWARD TO INPUTS
Now ask: what has to be true upstream for this to happen?
If the lagging goal is cash, the inputs usually look like invoicing speed, collections touches on past-due accounts, dispute resolution time, and a weekly AR review that actually happens. If the lagging goal is margin, the inputs usually look like estimate review before you send it, change orders submitted quickly, a schedule that’s locked early enough to run the week cleanly, and a weekly WIP review with the ops lead.
Notice what those are: behaviors, rhythms, and controllables. They’re not “hope.”
3) PICK 3–5 LEADING KPIS THAT MEASURE THOSE INPUTS
You don’t need a dashboard with 40 tiles. You need a small set of leading KPIs you actually review, and you need them tied to decisions.
A good rule is this: if you can’t explain how a KPI changes a decision this week, it’s not a KPI. It’s a number.
4) DESIGN INCENTIVES THAT REWARD THE INPUTS (WITH GUARDRAILS)
This is where most incentive plans go off the rails. Two rules keep you out of trouble.
First, incentivize what people can control weekly. Monthly bonuses tied to lagging results create confusion and politics, while weekly controllables create momentum and accountability.
Second, add one quality guardrail. If you reward speed, you need a quality check. If you reward volume, you need a margin check. If you reward collections, you need a customer experience check. The goal isn’t to “trick” people into behaving. The goal is to make the right behavior the easiest path to winning.
5) REVIEW IT WEEKLY OR IT DOESN’T EXIST
If it’s not reviewed, it’s not real.
This is where most businesses fall apart. They create KPIs and incentives, then never revisit them until something breaks, and by then the scorecard has been training the wrong thing for months. The weekly review is the coaching, and it’s the difference between a one-time speech and a pattern.
STOP PAYING FOR REBOUNDS
After that pre-game conversation, I told my kid the truth.
“I don’t really care about the rebound. I care about you going after the rebound. I want effort. I want engagement. I want you playing hard and having fun.”
He had his best game of the summer. I’d love to say it was my speech, but it was probably reps, clarity, and a few other factors too.
That’s the same lesson for your business. If you measure the wrong thing, you’ll incentivize the wrong thing. If you measure the inputs that create the result, you can build a team that wins without being bribed into the right behavior.
And you stop paying for rebounds.
