What Your KPI”S Aren’t Telling You About Workforce Performance and Monthly Understated Results
By Peter DiMario, CEO and Phyllis Mikolaitis, EVP
Most organizations rely on financial KPIs to measure success—such as revenue, profit margins, expenses, and productivity.
But here’s the challenge:
KPIs tell you what happened. They don’t tell you why it happened—or what workforce roadblocks are quietly holding you back.
What often goes unseen are the hidden operational costs of low workforce proficiency levels—costs that accumulate every day, across every function, and across every level of your organization.
What You See is an Illusion of Strong Performance
On the surface, many organizations appear to be performing well. Targets are met. Revenue is growing. Operations seem stable.
Yet beneath that surface are the Silent Profit Killers, such as inefficiencies and low productivity levels, that are quietly compounding.
Research from Gallup and McKinsey shows that organizations with highly engaged and capable employees achieve up to:
- 21% higher profitability, for example, Kroger, Walmart, or smaller companies.
- 17% higher productivity
The inverse, companies with high levels of disengaged employees are just as important—and often overlooked. For example, disengaged employees are:
- 18% less productive
- 15% lower profitability,
- 37% higher absenteeism
Understanding the true costs of proficiency gaps can motivate leaders to pursue strategic change, fostering a proactive approach to unlocking hidden performance gains.
Where the Hidden Costs Show Up
Proficiency level gaps never present as a single, obvious issue. Instead, they appear as everyday business problems that are normalized.
But they shouldn’t be.
Organizations with proficiency level gaps often experience:
- Very low engagement rates
- Hidden productivity opportunities
- Quality defects and costly rework
- Customer dissatisfaction and declining loyalty
- Increased safety incidents and risk exposure
- Higher turnover and absenteeism rates
- Slow adoption of new technologies
- Reduced innovation and creativity
Each of these carries a cost.
Together, they create a systemic erosion of profitability and competitive advantage.
The Compounding Effect Leaders Miss
The real risk isn’t just the existence of these gaps—it’s how they compound over time.
- Inefficiencies become accepted as “the way things work.”
- Underperformance becomes the baseline
- Engagement significantly declines as employees feel unsupported
- Leaders rely on lagging indicators, missing root causes, and indicators
Over time, organizations come to accept suboptimal performance as their ceiling rather than recognizing it as a solvable problem.
The Leadership Blind Spot
Here’s the critical issue:
Most leaders measure results but lack clear methods to assess workforce proficiency and behavioral alignment directly, which restricts actionable insights.
Without that visibility:
- Decisions are made every day on incomplete data
- Investments miss the mark
- Performance improvements are slow and, in many cases, stall
And when you can’t clearly see the problem…
You can’t effectively fix it.
From Measurement to Insight
Improving performance requires a shift:
- From measuring results → to understanding capability
- From reacting to outcomes → to predicting performance
- From managing activity → to developing proficiency levels
When organizations can identify where gaps exist—and why—they unlock the ability to:
- Target improvement of 10 to 20% with precision
- Improve execution consistently
- Drive measurable 10%+ gains in productivity and profitability
A Question for Leaders
If your KPIs are only showing outcomes…
What’s happening beneath the surface that you’re not seeing?
- Where are the proficiency gaps quietly impacting results?
- What is the real cost of underdeveloped capability?
A Closing Thought
How much performance, revenue, profit, and innovative impact are you leaving on the table each quarter?
Organizations that consistently outperform don’t just measure performance—
They understand and optimize it at its source: their people.
Today, the Return On Investment (ROI) on a company’s Human Capital is about 40%.
The question is no longer whether proficiency gaps exist.
The question is: Do you have the visibility to identify and close them—before they continue to impact your results?