The Hidden KPI Trap Sabotaging Your Strategy

Contrarian Viewpoint: KPIs set department-wise create silos. True strategy KPIs must cut across functions to drive enterprise-wide alignment.

Why Siloed KPIs Quietly Kill Strategy

Most leaders set KPIs by department. It feels neat and manageable—but it quietly kills strategy. True strategic KPIs don’t live in silos; they cut across functions, forcing collaboration and aligning the entire organization toward the bigger goal.

"If everyone is moving forward together, then success takes care of itself." – Henry Ford

When organizations set KPIs in departmental silos, they unintentionally foster turf wars, duplicate efforts, and misaligned priorities. A sales team might be chasing revenue growth, operations could be focused on efficiency, and finance might be tightening cost controls—all at the same time, and often in ways that conflict. The result? Each department “wins” on its own scoreboard, but the business loses in the marketplace.

I’ve seen this play out in an Indian manufacturing company where production’s KPI was to maximize throughput, while marketing’s was to launch frequent promotions. The unintended outcome? Production ramped up stock for promotional surges that never matched actual customer demand, leading to excess inventory, tied-up capital, and warehouse congestion. Each department proudly hit its targets—but profitability tanked.

Similarly, a large Indian bank ran into trouble when its digital team was measured on app downloads, while the branch network’s KPI focused on in-branch product cross-selling. Instead of working together to create an integrated customer journey, they competed for customer attention and ended up confusing the customers.

What Cross-Functional KPIs Do Differently

True strategic KPIs don’t live in silos; they cut across functions, forcing collaboration and aligning the entire organisation toward the bigger goal. They represent the enterprise’s critical success factors and force leaders to think beyond their own domain.

For example, a KPI such as “Increase customer lifetime value” requires collaboration between marketing, sales, operations, and service. Each function must contribute, and success depends on their integration, not their independence.

Infosys provides a good case study here. When they shifted one of their core KPIs from “billable hours” (a delivery-focused metric) to “client value creation” (a broad, relationship-driven outcome), it required sales, delivery, HR, and technology teams to align. Billable hours alone could be optimized by one department. Client value creation could only be achieved by seamless coordination across the whole organization.

When designed well, cross-functional KPIs:

1. Breaks silos. Teams must work together to hit the same metric, rather than protect their own turf.
2. Builds shared accountability. No department can hide behind the excuse of “we did our part.”
3. Enhances strategic clarity. People understand that their daily work connects to a bigger goal.
4. Improves execution speed. Cross-functional KPIs push leaders to resolve bottlenecks quickly.

It’s worth noting that these benefits often surface gradually. In the early months, expect discomfort and pushback. Departments used to “owning” their results may resist the idea that their success is now tied to others. In my work with a mid-sized Indian pharma company, sales initially resisted a KPI linked to “time-to-market for new products” because they felt it was “operations’ job.” Six months later, they became one of its strongest champions—because faster launches directly improved their own sales performance.

Common Pitfalls That Derail Cross-Functional KPIs

Adopting cross-functional KPIs is not without challenges. Many leaders fear losing control over their department’s agenda. Others worry about the difficulty of measuring a metric influenced by multiple teams. These tensions are natural—and a sign you are working on the right problems. Strategy is about integration, not isolation.

Two pitfalls show up repeatedly:

1. Measuring everything cross-functionally: Measuring everything cross-functionally dilutes focus and creates noise. The key is to identify the few enterprise-level KPIs that truly require cross-functional collaboration—usually the ones directly tied to your strategic objectives, such as market share growth, customer retention, or innovation speed.
2. Unresolved ownership tensions: In one Indian conglomerate, a KPI on “employee engagement score” floundered because HR assumed it owned the metric, while business unit leaders thought it was HR’s responsibility alone. The result? Minimal progress. Once a senior leader was appointed as the KPI custodian—with authority to coordinate actions across all units—scores improved significantly.

How to make cross-functional KPIs work in practice:

• Anchor them to strategic objectives. Start with your strategic objectives or business goals, not departmental wish lists.
• Define clear ownership. Even if a KPI spans multiple functions, assign a lead custodian to coordinate delivery.
• Measure both outcome and contribution. Track the overall KPI, but also monitor how each function contributes to the result.
• Review and recalibrate regularly. Cross-functional KPIs need more frequent review than siloed ones because they surface interdependencies faster.

One leading Indian e-commerce player adopted “Order Fulfilment within 24 Hours” as a cross-functional KPI. Logistics, procurement, customer service, and IT all contributed to it. The logistics head acted as custodian, but each function’s contribution was tracked in detail. This balance of shared accountability and individual clarity meant that bottlenecks were spotted and resolved within days, not weeks.

For leaders looking to leap, start small. Pilot one or two cross-functional KPIs in a high-impact area, build the muscle for shared accountability, then scale.

The Mindset Shift

Traditional KPI setting is like giving each player on a football team a separate scoreboard. Cross-functional KPI setting is like giving the team one scoreboard—and making sure everyone knows the final score matters more than any personal stat.

When your KPIs are strategically integrated, you stop optimizing parts at the expense of the whole. You start making decisions that move the entire organization forward in one direction. And that’s how you turn strategy from a PowerPoint into a performance reality.

In the end, the question isn’t “Can I control my department’s KPIs?”—it’s “Can I influence the company’s success?” Leaders who embrace cross-functional KPIs send a powerful message: that the business wins only when we win together.