Why Do We Believe in KPIs?

If numbers -especially Key Performance Indicators (KPIs)- have come to occupy such a central place in our relationship with the world – particularly within organizations – it is because they serve as powerful bulwarks against the existential anxieties that run through human life. To order, classify, and quantify is to establish a symbolic grip on what ultimately eludes and transcends us: finitude, solitude, the absence of meaning, and the vertigo of responsibility.

The aura of numbers – the prestige they enjoy in Western thought – is often taken as proof of effectiveness and scientific rigor in accounting practice. Yet while accounting is inherently quantitative, it is not mathematical in essence, despite the apparent scientific authority of the figures it produces. Our fascination with numbers stems first and foremost from the promise they hold: the promise of extracting supposedly neutral information from the grey zones of organizations – information deemed useful for decision-makers.

But is that promise fulfilled? Far from certain. Uncertain and at times arbitrary, Key Performance Indicators (KPIs) are useful, yet deeply imperfect. A historical perspective on cost accounting offers an illuminating example.

There is no such thing as the “true cost.” More than two centuries after the emergence of accounting, the question of determining the “real cost price” remains caught between the demand for precision and the search for simplicity. Calculating cost remains indispensable, yet the quest for absolute truth appears futile.

So why do we continue to believe in KPIs?

The Reign of Quantophrenia

Without numbers, the world would not be what it is. They exert a form of power – intellectual, moral – and even domination. They constitute an empire, an authority that feels absolute. We live under the reign of quantophrenia: imposed, yet simultaneously desired. It has permeated everyday life (the rating of goods, services, professions, institutions, and more) as well as professional environments (accounts, dashboards, management by objectives, etc.). Numbers are performative, for better and for worse, in that they “decide” on our behalf, often without our awareness, narrowing the scope of personal judgment.

The power of numbers rests on a dual legitimacy: scientific (the objective knowledge of the engineer) and political (who could oppose transparency, faithful representation, or fair value?). Numbers flatter intellectual laziness by sparing us the demanding effort of gathering nuanced information and engaging in reasoning that might be contested. It is far easier to choose a product based on its rating (customer satisfaction, energy performance, etc.) than to conduct laboratory tests oneself or examine a detailed list of components.

In short, across all domains, numbers allow us to escape the anxiety-laden grey zone of doubt and mistrust and to establish the confidence necessary for exchange.

KPIs are imperfect

Yet by reducing the complexity of reality – by overlooking hidden costs and concealed outcomes – do we risk missing what truly matters? Not everything is measurable, as illustrated by the standardization of sustainability reporting, which now requires narrative disclosures alongside quantitative indicators. Numbers may offer a more socially acceptable way to “monitor and punish,” even though they can also erase moral values in the process.

In this sense, KPIs are frequently imperfect, constructed, sometimes arbitrary. Costs, for example, are nothing more than constructions – they do not reveal the “truth.” They are the product of conventions, assumptions, and opinions, both in their design and in their interpretation. We do not all draw the same conclusions from the same figures. Numbers are also performative: they help shape – consciously or unconsciously – a certain reality.

Rational beliefs reassure managers that they command shifting realities. The calculation of the “true cost price” has haunted accounting for two centuries. The famous aphorism by Auguste Detœuf, formulated in 1938, had already captured the issue in both simple and striking terms.

Imagine someone who takes the bus to the market to buy 5 kilos of cabbage for 10 francs, and while there also purchases 5 kilos of carrots for 20 francs. The bus fare costs 3 francs each way. How should the transport expenses be allocated? One third to the cabbage and two thirds to the carrots? Split equally? Or assigned entirely to the cabbage? Depending on the chosen method, the calculated cost differs. therefore, what is the “true” cost of each vegetable?

Quest for Truth and Transparency

The same question arises, to varying degrees, in all contemporary organizations. Yet the pursuit of cost “truth” remains a leitmotif. It persists today, as evidenced by the wide audience granted to the proponents of “new” methods such as ABC, UVA, or TDABC. Each seeks to deliver ever more precise cost calculations – despite abundant literature demonstrating that full-cost accounting methods are rarely free of error, and that the conditions under which such errors can be avoided are highly restrictive.

Doubts also persist regarding the very purpose of cost calculation. As early as 1922, McKinsey pointed out that cost allocations influence managerial motivation. Later, in 1957, Anthony argued that choosing a costing system ultimately aims to encourage managers to act in accordance with senior leadership’s intentions.

If the quest for truth and transparency through numbers sometimes proves futile, why then do we continue to believe in KPIs? The symbolic force of numbers lies in the protective barrier they erect against the existential anxieties that pervade human activity. Management and decision-making are no exception. Managers are exposed to profound fears linked to finitude, responsibility, solitude, and the absence of meaning. In this context, numbers perform an obvious function: they help avoid confronting these anxieties.

Leaving a Mark

Faced with the anxiety of death – the prospect of disappearance – KPIs may create the illusion of controlling time. To freeze reality, to project it, forecast it, anticipate it – is this not, in some sense, an attempt to master time itself?

And yet numbers can also serve a sublimating function. Through them, it becomes possible to leave a trace, even to transmit something beyond oneself. Similarly, confronted with the vertigo of freedom and fundamental individual responsibility, there is a strong temptation to defer to a higher authority or to a form of rational magic. Numbers can provide the reassuring sense of a foundation, of structure. When faced with the feeling that nothing truly has meaning, a conformist — even mimetic — use of metrics may artificially fill the void through compulsive measurement.

Finally, in the face of existential solitude, dashboards and management tools can become formidable instruments of domination. those same tools can also function as a shared language — a bridge between consciously assumed solitudes. In that case, numbers may once again become instruments serving collective creativity.

Whether quantophrenia in management represents genuine progress or a form of voluntary blindness remains an open question. Organizations need the illumination provided by numbers to adapt swiftly to emerging challenges, they must also preserve spaces of discretionary judgment – grey zones where freedom of decision remains possible.The real challenge, then, is to handle ambiguity with precision.

This article is republished from The Conversation under a Creative Commons license. Read the original article.