When Metrics Mislead: The Hidden Cost of Outdated Policies

As organizations evolve, their processes, people, and goals shift—but often, the systems built to measure success and guide decision-making do not. What once served as a compass can become an anchor, quietly dragging the organization off course. Misaligned metrics and outdated policies are rarely malicious. They’re usually the result of inertia, legacy thinking, or the natural lag between growth and governance. But left unchecked, they can erode performance, employee trust, and customer satisfaction.

Two cautionary examples illustrate how these issues play out in the real world—and how costly they can become when ignored.

Example 1: Wells Fargo’s Cross-Selling Scandal

For years, Wells Fargo was lauded for its aggressive cross-selling strategy. Executives proudly reported metrics showing that customers held an average of 6–7 products each, compared to 3–4 at peer institutions. These numbers were seen as evidence of customer loyalty and strong relationship management.

But behind the scenes, the pressure to meet these metrics led to systemic misconduct. Employees, evaluated on how many accounts they could open per customer, began creating fake accounts without customer knowledge—over 2 million of them, according to the 2016 settlement with the Consumer Financial Protection Bureau.

What began as a well-intentioned growth strategy had calcified into an unquestioned metric, disconnected from actual customer value or experience. The bank’s internal policies rewarded output without questioning whether it aligned with ethical behavior or long-term trust. When the public scandal broke, Wells Fargo paid over $3 billion in fines and suffered a years-long reputational hit.

The lesson? A metric that incentivizes the wrong behavior is worse than no metric at all.

Example 2: Veterans Health Administration Wait Time Goals

The U.S. Department of Veterans Affairs (VA) faced intense scrutiny in 2014 when it was revealed that some facilities were manipulating wait time records to meet internal performance goals. The VA had set a policy target: patients should be seen within 14 days of requested appointments. While the goal was admirable, it was out of step with the VA’s actual capacity and patient volume.

To meet this unrealistic benchmark, employees in several facilities created secret wait lists that excluded patients until they could be scheduled within the 14-day window—effectively hiding long delays rather than solving them. A report by the VA Office of Inspector General found that at least 40 veterans died while waiting for care, though it stopped short of directly attributing those deaths to the delays.

Here, a noble policy became a compliance trap. By sticking to an idealized standard without reevaluating its fit, the system incentivized deception over improvement. The agency responded with leadership changes and a complete overhaul of its scheduling policies, but not before trust in the VA was deeply shaken.

What Organizations Can Learn

Both cases reveal the same core issue: metrics and procedures designed in one era can become liabilities in another. This isn’t a problem of bad actors—it’s a structural vulnerability. When performance measures become untethered from purpose, or when procedures persist beyond their usefulness, they create blind spots. Teams stop asking “Is this still helping us succeed?” and start asking “How can we hit the number?”

Regularly auditing internal metrics, policies, and incentives is not just a compliance exercise—it’s a strategic necessity. It’s how companies avoid being trapped by their own success formulas.

Whether you're a startup scaling fast or a legacy institution with deep roots, ask yourself: What are we measuring that no longer matters? What processes are still in place because “they’ve always been there”? And what would it take to start questioning them?

Symptoms, Causes, and Structural Blind Spots

Both cases reveal a deeper challenge: organizational growth increases complexity, and complexity demands new structures, policies, and procedures to manage it. But when those structures are misaligned—or worse, missing altogether—organizations suffer. Ironically, the same symptoms can indicate two different problems: obsolete processes that no longer serve their purpose, or the absence of needed systems that growth now requires.

In either case, the surface issues—confusion, inefficiency, ethical lapses—are not the root cause. They're clues.

What makes these issues harder to spot is that people are often doing the wrong things for the “right reasons.” They’re following the rules, honoring legacy goals, or optimizing against KPIs that haven’t been reexamined in years. That’s why performance metrics and policies must be treated as living systems, not fixed artifacts.

Don’t Let Your Compass Become an Unintentional Constraint

Every so often, founders and execs need to pause and ask:
What are we still doing because it once worked?
What are we not doing because no one’s responsible yet?
And what problems might be signs that the company has outgrown its own operating model?

Because a metric that isn’t questioned becomes a mandate—and mandates without context create risk.
What once helped you move fast can quietly become what slows you down.
A system that scales a product doesn’t always scale a company.

You don’t need more dashboards.
You need to know which numbers still mean something—and which ones are just legacy noise.

Scaling fast? Make sure your metrics aren't stuck in the past.
If your organization is growing but your decisions are still guided by outdated KPIs, legacy policies, or “what used to work,” it’s time for a reset.
Let’s identify the blind spots before they become bottlenecks.

Schedule a conversation

Let me know if you’d like this formatted for LinkedIn as well, or turned into a newsletter version.

4o