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Process KPI. Key Performance Indicator (KPI)

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Key Performance Indicators or Key Performance Indicators is an evaluation system for determining the achievement of the operational and strategic goals of an enterprise. KPI helps a company assess its current state and improve the efficiency of its own development strategy.

Very often the technique KPI used to evaluate and control the activities and activity of employees of the enterprise. In Russia and the CIS countries, the term "Key Performance Indicators" is often used, as a translation from the English term "Key Performance Indicator" (KPI). However, this translation cannot be considered accurate enough.

If the translation of the word "key" as a key (essential for achieving the goal) and the word "indicator" as an indicator (indicator) can be considered sufficiently accurate, then there are difficulties with the translation of the word "perfomance". According to ISO standard 9000:2008 the word "perfomance" can be divided into two terms, efficiency and effectiveness. According to the standard, performance refers to the degree to which planned results are achieved and the ability to focus on results. Efficiency, according to the standard, means the ratio between the result and the costs (monetary, quantitative, time and others) to achieve it. Taking into account the fact that performance combines both effectiveness and efficiency, it is more accurate to translate KPI as “Key Performance Indicators”, since the result also includes the costs of obtaining it.

KPI is an excellent tool for measuring the degree to which certain goals are being achieved. In the actual activity of the enterprise, it is necessary to use only those indicators that are related to the goals of the enterprise.

Today, enterprise goal management or enterprise goal management is one of the foundations of modern enterprise management concepts. This concept provides for the ability to anticipate the results of activities and plan ways to achieve them.

The concept of management by objectives began its development with the work of Peter Drucker in the 20th century. According to his works, managers should avoid much attention to solving daily routine tasks, instead they should focus on achieving the goals set for the enterprise (department). Today, the KPI system includes this concept, complemented by other modern techniques and automated software tools.

According to various estimates, today enterprises have significant problems with setting the right goals and a system for evaluating results. According to surveys of company executives in the United States, it turned out that more than 60% of managers are dissatisfied with the system for evaluating the results of an enterprise. In Russia, dissatisfaction is even greater - more than 80%.

KPI and the system of motivation of employees of the enterprise are very closely related things, with the help of KPI, you can prepare and implement a highly effective system for stimulating the personnel of the enterprise.

There are many more key indicators. The set of indicators depends on the area of their application; they are often used to evaluate the result of the work of enterprise managers.

Key indicators of the enterprise can be divided into the following types:

Lagging KPIs - show the results of the enterprise after the end of the period
Leading KPIs - allow you to quickly manage the situation within a given period to achieve the desired results after its expiration

Financial performance is usually driven by lagging KPIs. Despite the fact that financial indicators are used by the owners of the enterprise to assess the ability of the enterprise to generate cash flows, financial indicators, due to the fact that they are lagging, cannot show the current efficiency of the departments and the enterprise as a whole.

Leading (operational) KPIs tell about the current activities of the enterprise. These indicators can often provide indirect information about planned cash flows. In addition, when properly configured, they evaluate the quality of the enterprise's business processes, product quality and customer satisfaction.

The set of enterprise KPIs is part of a balanced scorecard that defines cause-and-effect relationships between indicators and goals. Such connections make it possible to see patterns and factors of mutual influence of the results of some processes on others.

KPI system development

When developing a system of key indicators, several stages can be distinguished:

Pre-project work. Such work usually includes the creation of a project team and a pre-project survey. It is also important at this stage to obtain the approval and support of volume managers.
Development of KPI methodology. At this stage, the optimization of the org. enterprise structure, development of a methodology and a set of indicators, development of management mechanisms based on KPI, preparation of a set of documentation.
Training software to manage KPIs. A technical task is being developed for making changes to the software. Direct programming of the system, user training and pilot operation of the system. An example of a program based on "1C" for KPI
Completion of the project. On the final stage input is made KPI systems(and methodology and software) into commercial operation.

Explaining to staff the benefits of using KPIs
Determination of strategic indicators for the entire company
Development of mechanisms for operational monitoring of indicators
The need for further continuous improvement of the set of KPIs to support the development of the organization.

Rules and principles of KPI implementation

Exist various estimates the need and sufficiency of the number of key performance indicators. Norton and Coplan once suggested using no more than 20 KPIs.
Fraser and Hope recommend using no more than 10.

The most successful current practice is to use the 10/80/10 rule.

This rule means that an enterprise should use about 10 key performance indicators, about 80 indicators related to operational (for example, production) activities and about 10 key performance indicators.

very important in implementation of KPI is the principle of manageability and controllability. This principle states that the department or individual responsible for the result of the indicator should be allocated all the resources to manage it, and the result should be measurable and controllable (including by them).

There are other principles for building a KPI system:

The principle of partnership - in order to successfully increase efficiency, it is necessary to seek partnership between all interested subjects of the company. Partnerships should start with building the system and continue as the system progresses.
The principle of transferring efforts to the main areas - increasing efficiency may require a significant expansion of the powers of certain employees of the enterprise. Often these are employees working on the front line. They may also need to improve their skills, conduct trainings and include them in the development of KPIs relevant to their activities. It is also necessary to improve communication between different departments and employees.
The principle of integrated performance evaluation, reporting and performance improvement. Created in the enterprise should encourage employees to take responsibility and specific solutions. It is also necessary to provide employees with all the reporting they need in their work.
The principle of coordinating operational indicators with the strategy. All indicators should be aimed at achieving the stated goals of the enterprise. It is necessary to constantly analyze and optimize key indicators. In the work of the enterprise there should not be indicators that are not consistent with strategic goals enterprises.

The application of these principles will allow you to build an effective enterprise management mechanism.

In this article you will learn

What is KPI and what types of key performance indicators are there
Why KPI systems often don't work
How much does it cost to implement a KPI system in a company

This article is about developing KPI in the organization and understanding of the necessary criteria that must be taken into account to increase the effectiveness of implementation new system.

Any system of staff motivation should be aimed at finding the relationship between the goals of the enterprise and the employees themselves. The effectiveness of such a link between personal and corporate goals is possible in a situation where employees clearly understand the goals of the enterprise and understand the opportunity to influence their income (and not just receive a standard salary that does not depend on the employee's performance). Therefore, in the remuneration of employees from the level of department heads, a variable part should be provided - approximately 25% of the total income.

What is a KPI?

By itself, the KPI system cannot be considered a personnel motivation system. It is just a tool for the management system. Today, almost any indicator is called KPI. I can't understand why many businesses refer to the KPI as paying percentage of sales to managers. Or why KPI is usually called the coefficient of labor participation - probably just some fashion trends that are not entirely correct.

KPI - key performance indicators (performance indicators). Setting up a management system based on KPI is based on the ability to achieve the main goal of the enterprise through the implementation of performance indicators for employees from various departments.

Types of KPIs

Target indicators. These indicators reflect the degree of proximity to the goal. We will pay special attention to these targets in the article.
process indicators. Evidence of the effectiveness of the process. They allow you to assess whether a certain process can be completed faster or reduce costs without affecting quality.
Design indicators. These indicators are related to the specific goals of the project - they indicate the effectiveness of the implementation of the entire project and its individual parts.
Indicators external environment. These indicators cannot be directly influenced. However, they must be taken into account, for example, when developing targets. Among the external KPIs, one can note price fluctuations, the prevailing price level in the market.

Is the KPI system effective in small businesses

It makes no sense to introduce KPI if the enterprise does not have a management system - when success depends solely on the efforts of the owner, who combines the functions of the chief financier, general director, chief personnel officer (mostly these are enterprises in the 1st phase of development).

The success of KPI integration is not affected by the number of employees. It is necessary to comply with another condition - the appropriate maturity of the business and an adequate accounting system. One of the classics of management emphasized that it is impossible to manage what cannot be counted. KPI - countable key indicators. They can be qualitative (in the form of a rating, points, etc.) or quantitative (time, money, volume of goods, people, etc.). However, in any key performance indicators should be countable for objectivity and comparison of data.

Not necessarily a mature accounting system includes, for example, a trendy CRM module or other popular applications. It is possible to fix and process the corresponding parameters in the Excel program. The main condition is the maintenance of not just a formal accounting in the company, but also managerial. Consequently, there will be a clear understanding of the trajectory of the movement of their money, the budget of income and expenses, there will always be an understanding of business trends, with the ability to calculate the balance.

When deciding on the relevance of KPI in your company, you need to take into account that the implementation of the system will require expenses of at least a million rubles. Therefore, when investing in such a project, it is necessary to understand the expected return and the period of its receipt. At normal operation of your system, with the achievement of goals and business development, but at the same time old, already proven management tools are used, you need to switch to KPI settings only for a certain expressed reason, and not just to follow fashion trends. The KPI system will ensure the effectiveness of the result within the framework of projects for diversifying the product, significantly scaling your business, increasing the market share by an order of magnitude, entering the regions, etc.

KPI development: how to implement key performance indicators

It is recommended to develop KPIs in a hierarchy from top to bottom - from main goal enterprises to the goals of departments and functions. Sometimes formation starts from the bottom - from the indicators and goals of a certain performer (as a rule, from a top manager to a middle manager), then the upward path begins to form towards a common goal. Indeed, at the level of everyday consciousness, one gets the impression that it is much easier to set a goal for an employee than to achieve an understanding of the overall goal of the organization. But under this condition, there can be no guarantee of achieving desired results on the scale of the entire enterprise, if the emphasis is on individual employees. Therefore, it will be necessary to verify the compliance of individual goals with the overall goal of the enterprise. In fact, you will need to do the same job twice.

Determining the overall goals of the enterprise when implementing KPIs

First of all, when planning the creation of KPIs, a company needs to answer the question “why?”. What is the company's activity for, for what tasks did it come to the market, why do consumers need it?

The chosen direction of activity in the market will depend on the answer to this question - from its current position to the chosen final goal.

You need to define your goal, which is set for the long term - for example, after 3 years. When formulating an answer, it is not recommended to focus on financial aspects. After all, finances are quite a relative component, which is confirmed by the recent crisis.

It is better to formulate the goal in such a way that financial desire follows from it, but is not clearly spelled out. This increases the stability of the system, despite changes in market parameters. The goal should not be associated with a specific unit, but with the market - therefore, actions will be initially set up for market changes.

You can formulate your goals as follows - to be in the top three on Russian market yogurts, break into the TOP-10 companies in the furniture market, enter the market of terminal communications in Moscow and St. Petersburg, and become a leader in certain regions.

From the formulation of goals in the form of a desire to achieve high or leading positions in a particular market, all financial aspects will follow. Goals for profit, turnover, share of costs and growth dynamics of the enterprise will become clear.

After determining the overall goal of the company, it will need to be divided into sub-goals by asking the question “What needs to be done to achieve the main goal?”. Immediately you should pay attention - not what needs to be done, but what "to do". In the context of this formulation, “to do” means to move in a certain direction. And “do” implies the implementation of a specific action. If the main goal of the organization is presented as a specific action plan, then there is a risk of not achieving it if one of the planned activities turns out to be impossible. With a correctly set direction of your movement towards the target, there will be an opportunity to maneuver - therefore, it is possible to choose plan A, plan B, etc.

KPI selection

In most cases, there are no problems when compiling a list of possible KPIs. Since managers are well aware of the parameters by which it is possible to evaluate the performance of units. However, problems are accompanied by the selection of key, most significant KPIs.

The presence of many key performance indicators, like the choice of only one indicator, leads to a deterioration in the ability to manage. Since too many indicators complicate the calculation procedure. When choosing only one key performance indicator KPI, 2 options arise - to confirm its achievement or non-achievement. But there is no room for maneuver, making changes to the work process in a situation where the results do not meet expectations.

Therefore, only a set of several top-level KPIs allows for the possibility of maneuvering - two or three are better. They can be selected based on an assessment of the significance of each of the KPIs, by analyzing their weight.

For each indicator, its own weight is assigned by expert means, so that the combined sum of the weights of all KPIs is one. You can not limit yourself in the number of KPIs. Weight must be determined taking into account the principle of necessity - what indicators need to be met to achieve the goal (which are not just desirable, but necessary, without which it is simply impossible to achieve the goal). These indicators are characterized by the greatest weight. Then we remove the indicators with a weight below 0.1, and again distribute the weights between those KPIs that remain. The output will be no more than 3-5 indicators. Indicators with a very small weight can then be taken into account for the motivation scheme as conditions for lowering or increasing the size of the bonus.

The balance is usually handled by the CEO with a team of top managers, taking into account the priority of the company's tasks. By the weight of the indicator, you can understand what actions the company should bet on in the foreseeable future (see Fig. tab. 4).

Identification of "leading" and "lagging" KPIs

Leading indicators - allowing, in case of noticed deviations from the path to the goal, to intervene in a timely manner and make the necessary corrections to the situation. They support the management of movement towards the goal. An example of such an indicator is the level of inventory in a warehouse. This parameter can be controlled in the low or high season, making sure that there is enough raw material in the warehouse to produce a certain amount of products, or you need to purchase it additionally. Or there may be an excess of raw materials in the warehouse, it is old and must be sold to free up space for the placement of a new one. By taking into account the indicator "level of stock of raw materials", it is possible to adopt management decisions aimed at improving production efficiency.

There are not only leading, but also lagging KPI key performance indicators. According to these indicators, achievement or non-achievement of one's task can be stated, however, without the possibility of making adjustments while moving towards one's goal. Therefore, if the goal is not achieved, lagging indicators simply indicate damage to the enterprise. Consequently, lagging indicators play the role of stop factors within the framework of bonus schemes. In fact, if not this indicator the bonus will not be paid in full or it will be significantly reduced. An example of such an indicator is staff turnover. After all, this indicator can be stated only by the fact - how many employees the company has lost over a certain period. Acceptance of managerial actions can only apply to the next period. But it will not be possible to influence the current losses - they can only be fixed for the future.

Therefore, when calculating the bonus scheme, the formula includes not only the weight and percentage of a certain KPI, but also the number of leading and lagging indicators.

In addition to calculations, it should be recalled that the seller's remuneration should not be tied solely to one indicator (for example, to revenue or turnover), without taking into account market features and seasonality. Since otherwise the business may face the trap of satiety - material factors lose their power of motivation. Consequently, the return for every ruble invested in employees gradually brings less and less return. And over time, the amount of investment in employees begins to exceed the return. A similar danger arises when an employee is provided with an income that exceeds the level he needs for his usual lifestyle (as a rule, it is achieved with 2 incomes of a specialist in his region in this specialty). The only way to treat the “satiation trap” is to dismiss an employee who has ceased to bring returns - it will no longer be possible to achieve the desired effect by changing the payment scheme.

KPI Based Bonus Calculation Formula for Head of Commercial Department

Bonus = (BF KPI 1 × A + BF KPI 2 × B + BF KPI 3 × C) × D, where:

BF KPI 1, 2, 3– max bonus fund, which is multiplied by the weight of KPI 1, 2, 3.

A- correction factor to KPI 1 with a threshold value of 70% (if the plan is less than 70%, no bonus will be accrued for this indicator (A = 0); if the sales plan is fulfilled by more than 70%, the corresponding bonus is accrued in proportion to the implementation).

B- correction factor to KPI 2, the threshold value of which is 85%. If this indicator is met by less than 85%, it is B = 0. If the level of 85% is reached or exceeded, the bonus will be accrued in proportion to the performance. The coefficient is blocking - if the threshold value of KPI 2 is not met, no bonus will be paid, regardless of the results of KPI 1 and KPI 3.

C- correction factor to KPI 3 (threshold value 60%). If the indicator is less than 60%, then C will be equal to 0, if it is performed by 61-100%, the accrual is proportional to the performance.

D– stop factor, which is a general blocking correction factor, with the bonus payment reset to zero if the minimum threshold values for any KPI were not reached.

Under the proposed scheme, the seller's attention is on the amount of receivables along with the cost of the sales process and the level of sales, and not limited to achieving growth in turnover at any cost. Thanks to this, the company manages to achieve timely receipt of money, refusing interest-free lending to staff or customers.

When KPIs will work and when they won't

An effective KPI system will be under the following conditions:

with the correct weighing and arrangement of all KPI indicators;
correct creation of a tree of company goals;
the accounting system will allow you to calculate all the KPI calculation formulas;
correct distribution of responsibility for goals (and processes) between performers;
entering data into the accounting system by trained, uninterested people - not those who performed these KPIs. In this case, it is necessary to enter reliable information;
linking KPI to the personnel motivation system. The motivation system should be built with the priority of the goals of the enterprise over the goals of employees, but with their obligatory consideration.

When the KPI System Doesn't Work:

The company's management did not participate in the creation of the goal tree.
It is impossible to calculate KPI due to lack of data in the accounting system, subjectivity or unreliability of their assessment.
Incorrect development of KPI - without taking into account the relevant indicators for achieving the goals.
There is no binding of KPI to the motivation system.
The implementation of KPI is not for all departments. The control system in this case will be skewed.
KPIs are tied to the current motivation system, however, without taking into account the personal motivation of employees for whom KPIs are introduced.
The achievement of KPI and the payment of a bonus for them for a period of more than 3 months are divided. In this case, employees simply get tired of waiting, ceasing to link the correctness of actions and reward. For long-term projects in a company, you need to link KPI and a bonus for achieving goals not only to the final results of the project, but also to intermediate stages.

How to overcome staff resistance when implementing a KPI system

1. Employees need to be explained that what is being implemented is related to what they have already done the day before. Thanks to this, there will be no expectation and fear of cardinal changes every Monday with the cancellation of past results.

2. KPI is a fairly complex tool. Therefore, it is necessary to explain this technique to all users in advance - in order to receive feedback in test mode, discussion, discussion of questions that have arisen, etc.

3. A critical success factor is participation in the KPI motivation project for the CEO and the top management team. If the management has doubts about the overall success of this project, such undertakings do not make much sense at all.

4. Top managers should also involve middle managers in the KPI development workflow - that is, employees who will be forced to evaluate and plan own actions under the new approved system. They must work together to create a phased implementation plan for a new project - usually the commercial departments are the first to test the system, and the back office at the very end.

5. It is necessary to encourage the activity of employees in the implementation of changes - you need to celebrate any, even the smallest victories.

6. Ensure that the workflow is consistent with the changes being made. Therefore, it is necessary to separately plan the transition from the current system of regulations to the new one - this will not happen instantly, therefore, it is necessary to separately take into account and control the time of this transition.

7. It is necessary to adhere to continuous changes in the company. However, in order to ensure continuity and consistency, the optimal situation is when all changes flow from the main goal of the organization.

Motivation, Incentives, Remuneration, KPI, Benefits and Compensation

The KPI system has come into practice Russian companies a few years ago. Currently, there is no unified methodology for assessing key performance indicators for Russian enterprises, a complex of foreign indicators is used.

Key performance indicators KPI - what is it

KPI (Key Performance Indicator) - key performance indicators - a system of quantitative indicators that reflect the performance of each employee.

The advantage of the KPI system is the active motivation of the staff and comparable indicators. Efficiency - relative indicator, which covers all areas of activity of employees and expresses the results quantitatively. The optimal number of KPIs for one employee is no more than five.

There are several subgroups of KPIs in connection with the following performance results:

cost item - the amount of resources spent (in value terms);
performance item - percentage of capacity utilization;
efficiency article - indicators characterizing the ratio of one indicator to another (for example, the ratio of revenue to costs);
article results - a quantitative expression of the result of the activity.

Exist several principles for developing a KPI system: the indicator should be quantitatively measurable, related to the results of the company's activities, the measurement of the result should not be costly (in terms of time and use of resources).

Many key performance indicators are interrelated, so it is recommended teamwork several departments and specialists to achieve the best results. Also, managers of different levels should coordinate their actions in relation to employees in order to increase the efficiency of activities and performance indicators.

Types of indicators

Key performance indicators can be divided into two types - operational and strategic.

Operational indicators reflect current activities enterprises and its divisions, allow you to adapt the goals and objectives in accordance with changing conditions. They characterize the quality of the organization of production, the supply of raw materials, manufactured products.

Strategic indicators reflect the result of the company's activities for the period, allow you to adjust plans for the next period. characterize cash flows, on their basis, the performance indicators of the enterprise are calculated (for example, ).

What are KPIs used for?

KPIs are used to quantify goals and objectives. After compiling the indicator report, it is possible to assess how the planned results were achieved, how accurate and correct the planned indicators were.

Subsequently, key performance indicators help to adjust tactical and strategic goals.

The entire KPI system is "tied" to the result, if the indicator does not affect the achievement of the goal in any way, it cannot be attributed in this system.

The technique is based on two theories - the idea of control and revision of goals and management by goals. The essence of the theory is reduced to the possibility of predicting the results of the set goals and planning their achievement through the implementation of KPI.

The system is used to ensure that employees, performing current duties, do not forget about the implementation of their goals. When the KPI is met, the staff will be rewarded, which is a strong motivation for employees.

Key performance indicators are recognized as one of the most effective incentive systems and one of the most advanced motivation systems in the enterprise.

Typically, KPIs are used to evaluate the work of administrative and management personnel (managers, directors, economists, etc.)

In sales

Key performance indicators in sales are calculated based on the following indicators:

In production

Key performance indicators in production are calculated based on the following indicators:

average daily consumption of raw materials;
the volume of work in progress and stocks;
labor productivity of workers;
other production expenses;
repair of equipment;
storage of finished products.

Examples of KPIs for representatives of various specialties

Position	Indicator	Formula
Head of marketing department	Sales plan (percentage of plan completion)	(Q f / Q pl) * 100%, where Q f - actual sales volume, Q pl - planned sales volume
Marketer	Market share by brands (percentage of total brands on the market)	Data from external marketing agencies
Chief Accountant	Timely filing of tax returns	Tax service data
Accountant	Timely execution of payment transactions (percentage of the total number of completed payment transactions)	(Op cf /Op total) * 100%, where Op cf - the number of payment transactions performed on time, Op total - the total number of payment transactions
Head of Legal Department	Number of cases won (percentage of total cases)	(Q in / Q total) * 100%, where Q in - the number of cases won, Q total - the total number of cases
Lawyer	The amount of money recovered and saved for the enterprise	Legal department report data

A video explaining why you should implement a KPI system when building business processes:

Discussion (10 )

KPI is one of the tools to save on employee salaries. The better they work, the more every month they raise the plan for “independent reasons”. As a result, the salary is always from 65 to 80 percent of the declared one. It depends on what schedule you were put on and how other employees snapped up productive resources. As a result, grabbing, division, conflicts.

If this is stimulation and increased motivation, then this is understandable, but if this is simply a decrease in pay for more intensive work, then this is profanity. My employer takes indicators from the ceiling and ties me to these “wishlists” and, as a result, demotivates me if I fail to do so. As a result, I am looking for a job. Because I understand what real sales are and how much I bring profit to the company. If the indicators are taken simply in progression without taking into account the market, the economic situation and other things, then this is just a road to nowhere. All Western know-how, as a rule, have analogues even in practice or developed in the USSR. All these frugality and linaxes come from there. The fact that we are adopting some advanced experience is a complete illusion. It's just that the level of real intellectual activity in the country is extremely low. Above what should be below. Time will show that this is a dead end. We are not Chinese.

The implementation of kpi in an enterprise is always a difficult process, especially when everyone resists. An external consultant or a company that deals with such issues can help.

The introduction of KPI is motivated by an increase in the efficiency of the organization (enterprise) as a whole, taking into account the return of each employee. And if all the conditions and key indicators for each position are discussed in the regulation on remuneration and bonuses, doesn’t this contribute to the effectiveness of the results of each person’s work and in general? Is KPI implementation not an invention of the wheel?

When using KPIs, in some cases, you may need to resort to special reporting tools. In addition, someone from the staff will need to be instructed to collect the necessary data and analyze them, and you, in turn, will need to conduct a check. If the changes in the company's work will be private, you will need to monitor frequent KPI changes and investigate the reasons for such changes. Therefore, first evaluate your resources and opportunities, value your time. You must clearly understand how you will benefit from the effort expended when implementing KPIs.

Key indicators are one of the most important tools for improving business performance. It's like in sports - the measurement of indicators in itself contributes to an increase in results. Of course, implementing KPIs is not without its challenges—often employees sabotage methods that make them work harder. However, the result of a more profitable and manageable business more than justifies the effort.

Implementation of the KPI system - important step for the company in the direction of increasing the efficiency of each employee and the enterprise as a whole.

Western companies have long been using a system of key indicators to motivate employees, while in our country only large organizations are beginning to gradually implement such an approach, and not always correctly.

A well-built KPI system allows you to best customize the work of the organization, all its departments and each employee individually. It allows:

find out the goals of the company and convey them to employees;
motivate the team to achieve goals and quality performance assigned duties;
increase the growth of the company's performance in the end.

But do not take KPI as a panacea. It is not enough to simply “set a bar” for each employee, tie pay for work to this bar, and watch how employees jump above their heads in pursuit of a bonus. The implementation of KPI is a complex and lengthy process that requires a lot of time and effort, both from the manager and employees. The whole company should be involved in the process of developing a system of key indicators - this is the only way to avoid the effect of "rejection of novelty", and the most adequate perception of the new scheme of work.

KPIs are the best introduce gradually. Watch the reaction of your employees - if they are negative about this idea, it is better not to rush, but first to conduct extensive outreach and training. Only if the staff will be favorable to the changes and will understand why they are needed, it will bring a good result.

Definition of key indicators

It is very important to develop such KPI , which will be correlated with the main goals of your company and will be realistically achievable. That is, those that the employee himself can influence. It makes no sense to set indicators that a person cannot influence in any way - for example, the number of calls from the site for the sales department (for tracking). This isKPI for a marketer or SEO specialist.

Consider what role the employee plays in your company and what you want them to do better. This could be an option KPIs. Each employee in the company should have their own performance indicators.

For a sales employee these will be: the number of outgoing calls, the size of the average check, deals made, the number of sent CPs.

Lawyer's KPI– the number of cases won and thus saved funds for the company.

The job of a marketer can be assessed by the market share occupied by the enterprise, by the number of attracted customers and by ROI.

ForSEO Specialist key indicators can be ROI, the number of applications from the site.

Developing KPI, it is very important to correctly prescribe the calculation formulas, explain them, and agree with each employee. It is important to achieve an understanding of what exactly, and how the wages of each employee will be calculated. A person must understand what he can influence and how to earn more and improve the state of affairs in the company.

The implementation of the system of key indicators takes place in several stages.

1. Development of KPI in relation to the goals and overall strategy of the company.

At this stage, you need to initially determine the overall goals of the company. This can be an entry into the top 10 companies in their niche in the region, a certain sales turnover, access to international market other. Once you've identified your goals, you need to categorize them as important (priority) and non-priority. Otherwise, you can direct the efforts of employees in the wrong direction.

Involve department heads and employees in creating the pyramid of goals. The more people involved in the process, the better. The more information you collect, and if you listen to the opinion of the employees themselves, the more likely it is that the goals will be real and achievable.

As an example, let's take the sales department in your company. Discuss with the head of the department and employees how realistic it is to increase sales by X percent. To do this, each employee needs to increase the average check by X, and the number of calls to customers. Determine specific numbers that are not divorced from reality - this can become a KPI for employees in this department.

2. Introduction to the process, explanation to employees.

The introduction of the system must begin with an explanation to employees why it is needed. If you simply introduce key indicators, as directed from above, you may encounter misunderstanding and rejection of this system. If the opinion of employees is not taken into account, and they are simply confronted with a fact, it will not work to create a strong team and achieve their goals.

When developing a strategy, you should already take into account the wishes of employees. Now it remains to gradually introduce a new scheme of work.

When hiring, each new employee must be familiarized with the system for evaluating the effectiveness of his work, explaining what is behind each indicator.

3. Control.

Now the following question arises: you need to somehow determine the effectiveness of the work of employees, control and keep records of key indicators. Only in this way can you fairly pay for their work. You will have to count and take into account specific key indicators: for example, the number of calls per day for the sales department, the number of units for the production department, etc. Therefore, it is necessary to think over and introduce a reporting system, and automate the process of accounting for indicators.

The easiest way to do this is with special software. In the case of the sales department, CRM, a customer service system, will help track the effectiveness of each employee. Here, each employee will be able to record data about clients, calls, the results of a conversation with a client, and so on.

If you have a good IT department, you can develop your own reporting solution based on Excel.

You can choose some good tracker for teamwork - there are a lot of them on the market.

The ideal solution should:

ensure control over the work of each employee;
collect data in a single format and bring them into one database;
help with payroll.

4. Analysis of efficiency and refinement.

If you did everything right, then each employee will be able to track their performance and the relationship between them and wages.

Analyze the effectiveness of subordinates. A correctly introduced system for evaluating key indicators will allow you not only to sum up the results at the end of a month or quarter - you will be able to see inconsistencies even in the very process of performing work. Your task as a leader is to identify such problems in time and eliminate them.

If an employee shows poor results, this is not a reason to dismiss him or deprive him of a bonus. Consider the possibility of advanced training, training, additional explanation of the system of work in the company.

Also, periodically you will need to review key indicators for each employee. You can do this every month, when calculating wages. Some of them may become irrelevant, some may lose weight, or quantitative indicators will need to be revised. You can assign this task to a member of the Human Resources department.

Be sure to let's feedback. The employee must understand which actions lead to a positive result, and which do not. Perhaps it will be possible to develop a development system for each individual employee.

What exactly will emerge over time - you will see who is already ready for promotion, and who does not belong at all in your company.

Payroll based on KPI

The introduction of a KPI system must necessarily affect the payroll procedure. The following scheme is usually used: wages are divided into salary and bonuses. An employee receives a salary in any case, no matter whether he has achieved key indicators or not. But the amount of money in the bonus, bonus part directly depends on the efforts of the employee, on how many indicators he has achieved or not achieved.

Common Mistakes When Entering KPIs and Changing Payroll:

with the introduction of KPI, salary is cut. If an employee received 15,000 rubles, and after the introduction of a system of key indicators, his salary fell to 10,000, and the rest still needs to be earned, this weakly motivates a person not only to work, but also to stay in your company in general. Therefore, before introducing a KPI system, you need to think about the budget - you must have additional funds for employee bonuses;
an insignificant amount of the bonus, or vice versa, too small a salary. In the first case, the employee has a small material motivation to work quite well, in the second case, too, since if the indicators are not achieved, the person will be left with nothing. And it will scare away new potential employees from working in your company. The ideal ratio is 75% salary and 25% bonus.

You can use the formula to calculate:

And always keep your promises. If a person has earned a bonus, he should receive it anyway.

Implementing a KPI system is a long and painstaking process. It requires not only time, but also resources - moral, material. But soon, after a certain period of adaptation, you will see the qualitative and quantitative growth of your company. It will immediately become clear which employees are ballast, and those who do their job well will be rewarded according to their merits. And most importantly, everyone will understand the overall goal of the company, and contribute to its achievement.

Hello! In this article, we will talk about the KPI system.

Today you will learn:

What is KPI.
How to calculate this indicator.
How to implement a KPI system in an enterprise.
About the pros and cons of this system.

What is KPI in simple words

KPI - this is a coefficient that determines the effectiveness of a particular enterprise: how well it functions, whether it achieves its goals.

The decoding of this abbreviation is as follows - Key Performance Indicators, which is usually translated into Russian as "key performance indicators".

If translated literally, the word “key” means “key”, “essential”, “indicators” - “indicators”, “indicators”, but with the word “performance” there are difficulties in translating, since it is difficult to interpret it unambiguously here. There is a standard that gives the most correct translation of this word, dividing it into two terms: efficiency and effectiveness. Efficiency shows how the funds spent and the results achieved are related, and performance - to what extent the company managed to achieve the result that was planned.

Therefore, it is more correct to translate KPI as “a key performance indicator”. Speaking in simple words, so to speak, for dummies, you can see that this system helps to figure out what measures need to be taken to improve efficiency. Efficiency covers all the actions performed for a set time period, as well as the benefits received by the enterprise from each individual employee.

KPI indicators are as follows:

Performance KPIs- shows the ratio of the spent money and time resources with the achieved result;
Cost KPIs- shows how many resources are involved;
KPI result- illustrates the result obtained during the execution of tasks.

Because this system is not easy to implement, should be followed certain rules and principles that can become indispensable assistants in the transition to KPI:

The 10/80/10 rule. It states that a company must define 10 key performance indicators, 80 performance indicators, and 10 performance indicators. It is not recommended to use many more KPI indicators, because this is fraught with overloading managers with unnecessary unnecessary work, and managers will certainly attend to finding out the reasons for not meeting indicators that have little effect on performance at all.
Coordination of production indicators and strategic plan. Indicators production activities have no meaning unless they are correlated with the current Critical Success Factors (CSFs) combined in balanced system indicators (BSC), and .
Manageability and controllability. Each division of the company responsible for its indicator must be provided with resources to manage it. The result must be controlled.
Integrate performance measurement, reporting, and performance improvement processes. It is necessary to introduce a procedure for evaluating indicators and reporting that will push employees to the required specific actions. For this purpose, reporting meetings should be held to consider the issue being resolved.
Partnership. In order to increase productivity successfully, it is worth building partnerships between all involved employees. Therefore, the way to implement a new system needs to be developed together. This will allow everyone to understand what the advantages of innovation are, as well as to be convinced of the need for change.
Transferring efforts to the main directions. In order to increase productivity, it is necessary to expand the powers of specialists: help in, offer to develop their own KPIs, provide training.

How to calculate KPI

Paragraph 1. To calculate KPI, you need to select from three to five performance indicators, which will be the criteria for evaluating a specialist. For example, for an Internet marketer, they might be as follows:

The number of visitors to the site attracted by the specialist.
A figure that shows how many purchases were made by customers who have previously contacted the company.
The number of commendable recommendations, customer responses in social networks or on the organization's website after purchasing a product or service.

new customers - 0.5;
buyers who made a second order - 0.25;
positive recommendations - 0.25.

Point 3. Now you need to analyze the data for all selected indicators for the last six months and draw up a plan:

KPI	Initial value (average monthlyindicators)	Planned value
Growth of new customers	160	20% increase or 192 new customers
Percentage of repeat customers	30	20% increase, or 36 repeat purchases
The share of customers who wrote a positive feedback, recommendation	35	20% increase, or 42 reviews

Item 4. The next step is to calculate KPI indicators in Excell. It is necessary to use the KPI calculation formula: KPI index = KPI Weight * Fact / Goal.

Key indicators (KPI weight)	Target	Fact	KPI index
KPI 1 (0.5)	20%	22%	0,550
KPI 2 (0.25)	20%	17%	0,212
KPI 3 (0.25)	20%	30%	0,375
Performance ratio			1,137
113,70%

Here, the goal is the indicator that the employee must achieve according to the plan, and the fact is what he has worked out in reality. The final indicator is 113.70%, this is a good result, however, if we look at the table in more detail, we can see that the marketer did not fully comply with the planned standards.

Item 5. We calculate wages. We will be based on the fact that the total earnings of a marketer are $800, of which the fixed part (salary) is $560, and the variable (bonus) is $240. For a 100% index, the employee is entitled to a salary and a full bonus, but due to the fact that the plan is overfulfilled, the marketer will receive additional bonuses in the amount of 13.7% of the bonus part, that is, $ 32.88. As a result, the employee's salary will be $560 + $240 + $32.88 = $832.88.

But when an employee does not fulfill the plan, and his performance indicator is below 99%, then the size of the bonus is proportionally reduced.

With the help of such calculations and drawing up a table, you can see the problems and difficulties that an Internet marketer faces.

Poor performance may be due to the fact that the plan is drawn up incorrectly or the loyalty strategy itself is incorrect. The problem area needs to be controlled, and if things do not improve over time, then the right way out of the situation is to change the performance indicators.

Thanks to this approach, an understanding of the principle of operation of KPI is formed. Focusing on the goals, the calculation can be supplemented with new values. This can be a system of penalties, the number of solved and unsolved problems, and much more. For example, if the work according to the plan is less than 70% done, the employee will not receive a bonus at all.

There is more alternative way payroll in relation to the percentage of the plan:

KPI index	Premium coefficient
Below 70%	0
70 — 80%	0,6
80 — 89%	0,7
90 — 95%	0,8
96 — 98%	0,9
99 — 101%	1
102 — 105%	1,3
106 — 109%	1,4
Over 110%	1,5

KPI in practice

KPI-performance indicator is used by almost all companies that are engaged in direct sales. Consider some examples for a sales manager. Having adopted the approved key indicators, he will see a clear picture of his activities: it will become clear to him how much goods need to be sold in order to reach a certain income, which ones.

For an insurance consultant who is new to his profession, the optimal performance indicator would be 1/10: to sell one insurance policy, you need to meet with 10 potential buyers.

There is also a result KPI, for example, “the number of new customers is not less than n”, “sales volume is not less than n”, etc. These indicators are personal, and it is better when their number is less than 5, and most importantly, they should be easily measurable and clearly articulated.

In addition to motivating employees, company leaders use KPI as a tool to analyze the work of their subordinates.

This system allows you to clearly see the gaps in activities and at what stage they arose. For example, the boss keeps track of the manager's client base, how many calls and meetings the employee makes. If these indicators are met in sufficient volume, but there are few sales, it can be concluded that the employee lacks certain knowledge, skills or personal qualities for successful work.

KPI and enterprise planning

KPI indicators can be used in planning and monitoring activities. After the work has been done, the actual indicators are measured, and if they seriously deviate from the planned ones, better side, then the analysis and adjustment of further activities is carried out. Since all indicators are "dictated" by the real process, and not invented independently, such planning will contribute to the achievement of the necessary goals of the organization.

How to motivate staff to achieve KPIs

Thanks to the use of the KPI system, planned and actual indicators are recorded when paying for labor. This gives the manager a clear understanding of how to motivate an employee and for what. At the same time, the employee also clearly sees the pros and cons of his work and is aware of what actions can bring him a reward, and for what a penalty is due.

For example, an insurance consultant sold more insurance policies than planned and expanded the client base with many new clients. Thus, he exceeded the plan and, in addition to his salary, he will receive a bonus in the form of a bonus. On the other hand, if the same manager sold much less policies than planned, he may lose the bonus altogether and receive a “bare” salary, because his personal performance will be low.

However, you can motivate employees not only with money.

For the achievement of indicators, you can be rewarded with interesting trainings paid for by the company, unscheduled days off, gifts and other “carrots” that will inspire the employee no worse than money. But in this case, the employee's salary is always fixed, and according to the KPI system, points are calculated that the employee can exchange for the desired bonuses.

To create a KPI for employees, you need to focus on a common goal for all employees and strong motivation. Working in a team of interested specialists, like clockwork, can lead the company to achieve all its goals in a short time.

When is KPI not needed?

In a young company that has just begun its existence, it is not advisable to introduce a KPI system. The management system has not yet been formed here, and successful development driven by work CEO. Most often, he also performs the functions of specialists in finance and personnel.

And also, you should not implement KPIs in those departments that, because of this, may adversely affect other departments of the company. For example, an IT service, whose representatives must solve the problems posed to them (repair of office equipment) in as soon as possible. After all, it happens that one of the employees' computer failed, and the work stopped, and the entire department depends on the work of this employee.

If the salary of an IT specialist is calculated according to the KPI system, then he will not immediately go to work. First you need to make a request for the elimination of damage. This application must be approved by a senior specialist of the IT department, after which the task is queued for implementation and awaits consideration.

As a result, a task that takes 5 minutes to complete takes much longer, during which the work of the entire department, where one computer has broken, does not move at all.

That is why it is useful to implement a KPI system wisely, otherwise it can do much harm.

Mistakes when implementing KPIs

The most common mistake is introducing KPIs for statistics alone.

Ultimately, it turns out that the indicators of one division have no connection with the indicators of another.

For example, the supply service of one enterprise needed to cut costs. Therefore, in order to receive raw materials at a discount, employees purchased them in large volumes, and also purchased defective goods. This led to the overcrowding of warehouses, the freezing of finances in raw materials, which blocked all the advantages.

Meanwhile Production Department had its own priority indicator - load factor production equipment. For effective use time employees churned out certain products to save valuable minutes on machine tool conversions. But the fulfillment of the sales plan inevitably suffered from this. commercial department, because there was no necessary assortment, and in a specific period of time the client could purchase only one type of product.

As a result, a situation has developed where everyone pulls the blanket over themselves, and no one reaches the goal. The result was reduced to zero, and all the work was done in vain.

Another common mistake is focusing solely on material indicators that are the result: sales, income, and so on. However, only when key indicators are not financial, but proactive in nature, it is possible to achieve goals much more effectively.

For example, how many calls should a sales manager make, how many meetings should be held, how many contracts should be concluded in order to achieve the same resulting KPI? It is on the basis of such non-financial factors that the system of employee motivation should be built, and the heads of departments should be guided directly by financial factors.

And also a serious mistake will be the situation when the persons responsible for this or that indicator are not indicated. For example, the order of incentives does not imply bonus payments or their reduction by the head for the performance or non-performance of the plan. In this case, the boss cannot be responsible for the actions of subordinates, because he has no way to influence them.

Pros and cons of implementing a KPI system

Working on a KPI system has many advantages:

It has been established that in companies with such a system, employees work 20-30% more efficiently.
Specialists will clearly understand what tasks are priorities and how to accomplish them.
With a well-implemented system of indicators, the control of the company's activities is greatly facilitated, due to which problems are detected already at the stage of their occurrence and are solved without having time to cause harm.
When calculating wages, the principle of justice applies: those who work diligently get more. This allows the organization to retain valuable staff.
The wage fund becomes a means of motivating staff, and not the main source of expenses.

There is a KPI system and disadvantages. First of all, the disadvantage is that a lot of time and effort is spent on implementation, because all indicators need to be worked out in detail. Most likely, it will be necessary to retrain employees, explain to them information about changing working conditions and new tasks.

However, the main drawback is that the effectiveness in the end is not always evaluated correctly. This can be avoided if, at the stage of system development, the criteria by which the qipiai will be assessed are flawlessly formulated.