The main responsibility of the company's top management is to create a strategy, determine the goals and objectives of the enterprise. The implementation of these goals rests on the shoulders of employees from structural divisions. A company's growth can be jeopardized if information is poorly shared between employees and management. This is mainly due to information overload of management and the inability to rationally assess the situation in work positions. This, in turn, affects the quality of control over the actions of personnel and the implementation of the strategy.

Impact of KPIs on the company

If specific strategic goals the staff lacks and also does not have sufficient motivation, this leads to the fact that employees are not able to determine the right course and are not able to act for the benefit of the company’s development. This inconsistency often leads to waste of company resources on tasks that are secondary. Such problems arise quite often, and many businesses around the world suffer from them.

It is difficult to call a self-sufficient enterprise strategy. Management's aspirations are to achieve goals by setting tasks for personnel, as well as quality control over the quality of work performed. In the chain of elements that are necessary to realize these goals, which constitute the management cycle, there are two elements:

That is why many modern entrepreneurs are interested in KPI (key performance indicators), what it is and how it can help in management. After all, the weak link in the chain shown above is, in fact, the connection between management and staff. If there are failures in its work, then decisions will be made taking into account information that is incomplete. According to some managers, the guarantee of the correctness of their decisions depends on the amount of information collected. But in this case, this is a wrong opinion, since the time required to evaluate information increases, and its quantity is not at all responsible for its quality.

Management Tools

Any management needs a tool that allows them to obtain high-quality and adequate information for decision-making. Western companies have long been using key performance indicators and a balanced scorecard for this purpose.

KPIs are considered a system of indicators (financial and non-financial) that have an impact on the qualitative and quantitative change in the result of personnel work or the result that is expected. It includes the coefficients of each controlled object, as well as the methodology for their evaluation. This allows you to focus on achieving strategic goals, based on an assessment of the organization’s performance.

The assessment of key performance indicators is precisely the tool that can show how well management is carried out in relation to the results relative to the set goals, taking into account the cost and position of the company in the market. It is worth keeping in mind that this tool can facilitate the decision-making process of management thanks to complete and high-quality information, but it cannot solve serious systematic problems of the organization. This technique does not provide ready-made solutions, it only identifies the area in which the problem arises.

The transition to new methods of progressive company management is justified by the fact that old methods, including increasing the scale and pace of production, as well as improving product quality, do not create the necessary competitiveness. Thanks to modern instruments management, the organization can quickly respond to any change occurring in the market.

The main objective of the KPI system together with the balanced scorecard is to move the company into a comprehensive set of necessary indicators that can highlight the main elements of management and measurement. Thanks to this set, an organization strategy is formed that is able to include all the necessary qualitative and quantitative characteristics in order to promptly inform workers about the factors that influence present and future success. Having formulated the results that should be achieved, the organization not only defines the goal, but also works on the conditions that allow it to be achieved better and faster.

It is not the amount of information that is important, but its objectivity, accuracy and relevance in order to carry out everything correctly necessary calculations. The concept of the balanced scorecard is that traditional financial and economic indicators are not enough for the success of a strategy. To solve problems, it is necessary to better balance key performance indicators, taking into account various planes, in order to control the factors that influence these indicators. You should not pay much attention to past achievements; you should evaluate future results. If you focus indicators on only one area of ​​activity, this will undoubtedly have a bad effect on the final result.

System implementation

To implement a system in an enterprise, there are certain steps that must be performed sequentially. Violation of this sequence can negatively affect the final result.

The first stage is the formation of a strategy

A clearly formulated strategy should describe the main steps to achieve the desired results and goals. It needs to be broken down into specific initiatives, with tasks assigned to individual departments of employees. Thanks to this, significant savings occur not only in money, but also in time.

The second stage is identifying key factors

Here you should define the most important factors, or rather, the parameters of aspects of economic and economic activity that have an impact on the implementation of assigned tasks and strategy implementation. These factors have a significant impact on success.

Stage three – key performance indicators

Here the activities necessary for the strategy to be successfully implemented are determined. KPIs are used as a tool to determine them. It is worth highlighting only the most sensitive of them, without using secondary indicators. They should be stimulating for staff. Among the main requirements for the system of key performance indicators are:

• Clear limits on the number of indicators.
• They must be uniform for the entire company.
• Possibility of obtaining a digital format of the indicator.
• It must be directly related to the factors influencing success.
• Metrics should motivate employees to meet the goals required by the organization.

Key performance indicators: examples

Let's take, as an example, a well workover shop. The strategic goal for this organization will be to increase the level of product production, which will be expressed in well production and reduce the factors that provoke the loss of the product and reduce its cost. In this regard, KPIs should be set so that they reflect not only the goals of the company itself, but also address issues regarding a specific division. If repairs are carried out, the well’s operation will be stopped, therefore, it is worth considering the costs caused by the shutdown.

The structure of key performance indicators for a given division may have the following structure:

Thus, using KPIs (key performance indicators), examples of which are discussed above, employees are encouraged to reduce costs and increase oil production. This not only matches common goals company, but also affects the quality of work of a particular department.

The fourth stage is working with a balanced scorecard

This stage involves the development of a generalized system that includes financial and non-financial indicators. This takes into account both the object of control and the assessment of factors influencing the overall picture of the enterprise’s performance.

Fifth stage – selection of a technical solution for implementing the tool

At this stage, the data source through which the indicators will be filled is determined; it must satisfy all the conditions for the reliability of the information received. It is necessary to first create a strategy that allows you to implement a new management tool. Decide on goals, taking into account how positively they will affect the state of the company. It is also necessary to configure the information flow in order to correctly calculate all indicators. There are still many points necessary to achieve the main goals and objectives of the organization, which key performance indicators will help to cope with.

From this article you will learn:

• What is KPI
• What examples of KPIs for representatives of various specialties can be taken into account?
• How to calculate KPI in EXCEL using an example

Method of personnel assessment using key indicators efficiency KPI(Key Performance Indicator) is based on the methodology of “management by objectives” by Peter Drucker. In Russia it has been used since the early 2000s. In this article we will describe the essence of KPI, give examples of KPI and show the prospects for applying and improving the KPI method at Russian enterprises.

What is KPI with examples

Since July 1, 2016, Russian enterprises have been implementing professional standards as the basis for the formation personnel policy. To assess the success of meeting standards, a system for assessing the quality of workers' work is needed.
The criteria that characterize the quality of work are presented in Figure 1.

Picture 1. Structure of labor quality criteria for enterprise employees.
Level I criteria- these are actually the names of the two main classes of criteria.
Level II criteria– generalizations suitable for submission for an award (but not for evaluation).
Level III criteria– unified indicators that allow for an approximate assessment of the effectiveness and reliability of an employee’s work. Almost all known methods of personnel assessment are focused on assessing level III criteria. Depending on the education and literacy of the authors of the methods and consumers, the most often chosen are:

• Purely economic KPI criteria. Applicable to managers and specialists directly involved in financial management and product sales.
• Questionnaires in the form of forms for experts to assess competencies.
• Psychological criteria (Cattell test, etc.) - on the assumption that the quality of work is determined primarily by personal characteristics.
• Job profiles based on specialized (mainly psychological) sets of indicators.

Let's consider the most popular assessment technology based on KPIs.


Main idea of ​​KPI– detailing the strategic goals of the enterprise down to the employee level. As a rule, financial and economic indicators act as strategic goals. There are several subgroups of KPIs based on quantitative measures of activity:

1. Expenses– in value terms.
2. Performance– percentage of equipment load.
3. Efficiency. Most often this is the ratio of revenue to cost.
4. Results. For example, the number of products produced.

Key indicators effectiveness can be operational and strategic.

• Operational indicators characterize the current performance results of the enterprise and its divisions. Allows you to monitor online technological processes, material support, product quality and adjust management parameters in accordance with changing conditions.
• Strategic indicators allow you to monitor the generalized results of the enterprise for a month, quarter, half year and make decisions to ensure that these results comply with the planned ones. Short-term forecasts of the efficiency of departments and profitability for the coming period are calculated.

KPI are numerical indicators of the degree of success in achieving specific goals. This allows you to use the KPI system as the basis for motivating management of employee activities.

Examples of KPIs for representatives of various specialties

KPIs are most convenient for assessing the labor efficiency of administrative and managerial personnel (managers, economists, financiers, etc.).
Key Performance Indicators trading activities are calculated based on the following data:

Key production performance indicators are calculated based on:

Specific examples are presented in the following table:

Example of KPI calculation in EXCEL

Each enterprise develops its own KPI assessment system. Key performance indicators are established for each position independently. Their total number for a specific position/workplace is no more than five. At the end of each month (for some enterprises - a quarter), the final individual KPIs of each employee are calculated as a weighted average of private KPIs. The simplest algorithm for combining private indicators of an individual workplace:

where are private performance indicators;
n – number of private indicators ( n≤5) ;
– weights of individual (private) KPIs. Usually
The weights vary because the significance (importance) of individual indicators may not be comparable. Weights are normalized:

Formulas for calculating bonuses based on values K(decision rules) can be expressed as a simple linear or step function TO.
The values ​​of motivational coefficients (that is, conversion factors K bonus) can be determined, for example, according to the following algorithm:

The following picture shows clear example calculations using Excel.


Figure 2. An example of assessing the success of an activity.
Explanations:

• Salary– fixed part wages. It is proportional to the number of hours worked. To simplify the calculation example, the fixed and variable parts of the salary are assumed to be equal.
• Percent fulfillment of the sales plan and work plan is calculated based on the ratio of actual indicators to planned ones (as in the above table of calculated values).

Formulas in Excel for calculating KPI for each employee: =(50% × (IF(D3<80 %; 0; ЕСЛИ(D3<90 %; 0,5; ЕСЛИ (D3<100 %; 1; 1,5))))). Влияние показателя 1 и показателя 2 на сумму премиальных считается одинаковым. Коэффициенты тоже равны. В связи с этим для расчета показателей 1 и 2 берутся одни и те же формулы.

• The formula for calculating the amount of premium to accrue is =C3 × (F3+G3). The planned bonus is multiplied by the sum of indicator 1 and indicator 2 for each employee.
• Salary – salary + bonus.

In order to evaluate the work of employees according to several key performance indicators, a matrix of the following form is compiled:


Figure 3. Worksheet form.

1. Key indicators A – private KPIs (.
2. Weights B – .
3. Base C is the minimum value of the indicator.
4. Norm D – planned level.
5. Goal E is the value to strive for. Excessive indicator.
6. Fact F – actual results of work.
7. KPI G index – level of result in relation to the norm.

Formula for calculating the KPI index:

An example of filling out a matrix for an office manager is shown in the following figure.


Figure 4. Example of KPI calculation.
The performance coefficient is the result of calculation using formula (1).

How to implement a KPI system in an organization

As can be seen from the above example, the implementation of a system of motivating personnel management based on key performance indicators does not require serious investments and highly qualified developers. No special training is required for HR specialists - the ideology is simple and popular. There are many enterprises that operate semi-automated Excel-based systems. The whole question is how effective personnel management is when using the technology discussed.
As can be concluded from the example, the KPI system is best suited for enterprises with discrete production, for example, mechanical engineering enterprises. For industries with a continuous process (for example, nuclear power plants, chemical plants), the main attention should be paid to the technological component of control, its reliability and safety. In this case, for example, it is impossible for an occupational safety inspector to formulate appropriate assessment criteria related to the financial well-being of the enterprise.

To correct this shortcoming, you can supplement the KPI assessment complex with a competency assessment subsystem. An example of a fairly successful solution is the STP 001.089.010-2005 standard, developed at OAO Irkutskenergo.
At OAO Irkutskenergo, special forms are used to assess competencies, which are filled out by experts - the head of the person being assessed and his colleagues. A sample of such a form is presented in Table 1.
Table 1. Employee competency assessment.

Experts assess the employee’s compliance with the job requirements using points. In this case, competency dictionary scales are used. Examples of scaling of two competencies are presented in Table 2.
Table 2. Scaling competencies.
Initiative

Ability to plan work effectively

Let's try to define what KPI is in simple words. In general, this is an indicator of the achievement of results in a particular activity, digitized, measured and expressed in numerical form. The KPI motivation system for employees is an indicator of the effectiveness and success of completing assigned tasks. The meaning of this system is to direct the actions of employees of all departments in a single direction by fulfilling specific parameters.

The performance of each individual employee not only determines the effectiveness of his specific work and is financially reflected in his salary, but is ultimately aimed at solving the business goals of the entire enterprise. KPI - it is also called KPI, kipiai, but it is more correct to use the abbreviation KPI (key performance indicators) in the Russian version - are divided into two types:

1. Operational, which fully reflect the current activities of the enterprise and allow solving problems in connection with changing conditions.
2. Strategic, which evaluate the company’s performance over the entire period and allow for adjustments to be made to the plan for the next working period.

The following types of key indicators are distinguished:

• costs - illustrate the amount of expenses;
• efficiency - characterize the ratio of the results obtained to the costs;
• functioning - assess the compliance of a process with a given algorithm;
• productivity - show the ratio of the result to the time spent on achieving it;
• result - demonstrate what effect is obtained in the end.

The last indicator is of greatest importance in personnel management, as it shows what results employees achieve as a result of their work activities. If the company has an appropriate remuneration system (salary + KPI), the key result indicator is used when calculating the bonus part of the salary.

Performance indicators and remuneration

When developing and implementing performance parameters for wages, in order to understand what KPIs in wages are, it is necessary to clearly formulate the goals that the company is pursuing. These goals must have specific characteristics, and verbs and numbers must be used to set them.

For example:

• increase turnover by 20%;
• take 5th place in terms of brand recognition among manufacturers of this product;
• reduce logistics costs by 15%;
• increase sales profitability by 25%;
• reduce the average application processing time to 5 minutes;
• increase the number of site views by 1000;
• process a larger number of addresses per unit of time, etc.

Any motivational system is aimed at increasing interest in work and the quality of key indicators being achieved. It is also important to understand that not all departments have an equal impact on the implementation of the company's business goals. For example, a secretary or an accountant. But even for such employees it is realistic to establish criteria for the effectiveness of their work. It is more convenient to tie them not to general business goals, but to the implementation of the goals and objectives of the department.

So, for a secretary, key performance indicators will be: the quality of processing incoming and outgoing documentation, the speed of answering incoming phone calls; for an accountant - the processing time of documents or the quality of interaction in matters of document flow with accountants of counterparties.

The introduction of a system of performance indicators provides for:

• clearly defined business goals;
• development of lowest and highest performance indicators;
• correct distribution of powers and responsibilities among employees;
• determining how and what indicators each department influences to achieve goals;
• finding out what the company employee influences within the department;
• search and formulation of specific indicators for each employee;
• creation of a new payroll algorithm taking into account key performance indicators;
• recording changes in local regulations. It is most convenient to develop a separate document. They compose it so that it covers all upcoming changes in wages.

It is advisable to first implement a new system as a pilot or test project in one department, whose work has a direct impact on the financial performance of the company (for example, in the sales department). And then, after correcting possible errors, extend its effect to all other departments. If the conditions of the external market environment change or the strategy and goals of the company change, the indicators must be revised.

Development should not only be carried out by employees of one department. This is always a team work of the heads of all departments, which allows us to clearly understand what employee KPIs are and not make mistakes in defining them in relation to the specific conditions of a particular enterprise.

Within the department, it is necessary to develop a system from top to bottom, that is, first to the manager, and then to his subordinates, so that the goals and objectives within the department are uniform. But it wouldn’t turn out that, for example, the head of a department has a goal to increase the sale of low-profit positions, and managers receive a percentage from the sale of high-profit positions. With such indicators, managers are not interested in selling positions with low returns, and the manager’s tasks will be difficult to achieve.

In a properly constructed system, each KPI coefficient is clearly thought out and defined values.

For one employee, several (not many) indicators are entered for which he is responsible (3-5 is the most optimal number). For each key indicator, its financial value is determined, which is reflected in the salary. It is recommended to maintain the employee’s salary, and make the motivational component additional, and not part of the former salary.

Thus, KPI salary is an option for remunerating employees, in which the final amount is variable and directly depends on the quality of the tasks performed.

Development of KPIs, rules and principles of implementation:

• a small number of indicators;
• measurability of each indicator;
• the costs (time and financial) of measuring a parameter should not exceed its cost.

When introducing a new wage system, it is not harmful to prepare for resistance from employees. Often, employees assume that they want to deprive them of their salaries, and not increase their income; they are afraid of not meeting the new established standards and losing their jobs completely. It is very important to explain to employees what this developed system is aimed at and what results management expects from them. And understand that the goals defined by management sometimes turn out to be radically opposite for employees to what they did before. It is especially difficult for “Soviet-trained” workers who are accustomed to other motivation and remuneration systems to get used to such innovations.

In general, developing a KPI system is a very controversial topic for any manager. This process is almost always quite costly and painful for employees, but with the right approach it is an excellent tool for motivating and stimulating employees to work.

How to evaluate performance

Assessing the completion of assigned tasks is an important element of the motivational system. Standards for ordinary employees are selected to be transparent in assessment, so that a person himself can understand during the accounting period whether he fulfills them or not, and not find out about this after the end of the period. Managers may have indicators that require time to determine their implementation, such as % of the company’s return on sales. But within a month, the employee must understand in which direction he is moving and be able to evaluate his current work using other indicators.

In large companies, the assessment of the implementation of key performance indicators is usually automated, and the results are determined “at the touch of a button.” In small companies, either managers or representatives of the personnel department are responsible for evaluating results.

Based on the performance of indicators, a bonus is awarded.

The following calculation formula is usually used:

• weight - the weight of each indicator of the system in a total amount equal to one. Maximum weight is given to the most significant indicator. For example, the main achievement of a sales manager is to increase the amount of sales;
• plan - a planned result that one would like to achieve;
• fact - actually achieved result.

Having calculated the index for each indicator, we will immediately see what tasks the employee had problems with and how this affected the overall results of his work activity for the reporting period.

To determine the feasibility of bonuses and calculate the bonus component of wages, the overall performance coefficient is used, which is the sum of all indices.

If it is more than one, then this indicates that the set plan was exceeded, which means that the employee deserves a bonus.

This approach makes it possible to make the process of bonus distribution more transparent and understandable both for the employee and for the company’s management personnel distributing bonuses.

In addition to paying bonuses, other incentive options are also used. For example, provide an unscheduled day off, transfer a more promising project, include in the personnel reserve for a higher position, etc.

It is optimal to combine material and non-material incentives. Such a motivational system will allow employees to work well and efficiently, and the company to achieve high financial results.

Examples for different positions

It is necessary to very clearly understand what KPIs are when paying for labor. For different positions, even to achieve the same goal, it is necessary to use different indicators.

Let's look at examples of KPIs for representatives of various specialties to achieve the goal of “increasing profitability (delta between revenue and expenditure parts) of sales” in a company that sells candy.

What is the KPI matrix

There are different interpretations of this concept on the Internet. Sometimes the concept of “KPI matrix - agreement on goals” is used. But the most accurate interpretation is the efficiency matrix.

This table contains examples of employee KPI (key performance indicators), planned and actual values, and the KPI coefficient for each item. The final average value in this matrix reflects the employee’s effectiveness in his activities within the framework of the assigned tasks and indicators defined for his position.

An example of a matrix for the above employees of a company that sells candy, within the parameters defined for them.

Pros and cons of the key performance indicator system

Pros (and, as a result, achieving goals):

• the employee’s ability to influence his salary;
• employee responsibility for a particular area of ​​work and transparency of tasks;
• employee participation in achieving the overall goal of the company;
• the ability to adjust goals by the manager in the process of work;
• interaction between a manager and a subordinate in a more intimate manner.

Disadvantages (and, as a result, demotivation of the employee):

• the unattainability of meeting the set parameters;
• a small share of each indicator in the bonus amount due to their large number;
• labor costs of system implementation;
• uneven solution of problems due to incorrect determination of the cost of standards.

Special opinion

There are 2 main mistakes when developing a KPI system. The first is the confusion between the concepts of KPI and money. KPI is not a description of the bonus system. Yes, it is worth paying bonuses for achieving key indicators. But first of all, KPI is a reflection of the effectiveness of an employee, department, direction, department.

For example, in manufacturing there is a client assessment of the quality of work. Most large companies do not include it in the bonus system, but record it only as a KPI: if an employee is in critical zones, he is brought up to the required level or parted with, but he is not paid a bonus if 90% of clients are satisfied with his work.

The second is KPI for the sake of KPI. Key performance indicators are always a decomposed goal of the company. For example, in a salon, the arrival of an administrator at 9 am is included in the performance indicators (otherwise the shopping center will fine the company for a closed salon), but in production such an indicator is meaningless (an employee will arrive at 9 am and leave at 6 pm, but the amount of work will not change, but the amount of work affects profit).

Boris Teklin

Head of Customs Department in Russia DHL Worldwide Express

It is considered that KPIs are chosen correctly if they meet the so-called SMART criteria (Simple, Measurable, Agreed, Relative, Timebound). This means the following.

Key performance indicators should:

• become understandable to the employee and simple to calculate;
• be measurable in certain units (in cubic meters of excavated soil, tons of transported cargo, the number of calls answered, the percentage of plan fulfilled, etc.). You cannot use unmeasured “analog” indicators as an indicator, such as “quality”, “good”, “beautiful”, etc.;
• be consistent with the goals of the unit and between the employee and his supervisor;
• relate directly to a specific employee and the work assigned to him;
• measured at specified time intervals (if there is a link to the premium, then it is logical to link the indicator to a month or quarter).

Performance indicators should be as clear as possible to those who set the task and those who carry it out. Their main task is to contribute to the achievement of planned indicators and motivate them to achieve new ones. Based on our experience, we identify several mistakes:

1. KPI is not developed for business management, but to motivate specific departments, employees, divisions, to evaluate the effectiveness of their work. If these key indicators are not connected into a common system and do not work to achieve business goals, the question arises: what effect do they bring to the business?

2. KPIs are not integrated into the motivation system. Performance indicators are developed, but employees have no incentive to meet them.

3. KPI indicators are only financial. A properly developed system has a large number of not financial, but leading indicators by which we monitor business activity and the achievement of the necessary results.

4. There is no KPI planning and accounting system. Performance indicators are needed when we know how to count them, when we can get them from the accounting system and objectively calculate them, and the employee trusts these indicators.

5. KPI indicators are compiled in such a way that the employee works not for results, but for indicators.

In our opinion, the KPI system does not work in creative professions and in unstable markets. Today we see the following alternatives to traditional KPI:

1. The employee makes decisions independently (the principle of working according to the “Turquoise Management Model”).
2. Planning based on goals for results.

Olga Pavlenko

HR manager Soyuzkhimtrans-Avto

The article presents in sufficient detail the important aspects when developing a motivational system based on KPIs. I would like to add an important, in my opinion, nuance that many key indicators are not introduced. Of course, there are positions in which it is very important to take into account many different factors and components. But the more parameters there are to record an employee’s performance, the more difficult it is to keep them all in mind and the harder it is to concentrate. Developing a system is half the battle; the system must work. And for this it is important to remember the basics of psychology about the characteristics of attention and memory. 3-5 performance indicators are optimal for a working system.

And the second important point that I would like to add concerns the base salary paid to the employee. The salary portion of the salary remains unchanged and indivisible. This state of affairs gives the employee a sense of stability and confidence. KPI payments that supplement the base salary should motivate and encourage the employee to develop professionally and perform tasks more successfully. If the base salary also becomes a variable value, there is a risk of demotivating the employee and provoking him to avoid difficult situations instead of solving them.

When developing KPIs, it is important to consider the following factors:

1. An employee definitely has the opportunity to influence KPIs.

2. Achievability of KPIs. An ambitious goal is good, but it must be taken into account that it is impossible to build a house in 2 days.

3. Relevance to functionality. KPI is an indicator for which this position exists to achieve or increase (marketing - attracting customers; salesperson - sales).

4. Weight depending on position. For example, a sales manager's KPI is up to 80% of the salary level. For a back office employee it cannot be more than 50%, since the presence of his activity already creates value, and KPI is additional motivation.

5. The optimal number of key performance indicators is from 1 to 3.

KPI is ineffective in the following cases:

1. A high degree of uncertainty about the final result or product.
2. The employee’s competencies are unique (in the company, industry).
3. We need a super result (build a house in 2 days).
4. The employee has no tools to influence the result. KPI can put pressure and limit, which will lead to regression.

An alternative is: the introduction of additional bonuses for super-results; description of the lower limit with a high degree of uncertainty in the result; checklist for a unique employee.

In this article we will tell you what key performance indicators (KPIs) are and how KPIs are calculated. We provide a detailed step-by-step algorithm for implementing KPIs. We'll tell you how to use this indicator to motivate staff. Bonus - a table with examples of KPIs for HR officers.

From this article you will learn:

★ Staff motivation

Documents that will help you develop KPIs for employees:

KPI (key performance indicators): what is it?

KPI or Key Performance Indicators - key performance indicators. The term is sometimes translated as “key performance indicators,” but this variant is less common. The Key Performance Indicators system is used by large corporations with a developed network of branches and a large staff.

KPI is an effective tool for an HR manager that will allow you to:

1. Evaluate staff performance.
2. Monitor the maintenance of efficiency during the work process.
3. Manage the workflow.
4. Set specific goals for staff.

HR cheat sheet: 8 rules to achieve any goal

Types of Key Performance Indicators

What KPI is in simple words is explained by Alla Piskunova, HR Director of the LGK-Logistics company.

3 main principles for developing KPIs

Principle No. 1. KPIs (key indicators) should be simple and easily measurable. This way you can compare them and avoid errors in calculations.

HR cheat sheet: how to check if you made a mistake when setting KPIs

Principle No. 2. The cost of measurement must be lower than the benefit fromKPI implementation. A too complex and expensive procedure for measuring indicators will negate all the advantages of switching to KPIs.

Principle No. 3. The measurement results must be used in work. If you measure indicators only for the report and do not take any further steps, then the measurements are meaningless.

Questionnaire to help you perform KPI analysis

Pros and cons of KPIs

If you think there are more benefits for your organization, start calculating indicators and implementing the system. Keep in mind that this will require time, effort and money. It takes the longest to calculate key performance indicators in large companies with many employees. In this case, it is more rational to involve third-party experts or create a large working group of the organization’s employees.

How to implement a system in a company: 7 stages

Stage 1. Find out what indicators are reflected in profits. Determine who in the company influences these indicators. Determine which employees are working half-heartedly and interfering with business processes.

Identify lazy careerists - conduct a coaching session

Stage 2. Select key indicators, that is, those that have the greatest impact on profits. Appoint an employee responsible for them. For each department, define 2-3 clear KPIs.

Stage 3. Explain to employees how achieving key indicators affects compensation. Try to motivate them.

Checklist: how to create a comprehensive motivation system

Download checklist

Stage 4. Monitor whether the employee manages to achieve target indicators. If yes, go straight to Stage 6. If not - to Stage 5.

Stage 5. Find out the reasons why indicators are not being achieved. If the employee is not at fault, change the conditions. If an employee cannot cope, assign responsibilities to someone else. You can improve the performance of newcomers through mentoring.

Checklist: how to evaluate a newbie’s work

Stage 6. Constantly adjust the KPI system - remove outdated indicators and add new ones.

Stage 7. Adjust your motivation system. Explain to employees what KPI means, what parameters are set and how they will affect wages.

Recommendations for HR: how to convey to employees the need for change

Howcalculate employee KPI

There is no one standard formula for calculation. Each company has its own specifics and its own set of performance indicators. There is a general algorithm and a basic formula.

AlgorithmKPI calculation

Step 1. Select from 3 to 5 performance indicators. For example, indicators for an online store seller:

1. New customers.
2. Buyers who have made a repeat order.
3. Positive recommendations.

Step 2. Determine the weight of each indicator. The total weight of the indicators is 1, and the most important one has the highest weight.

1. New customers - 0.5.
2. Buyers who made a repeat order - 0.25.
3. Positive recommendations - 0.25.

Step 3. Collect and analyze data on selected indicators throughout the month. Use different assessment methods to understand whether subordinates are performing well.

Comparison of different assessment methods

Download the table in full

Step 4. Calculate KPI using the formula:

KPI index = Indicator weight*Fact/Plan

Fact - actual result

A plan is a planned result.

Step 5. Calculate your salary taking into account the KPI index.

KPI (key performance indicators): examples

A large household appliances store has 12 sales assistants on staff. The store's HR manager evaluates the performance of sellers based on the following criteria:

• criterion No. 1- the ratio of the number of buyers with whom the seller communicated with the number of those who subsequently made a purchase (in percentage);
• criterion No. 2- average customer bill;
• criterion No. 3- percentage of exceeding the plan.

This minimum set of criteria already allows you to calculate the seller’s performance and evaluate its effectiveness. The HR manager can monitor the implementation of KPI indicators and maintaining efficiency throughout the day or month. It turns out that the indicators allow you to manage the work process and set specific tasks for staff.

Example: how to calculate KPIs

1. At the store, the manager sets the task of selling out Philipps coffee makers.
2. The manager motivates employees to complete the task - selling these particular coffee makers.
3. One more criterion is added to employee KPIs: the percentage of exceeding the sales plan for Philipps coffee makers. For example, for each Philipps coffee maker sold above the plan, the seller receives 3% of its value.
4. The staff receives additional financial incentives for coffee makers sold above the plan.

In practice, the average number of indicators is 5-8 KPIs. Examples show that a minimum set of criteria for calculation was initially laid down. You need to develop more. Keep in mind that introducing 10 or more key indicators is also undesirable - you will get confused in the calculations, making the system voluminous and incomprehensible.

Preamble: “Listen, I found out about such a cool thing here! We'll launch it!" said our founder, returning from another trip abroad to the distribution forum.

Thus began a two-year epic with the transition to a new wage system. In 2010, what is KPI No one in our company knew. I had to read a lot of different literature, of course, Internet resources were studied and noted down.

For some reason, many sources initially incorrectly interpreted the essence of the system of key indicators. Even now on the Internet you can often see articles where, from the very beginning, the system is described as a personnel evaluation system.

I remember these debates at planning meetings - department heads argued about how to correctly understand and count these same KPI. The most complex formulas were built in Excel, where the indicators of employees were linked in proportion to the indicators of managers, etc. As a result, it was decided to undergo management training.

We were lucky. Since the company we found was adequate and well versed in its business, after the training everything fell into place.

KPI (Key Performance Indicator)— Key indicators of the enterprise. This is an indicator of the situation in achieving certain goals. It can be said that KPI is a quantitatively measurable indicator of the results actually achieved. This is a figure showing the actual profile (at the moment) of the selected indicators. The system of indicators itself has nothing to do with motivation and salary. To Russian KPI often translated as “key performance indicator”, which is also not true. Efficiency is the ratio of results to costs, and with the help KPI You can also display other parameters. “Key performance indicator” of an enterprise is a more convenient translation for me.

So what is it KPI, if you figure it out?

Every enterprise has many indicators, each of which must be constantly monitored by someone, or which are simply of interest to someone. For example, the founder of a company is most likely interested in profit and growth in the value of the enterprise. Directors - turnover, margins, costs. Head of Sales Department - Accounts Receivable. Chief accountant - correctly executed documents. Head of the supply department - illiquid assets, turnover. And so on.

All these are the key indicators of the enterprise. Each company has its own. Everyone has probably seen foreign films where a top manager sits, smoking a cigar, staring at a big screen on which graphs are floating? Usually these are brokers on the stock exchange. But in my imagination I can see the image of a director who also monitors all indicators, like the results of the work of the business processes of his enterprise, and when the graphs “red”, he appoints someone responsible, getting involved in correcting the situation.

Also, they are often confused KPI and BSC (Balanced Scorecard). KPI and BSC are of course related in some way, but they are far from the same thing. BSC is a cross-section of “business processes” where the goals are located. Indicators of these business processes are often used as measures of the achievement of these goals - KPI. A little chaotic, but the article is not about DSC and I wrote this so that you would not believe everything that they write.

Let's return to our KPI. For example, we have now implemented monitoring of indicators, based on 1C Volgasoft (a separate conversation about this buggy thing as of 2012, but we haven’t found a better one) What happens next?

Let’s say we have a “warehouse re-sorting” rate of 1% and this is a problem (by the way, there are good methods for identifying company problems), since customers complain that the warehouse is not working well. How can we improve the situation? This is where it comes to mind that the indicator system can be taken as the basis for a motivation system. And thanks to this, you will be able to manage the values ​​of indicators. Many people here make the mistake of setting a plan according to KPI for re-grading warehouse =0. In 2012, one company, a large paint manufacturer, in my opinion, was too clever with KPI in the motivation system, making it difficult to understand and impossible to implement, as a result the sales team was destroyed, since employees did not receive bonuses for the entire year. And, using the mechanism in building a system of retro bonuses (motivation built on KPI for the buyer 🙂) has still lost the loyalty of many of its large clients.

So, configured monitoring based on indicators makes it possible to influence these indicators. Gradually move them, allowing the staff to get used to them, from the existing fact to the maximum possible result. It is important to understand that this is not a panacea that guarantees 100% service. This is a tool with which employees begin to pay attention to the results of their activities, since their wages depend on it. And when the plan approaches the physically possible value, the same personnel begins to look for problems that prevent them from improving the situation, which ultimately also gives a plus.

Where to begin?

First, we need to describe all the main business processes in the enterprise that we want to control. Find control points (time, quantity) for each process.

Typically, the following types of key indicators are distinguished:
Result KPI - how many and what results were produced;
Cost KPI - what resources were needed;
KPI of functioning - execution of BP (allows you to ensure that all algorithms are executed without failures);
Productivity KPI - usually time spent on processes;
Efficiency KPI is the ratio of results to costs.

When developing process indicators, you must adhere to the following rules:

• The set of indicators must contain the minimum required number to ensure full management of the business process;
• Each indicator must be measurable;
• The cost of measuring an indicator should not exceed the managerial effect of using this indicator.

KPI can be used to monitor activities, draw up enterprise plans, and motivate staff. Also, motivation built on this system gives awareness of the responsibility of each employee performing his or her area of ​​work.

Actually, everything is clear with monitoring and plans; I will dwell in more detail on the motivation system.

Standard motivation systems usually include 1 indicator + a system of penalties. For example, the manager has % profit + fines\bonuses. And often, many positions have no motivation for results at all. For example, a storekeeper’s bonus = 10,000 + fines - shortage.

Motivation based on KPIs is radically different from old schemes. Nothing may change fundamentally. That is, the manager’s percentage of profit remains the same. But then the resulting amount is divided into several parts, each of which forms the basis for assessing the established standards. So, the entire bonus is 100%. The premium can be fixed or floating. Let me give you an example of motivation

Storekeeper:

1% Deviations in shipments reaching the consumer 30%
2 Knowledge of goods by storekeeper 15%
3 Use of barcoding or terminal 25%
4 Re-sorting in warehouse 15%
5 Goods acceptance rate 15%

Senior storekeeper:

1 Carrying out inventories 15%
2 Product losses during storage 20%
3 Marking of storage areas for goods 15%
4 Payroll warehouse 40%
5 Processing speed of detected shortages 10%

Manager:

1 Sales volume
2 Accounts receivable10%
3 Gross profit 10%
4 Successful clients 20%
5 Sales by product groups B2B 50%

The percentage is how much of the premium will be assessed. By setting it, we either reduce the importance of the indicator in the salary or, on the contrary, make it significant. That’s what it’s called – “WEIGHT”. As you noticed, different positions have different indicators divided by responsibility. When developing a system, it is necessary to take into account a number of factors in order to achieve the following indicators:

• were calculated automatically and were not subjective.
• were easy for employees to understand so that they could realistically evaluate their work.
• Indicators should be achievable, but at the same time, employees need to make some efforts in order to achieve the planned result. If the plan is too high, then employees, seeing the unreality of the plans, will not even try to achieve it. If we set an inflated plan, then we must provide tools for its implementation - promotions, discounts, etc.
• Each indicator must carry a meaningful load and be important for the company. For example, the indicator “number of calls” or “number of sales” is often found. How will they help? How can KPIs take place, for example, to calculate the load on resources, but in motivation!? I, as a manager, could easily negotiate with clients and make 10 invoices instead of 1, while the shipping amount and profit would not change.

When introducing such a system, we must be aware that employees will primarily perform those tasks and direct their efforts in those areas on which their salary depends. And if you overdo it, the rest simply won’t be done. Some particularly important indicators may be duplicated for different positions, but I would not get carried away with this since this reduces the total number of indicators tied to salary.

It would also be a good idea to motivate employees to exceed the plan. By the way, let's talk about how the plan is set?

To begin with, standards are established. Before forming them, you need to collect statistics of the existing level.

What have we asked here? The fact is that if an employee fulfills the plan by 84%, he will not receive anything for this indicator. if 90% then 60% premium. If he has exceeded this, he may be awarded an additional 20% bonus.

Next, the manager inserts plans for each indicator. The subordinate should see the % completed at any time. At the end of the period, wages are calculated based on the weight, % of the plan and the established standard.

At the end you should get a picture like this:

It really works, I say this as a person who has tested the system in practice.