Monitoring the implementation of kpi. KPI in simple words

KPI (Key Performance Indicators) - “key performance indicators”, but more often translated as “key performance indicators”. KPI is one of the tools with which you can analyze how effectively staff works to achieve the company's goals.

KPI indicators are often used by larger companies (not where the owner, director, seller and loader are the same person), but on the contrary, when the company has a large number of employees and branches. The use of “kipiai” greatly simplifies monitoring the performance of all departments of the company. Having key performance indicators gives us the opportunity to manage the process and make changes to it. Set goals for staff and motivate them to achieve them.

Let's look at an example of key performance indicators. You are the owner of a large household appliances store and you have 12 sales managers on your staff. The performance of each manager for the month can be assessed according to the following criteria:

• what % of clients with whom the manager communicated made a purchase;
• average customer bill;
• fulfillment of the sales plan (for example, the minimum monthly limit is 350,000 rubles, and the manager’s salary will depend on the percentage by which he exceeds the plan);

If, for example, you need to sell blenders of a certain model, you can set a plan for each manager of at least 5 units; if more, then for each “extra” unit the seller receives 3% of its cost. Thus, the goal is achieved to sell a certain product and motivate managers to do so. As practice shows, the optimal number of KPI criteria for one employee is from 5 to 8.

2. Types and principles of KPI

Types of key performance indicators:

• Result KPI – quantitative and qualitative indicators of results;
• Cost KPI – amount of resource expenditure;
• KPI of functioning - how well the execution process corresponds to the established algorithm;
• Performance KPIs are derived indicators that characterize the relationship between the result obtained and the time spent to obtain it;
• Efficiency KPIs (performance indicators) are derived indicators that characterize the ratio of the results obtained to the expenditure of resources.

There are principles to follow when developing key performance indicators. The costs of measuring performance indicators should not exceed the management benefits of using the indicator. You won’t hire a person who will count the number and duration of the manager’s calls; the result will not justify the costs. For a more accurate result and the possibility of comparison, indicators should be measurable and as simple as possible, understood equally by each department, in order to avoid misinformation. And, most importantly, the KPIs are necessary; if we do nothing based on the results of their measurement, then in this case they are meaningless.

3. Pros and cons of KPIs

The main advantages of KPI include:

• fairness, transparency and comparability of results (management and staff see who works and earns how much);
• adjusting the employee’s work according to the lagging indicator;
• involvement of personnel in achieving the goals of the enterprise;
• quality control of performance of duties.

Despite all the positive aspects of the KPI system, it is not universal. Not all indicators in the work of personnel can be measured quantitatively, and therefore each business has its own ways of assessing efficiency, and finding them will require a large investment of time, labor and finances.

4. How to calculate KPI. Example

There is no single formula for calculating KPIs, since each company has its own specifics and, therefore, its own “kipiai”. Let's look at the example of calculating the salary of a sales manager, taking into account his KPIs in the Kotelok online store. Rate 7,000 rub. + 2% from personal sales (800,000*0.02=16,000 rubles) + bonus for fulfilling the plan for the number of new clients (2,000 rubles) + bonus for fulfilling the enterprise plan (for example, the plan is 100% fulfilled - 5,000 rubles , by 70% - 3,500 rubles) in our case, by 80% - 4,000 rubles. In total, at the end of the month the manager will receive a salary of 29,000 rubles. This counting system motivates managers to sell to existing customers and attract new ones.

5. What are KPIs in sales

In the sales field, the main key performance indicators for the sales manager and sales department are:

1. Sales volume. The manager is given a plan for a certain period of time (month, quarter, year). For example, in March the manager must make sales of 1,300,000 rubles.

2. Number of sales. Number of customers who made a purchase (number of receipts).

3. Traffic. The number of customers who learned about your product are potential buyers. Of course, attracting traffic is the task of marketers, but the seller himself can also influence the flow of customers, for example, with the help word of mouth.

4. Average bill. Implemented to encourage the manager to sell additional products. For example, purchase a heat-resistant glass plate or baking dishes for the oven.

You can develop a KPI system yourself, but this will require a lot of effort and more than one dog to eat. Majority large companies Still, they prefer to entrust the construction of the “kipiai” system to professionals with extensive experience in this field. If you need help implementing KPIs in your company, please contact us, we will be happy to help!

Personnel based on KPIs are becoming increasingly popular in Russia. The main advantages of such mechanisms are the rational reflection of company activities.

KPI: what is it?

KPI (KPIs) is an English abbreviation for “key performance indicators”, in Russian it is referred to as KPI - key performance indicators (sometimes - parameters). But in the original foreign sound it is used as a norm. KPI is a system that allows you to evaluate the performance of company employees in terms of achieving goals (strategic and tactical).

“Key indicators” allow a company to analyze the quality of its structure and its potential in solving problems. A system is also formed based on KPIs most important factor: if there are no signs of targeting, then there is nothing to use “key indicators”. and KPI, thus, are two interrelated phenomena. The first involves, first of all, predicting the results of work, as well as planning how these results will be achieved.

Who came up with KPIs?

History does not give a clear answer to this question, but we can trace how global management moved towards understanding KPIs, what they are and why they are useful. In the late 19th and early 20th centuries, sociologist Max Weber determined that there are two ways to evaluate employee performance: the so-called “sultanic” and meritocratic. According to the first, the boss (“Sultan”), at his own discretion, assessed how well a person copes with his duties. The rational principle here plays a secondary role; the main thing is the purely emotional perception of the subordinate’s work.

The meritocratic method is when labor results are assessed based on real achievements, with the inclusion of objective measurement mechanisms. This approach was adapted by management theorists in Western countries and gradually crystallized into what we know as the KPI system. An important role in the systematization of rational assessment of personnel performance was played by the works of Peter Drucker, who is considered to have turned management into a scientific discipline. The scientist’s concepts directly state that there are goals, and there is an assessment of the degree of their achievement through key performance indicators.

Pros of KPIs

The main positive side of the KPI system is the presence of a mechanism for assessing labor and the performance of the enterprise as a whole, which is transparent to all employees of the company. This allows management to evaluate the performance of all subordinate structures in real time, to predict how tasks will be solved and goals will be achieved. The next advantage of KPI is that management has a tool for adjusting the work of subordinates if current results lag behind the planned ones.

If, for example, performance measurement in the first half of the year reveals that performance is not high enough, then work meetings are held to identify the reasons and encourage employees to do better work after the next six months. Another positive side of KPI is feedback between the specialist and the manager. The first will receive not just instructions and sometimes seemingly biased nagging, but well-founded comments, the second will receive improved performance by specifying errors and shortcomings in the work performed by the subordinate.

Cons of KPIs

The results of assessments within the framework of KPI (performance indicators as such) may not be interpreted entirely correctly, and this is the main drawback of this system. As a rule, the probability of such a problem occurring is lower, the higher the attention paid at the stage of forming criteria for how to evaluate performance parameters. Another disadvantage of KPI is that in order for a company to implement this system, it will have to spend a lot of resources (calculated, as a rule, in time, labor and finance). We are talking, of course, about working on the key performance parameters of the proper level of elaboration. There is a possibility that large-scale retraining of employees will have to be carried out: specialists - in order to change tasks, and therefore working conditions, while management will have to master new methods of assessing the work of subordinates. The company may not be ready to give the team extra time to master innovations.

Subtleties of KPI implementation

The main task when implementing a KPI system (“from scratch”) is to prevent a negative attitude towards it from employees. Therefore, the company’s management needs to clearly convey the meaning and practical benefits of innovations to each of the subordinates, whose work is subject to subsequent evaluation for effectiveness. The best technique here, according to some HR experts, is an individual presentation, an explanation to specialists in specific positions: KPIs - what they are and why to implement this system in the company.

It would be a mistake to unconditionally impose efficiency parameters by order, but a necessary step is an appeal from the top officials of the company. If, for example, a line manager informs subordinates in his department about the imminent implementation of KPIs, then this information must also be confirmed by the general director. A specialist must understand that the system of key performance parameters is not an invention of the boss, but an element of the strategic policy of the entire company.

Optimal timing for KPI implementation

Among experts, there is an opinion that KPI indicators, when it comes to a system, should be implemented simultaneously at all levels of company management - from ordinary specialists to top managers. According to this point of view, the implementation period for key performance parameters cannot be extended over time: the system begins to work immediately. The only question is how to optimally choose the moment to launch it. There is a point of view that it is enough to notify employees about the launch of KPIs approximately three months in advance. This turns out to be enough for the company’s personnel to study the specifics of future assessment of the effectiveness of their work.

There is also a thesis that for some time KPI can work in parallel with the previous payment system. Depending on the degree of liberalism of the management, the employee will be able to choose according to which scheme his salary will be calculated. It is quite possible to motivate a person to work according to the new KPI through bonuses and bonuses, the conditions for receiving which will be clearly stated in the key parameters.

Stages of creating a KPI system

Actually, the implementation of KPI mechanisms as such is preceded by several stages of preparatory work. Firstly, this is the period associated with the formulation of strategic goals that are set for the company. As part of this same stage of work, the general concept is divided into tactical sections, the effectiveness of which is to be measured. Secondly, it is the development of key performance indicators and the definition of their essence. Thirdly, this is work on the distribution of official powers related to the implementation of the system, so that each responsible person asks a question like “KPIs - what are they?”

Thus, all indicators will be assigned to specific individuals (divisions) in the company. Fourthly, adjustments to current business processes may be necessary (if the updated strategy requires it). Fifthly, this is the development of a new system, creating salary calculation formulas according to new criteria. After completing all the specified procedures, you can launch the KPI system.

KPI requirements

As mentioned above, KPIs are key performance indicators that are inseparably linked to the company's goals. The quality of targeting is the main requirement for the KPI system. Goals can be formed according to different principles, but one of the most popular in the HR environment is the SMART concept. It means “specific”, “measurable”, “achievable”, “relevant”, “time-bound”, and, as a result, giving worked out and quality KPIs.

Examples of goals that meet these criteria: “open so many (measurable) retail outlets (specific) in a city (relevant) in the first quarter (time-bound)”, or “sell so many air tickets to such and such a country in three weeks". Each goal should be divided into tasks, which, in turn, are reduced to the level of personal KPIs (for employees or departments). The optimal number, as some experts believe, is 6-8.

KPI automation

One of the factors for successful KPI implementation is a technological infrastructure. Since KPIs are a set of rational indicators, a computer will do a very good job of working with them. There are many software solutions for KPI management. The capabilities available in such distributions are quite extensive. Firstly, it is a convenient presentation of information (in the form of graphs, analytics, documentation) about processes related to KPIs. What does this give? Mainly, the unity of perception of data, reducing the likelihood of misinterpretation of numbers. Secondly, the collection and calculation of performance indicators. Thirdly, this is a multidimensional (with very large volumes of numbers) analysis, which will be difficult for a person to perform without a program. Fourthly (if there is a network infrastructure), this is the exchange of information between individual employees and establishing “superior-subordinate” feedback channels.

Almost all managers are now familiar with the term KPI. Literally, KPI (Key Performance Indicators) are key performance indicators (work, activity). But KPIs are most often translated into Russian as key performance indicators, although this is not entirely accurate from both linguistic and content points of view. But we will not deviate from established traditions and will take as a basis exactly this translation of this term.

In management practice, KPIs are a kind of “ measuring instruments”, with the help of which the various results of the activities of the organization, divisions and employees are assessed. In other words, this is some function showing the dependence of the result of work ( exit) on the methods and conditions for performing this work, the quality and quantity of resources used ( process). KPI values ​​are used to judge the degree of achievement of activity goals. This measure, allowing us to directly or indirectly assess how much we have achieved a particular goal. In general, the following characteristics of work (activities, business processes) are measured using performance indicators:

1. Beneficial effect- what the work is done for. For example, net profit, revenue, sales volume, production volume, size customer base, the company’s share in the market, the quality of products or services, the satisfaction of external or internal customers, the qualifications and competencies of employees, the image and reputation of the company, and more.
2. By-effect - undesirable, but often inevitable, results accompanying the main (desired) results of the enterprise or employees (for example, staff turnover, accounts payable and receivable, etc.).
3. Resource costs - any costs (fixed, variable, direct, indirect) and costs of material and intangible resources that have a monetary value.
4. Time spent - time spent performing a job (process).
5. The ratio of the beneficial effect and the cost of resources/time - objective assessments of the beneficial effect per unit of cost/time or subjective judgments about the level of work efficiency based on known characteristics of the beneficial effect, resource costs and time. It is in this sense that KPIs are performance indicators. In other cases, we deal with performance indicators.

In general, any indicator can be attributed to one type or another. The main types of KPIs are listed below in the figure.

The composition of indicators at the level of the organization, divisions and employees should be balanced. The differences between the types of indicators are as follows.

The right column of the table lists the types of indicators for which in practice the balance is often upset in favor of their “opponents”. Simply put, managers usually underestimate these indicators or simply forget about them. Thus, in many more enterprises, financial indicators prevail over non-financial indicators, quantitative indicators prevail over qualitative indicators, individual indicators prevail over team indicators, operational indicators prevail over strategic indicators, and so on. Of course, the composition of indicators depends on the characteristics of the enterprise, its strategy and business goals, but in any case, it is important to remember and try to maintain a balance between different types of indicators.

In this regard, we will consider in more detail the division of all performance indicators into individual, team and quantitative, qualitative.

By using individual indicators measure the personal performance of employees and managers, depending only on their own efforts or on the work of their departments (project groups). Consequently, any indicator of an employee’s work can be considered his individual indicator if the values ​​of this indicator are influenced by the work of only this employee and no one else, or the influence of the others is so insignificant that it can be neglected. For example, the indicator “sales volume” for a sales specialist or sales representative working with a certain group of clients can be considered with some stretch as an individual indicator, although in fact this is not always true. Of course, if he himself found a new client, negotiated with him, concluded an agreement, sold the goods and subsequently makes efforts to retain this client, and he succeeds, then this is the unconditional merit of this employee. But it is possible that the client was already “warm”, since he was already familiar with this company and its products (from advertising, from word of mouth, and so on), and the “cold” call from our employee only accelerated the sales process. Or the client independently contacted this company because he saw somewhere advertisement or found the company’s website on the Internet through search engines or contextual advertising. Can we assume that in these cases, the sale of goods to such customers is entirely the merit of our sales manager? I think no. Then the sales volume cannot be considered his individual indicator, since it depends not only on his efforts, but also on the work of other departments and employees (advertising department, IT, and so on).

Attributing some obvious indicators to individual KPIs is in most cases a simplification of the real state of affairs. This is only possible when the employee has a weak connection with the organization. But, as you know, the work of an organization is joint activities of a group of people aimed at achieving common goals. Therefore, in fact, most performance indicators are collective, team performance, depending on the efforts of different people and departments of the company. Team indicators also come to the rescue in cases where the individual results of a given department or employee are not obvious, that is, they are difficult to formulate and isolate from the overall result of the enterprise. Team performance enhances informal interpersonal interaction at all levels of the organization, as people understand that they are collectively responsible for overall performance. Thanks to this, synergy or team effect arises, when internal competition, which thrives using exclusively individual indicators, is replaced by intra-company cooperation and the hitherto dormant powerful organizational capacity. This is the main argument for team performance. However, their use also has its risks. All the pros and cons of team indicators can be summarized in the following table.

Team KPIs: pros and cons

In practice, when developing KPIs for managers and employees, it is important to maintain a balance between their individual and team performance. For the chief executive officer (CEO), individual performance is the organization's KPI. Top managers (directors) of an enterprise, despite functional differences, must work as a management team and are also assessed by organization-level KPIs. But for them it will be team performance. Heads of structural units can be assessed both by team indicators (KPIs of the organization) and individual indicators (KPIs of their departments). For ordinary employees, the team results will be the KPIs of their department and even the entire organization. The remaining indicators are their individual results. Each enterprise for each position chooses its own ratio of individual and team KPIs depending on the specifics of this position, the nature of the work performed, its autonomy and independence or, conversely, the impact on overall work results and dependence on other departments and employees. Thus, the approximate ratio of individual and team indicators at different levels of the enterprise may be as follows.

Not all results of an organization’s activities can be assessed quantitatively in objective units of measurement (rubles, hours, percentages, and so on). For results that can be quantitatively measured, use quantitative indicators. The values ​​of such indicators are expressed in the form of a certain real number that has a certain physical or economic meaning. These include all financial indicators (revenue, net profit, constant and variable costs, indicators of profitability, turnover, liquidity, etc.), as well as part of the market indicators (sales volume, market share, size/growth of the customer base, etc.) and indicators characterizing the efficiency of business processes and activities for training and development of the enterprise (for example, labor productivity, production cycle, order lead time, staff turnover, number of employees who have completed training, etc.).

However, most characteristics and performance results of an organization, departments and employees cannot be strictly quantified. To evaluate them they use qualitative indicators. Quality indicators are measured using expert assessments, that is, subjectively, by observing the process and results of the work. These, for example, include indicators such as the relative competitive position of the enterprise, customer satisfaction index, staff satisfaction index, teamwork, level of labor and performance discipline, quality and timeliness of document submission, compliance with standards and regulations, fulfillment of instructions from the manager and many others . Qualitative indicators, as a rule, are leading, as they influence the final results of the organization’s work and “warn” about possible deviations in quantitative indicators. For example, a decrease in employee satisfaction index leads to a decrease in labor productivity and an increase in staff turnover. A decrease in the customer satisfaction index inevitably affects the sales volume and financial performance of the enterprise, and so on. Monitoring quality indicators leads to improved quantitative indicators. Quality indicators are the reason. Quantitative indicators are a consequence. If we want to get the desired effect, it is necessary to control and measure its cause. This is the meaning of quality indicators. What we measure is what we get. If we measure qualitative indicators, we are more likely to get the required quantitative result.

Managers often resort to the help of experts to evaluate quality indicators. Sometimes qualitative indicators can be presented in numerical form indirectly by measuring some other indicator. For example, an employee’s qualifications can be indirectly judged by the length of time he has worked in a given position. But in most cases, certain numbers (points) are artificially assigned to different values ​​of qualitative indicators, as if transferring them to the category of quantitative ones. However, this approach does not assess the degree of difference between alternatives, and its injudicious use can lead to unfounded conclusions.

The impossibility of expressing qualitative indicators directly in quantitative form should not serve as an excuse (which is often the case in practice) for refusing to establish standards and control these indicators. Even subjective assessments in this case are much better than nothing. Subjective assessments are better than no assessments at all! Organizational leaders cannot effectively manage their subordinates by refusing to control important quality indicators. The inevitable consequence of this is management on a whim, which in fact is no longer management, but is simply a spontaneous reaction to a situation that has gotten out of control.

Different scales are used to measure qualitative and quantitative indicators.

Any performance indicator is measured on a certain scale. Concept "scale" establishes what scores a measure can have and what transformations with those scores are considered acceptable to avoid erroneous or meaningless results. When measuring indicator values, the most widely used are nominal, ordinal and metric scales. Let us consider the listed types of scales in increasing order of their perfection.

Nominal scale, or naming scale, is used to describe the belonging of objects to a specific type or class. In a nominal scale, the number is used only to designate and highlight an object. In this case: all objects of the same class are assigned the same number, and objects of different classes are assigned different numbers. For example, each department and position in an organization has its own name, and may have its own unique number. Each type of product has its own name and identifier. Objects that have the same number or name are considered equivalent. In this case, preferences between objects of different classes are not established, that is, it cannot be said that object A is better or worse than object B. Each such value shows a certain class of certain objects. And nothing more. Thus, the nominal scale is used only to indicate individual properties of objects, and based on the value of the indicators measured on the nominal scale, it cannot be argued that one of these objects is better or preferable to the other.

Ordinal scale(rank) is more advanced than nominal because it allows preferences to be established between different objects. It is used to organize objects according to one or more characteristics. In this scale, indicator values ​​represent qualitative assessments expressed in natural language. Therefore, ordinal scales are most widespread when measuring and comparing qualitative properties that cannot be assessed directly by any number. However, as a rule, quantitative assessments are attributed to a person’s qualitative judgments, which are called points. Points are usually natural numbers that show the rank of certain objects and are listed in descending or ascending order of their preference. For example, using an ordinal scale, a manager can evaluate the performance discipline or qualifications of his employees, giving them the following points: 2 - low, 3 - average, 4 - high, 5 - very high. The numbers on this scale only determine the order of objects according to their preference, but do not allow us to state to what extent one object is preferable to another.

In particular, indicator scores on an ordinal scale can have only two values: 0 (did not complete) and 1 (completed). Such indicators are often found in management practice. They are used to evaluate tasks or work for which all requirements must be met. If at least something is not completed, then the entire task is considered uncompleted. For example, a project is considered completed if all customer requirements are met. If at least one requirement is not met, and the customer’s signature is not on the work acceptance certificate, it means that the project as a whole has not yet been completed. Or, let’s say, it is impossible to conclude an agreement on strictly defined conditions for 99%. You can either conclude or not conclude. Again we get only two possible values ​​of the indicator.

For an ordinal scale, any transformations of indicators that do not violate the order of objects are considered acceptable. Indicators measured on an ordinal scale carry much more information and make it possible to judge the relationships of preference between objects such as “better-worse”, “more-less” and others. However, this scale also lacks the concepts of scale and origin. Therefore, the values ​​of indicators that have an ordinal scale do not allow answering the question “how much or how many times is one object preferable to any other?”

This can be done using indicators measured in metric scales. These include the interval scale, ratio scale and absolute scale.

Interval scale used to show differences between properties of objects. Unlike an ordinal scale, the values ​​of indicators in an interval scale allow you to determine how much one object is superior to another. This scale can have arbitrary reference points and scale. Allowable transformations of indicators are described by linear functions of the form f (F) = aF + b, where F- the value of the efficiency indicator; a> 0 - scale, b- start of counting.

The value of the indicator in the interval scale is measured at fixed scale values a, which specifies the unit of measurement, and the origin b. The main property of the interval scale is the preservation of the interval ratio for any admissible scale transformation. For example, on an interval scale, the service life of equipment, deadlines for completing work, deadlines for selling products and other indicators are measured, for the measurement of which it is necessary to fix the scale and origin.

Relationship scale is a special case of the interval scale when choosing a zero reference point ( b= 0). However, the ratio scale is more advanced than the interval scale, since it allows fewer transformations, which are described by functions of the form f(F) = aF, Where A> 0. For any transformations of this scale, it preserves the relationship between the properties of objects, i.e., unlike the interval scale, it allows us to judge how many times some property of one object is “stronger” or “weaker” than the same property of another object.

Indicators measured on a ratio scale are the most common in practice. For example, these include profit, sales volume, production volume, market share of the company, risk level, costs, profitability indicators, time costs and other indicators for which there is a natural reference point (“ zero point»).

Absolute scale- the most perfect. This scale takes the zero reference point ( b= 0) and unit scale ( A= 1). It does not allow any transformations of indicators, that is f(F) = F. This means that there is only one mapping of objects to a number scale. For example, the absolute scale defines the number of people, objects, events, and so on, which can be measured in the only way using natural numbers. An example of an absolute scale is the Kelvin temperature scale or the range of real numbers from 0 to 1, used to estimate the probabilities of random events.

Thus, performance indicators can have different types of scales. In this case, the scale is considered more perfect, the smaller the set of its permissible transformations. This makes it possible to more accurately define the concepts of quantitative and qualitative indicators. Quantitative are indicators whose values ​​are measured on any metric scale. High quality are indicators whose values ​​are measured on a nominal or ordinal scale. That's all.

The correct choice of scale for measuring indicators has great importance and depends on the availability of the necessary information and the purpose pursued during the assessment. Thus, the use of metric scales requires more complete information compared to nominal or ordinal scales, and obtaining this information is associated with additional costs of resources and time. Therefore, when choosing the type of scale, it is always necessary to take into account the specifics of the problem being solved: how will this information be used in the future? If the task is to rank something or someone (for example, employees) on some basis (for example, according to their qualifications), then there is no need to measure quantitative characteristics, but it is enough to measure only qualitative ones and limit ourselves to an ordinal scale. As you gain more information, you can move on to more advanced scales.

Let us additionally consider another classification of indicators according to the direction of change in preferences for their values. On this basis, positive, negative and interval indicators are distinguished.

Values positive indicators it is advisable to increase. The rule for them is: “the more, the better.” Positive indicators include revenue, net profit, sales volume, size of the customer base, marginal profitability, market share, customer satisfaction, performance discipline and many others. In practice, when planning positive indicators, a requirement is set that the value of the indicator should not be lower than a certain norm (or plan). For example, sales volume is not less than 8 million rubles. per month, or a customer satisfaction index not lower than 0.90.

Values negative indicators it is advisable to reduce. The rule for them is: “the less, the better.” Negative indicators include such indicators as any unproductive costs (losses), overdue accounts receivable, the number of complaints from customers, the volume of production or logistics defects, the number of any violations (regulations, standards, rules), the time required to complete certain works ( the faster the better) and others. In practice, when planning negative indicators, a requirement is set that the value of the indicator should not be higher than a certain norm (or plan). For example, overdue receivables should be no more than 5% of the total amount of customer receivables, or the share of internal defects should not be higher than 2% of production volume, and so on.

Values interval indicators it is desirable to “pull” to a certain point. The rule for them is: “the more or less, the worse.” For example, interval indicators include such indicators as order lead time(if just-in-time execution is required), accounts payable turnover ratio(so that the deferred payment is not too large and not too small), staff turnover rate(high turnover is bad, but at the same time, planned renewal should occur staffing), share of new products in the assortment(must be maintained at a certain level), budget adherence(under-expenditure and over-expenditure are undesirable) and many others.

When planning interval indicators, a requirement is set that the value of the indicator is no lower and no higher than the lower and upper limits that define the acceptable range of indicator estimates. But in practice, to perform calculations, interval indicators are converted to negative and formulated as a relative (in%) or absolute deviation from a given (optimal) value. It turns out that the smaller the deviation (in one direction or the other), the better. Then, when planning such indicators, a requirement is set that the value of the indicator should not be higher than some standard deviation from the established optimal estimate. For example, the deviation from the budget should not be higher than 5%, or the deviation from the order deadline should not be more than 1 hour.

The conscious choice of KPIs is based on an understanding of their diversity and features of use in certain management situations. This allows you to develop a truly balanced scorecard that provides the shortest path to achieving the strategic goals of the enterprise.

You will learn:

• What are the pros and cons of the KPI system?
• Which employees should not implement KPIs?
• What KPIs should the manager set?
• What to do if employees sabotage KPI implementation.
• How to revise the KPI system.

What is a KPI system

KPI is a special system of indicators, using which employers can evaluate the performance of subordinates. At the same time, KPIs - the key indicators of each employee - are tied to general business indicators (level of profitability, profitability, capitalization).

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There are different KPI goals, but the main one is to create a situation in the company in which employees from different departments could act together, without their business actions contradicting each other. The activities of one specialist should not interfere with or slow down the work of another. All employees must strive for a common goal and work effectively, receiving bonuses for this.

There is an opinion that KPIs are directly related to the BSC (Balanced Scorecard), but this is not the case. The creators of BSC did not use the term KPI. They used the concept of “measure,” “meter,” or measure.

KPI and BSC are indirectly related to each other. BSC has a business process perspective with associated goals. To measure the extent to which these goals have been achieved, specialists use KPI business process indicators.

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So what is KPI in simple words? These are certain indicators that make it much easier to understand what actions should be taken to improve efficiency. At the same time, efficiency represents not only the number of manipulations carried out over a certain time period, but also the benefit that the enterprise received from the work of an individual specialist.

Company KPIs are general. However, in departments they are divided into small ones, called personal. There can't be many of them. 3-5 clearly defined and understandable indicators are enough. The main requirement is the ability to measure them simply and quickly.

Here are some KPI examples . Possible KPIs for a sales manager are the following: “Sales volume is not less than...”, “The number of new clients is not less than...”, “The amount of the average contract for a client is approximately...”, “The degree of English proficiency is not less than...”.

Another KPI example. You are the owner of a large outlet selling household appliances. You have 12 managers working for you. How effectively each of them works during the month is assessed based on the following indicators:

• how many people the manager talked to bought equipment (in percentage);
• average check amount;
• how much the sales plan has been fulfilled (for example, the minimum monthly amount is 350 thousand rubles; the manager’s salary will be affected by the level of exceeding the plan as a percentage).

For example, you need to sell mixers of a certain brand and manufacturer. In this case, it would be reasonable to set a plan for each manager with minimum quantity mixers equal to 5. If the manager sells more equipment than the planned quantity, he receives 3% of the cost from each “extra” mixer. This is an excellent motivation for specialists; KPIs of this type allow them to successfully sell products. Experience shows that the optimal number of KPI criteria for one specialist is from 5 to 8.

3 interesting facts about KPIs

• The Key Performance Indicators system has been used in the West for over 40 years. In the CIS countries and Russia it has been used for about 15 years.
• In a number of countries (Korea, Singapore, Hong Kong, Japan, Malaysia, Germany and the USA), the Key Performance Indicators system is national idea. KPI is not just a concept, but the basis for the work of all companies.
• Russian President Vladimir Putin proposed creating a Key Performance Indicators system to evaluate how officials work.

How to avoid mistakes when implementing KPIs

The editors of the General Director magazine reviewed 6 popular mistakes in the KPI system and gave advice on how to avoid them.

Where does KPI development begin?

KPIs should be created from the top down, starting from large-scale company goals to the tasks facing an individual employee. In order to fully solve problems, it is necessary that all personnel be involved in preparing the KPI system. We are talking about employees working in economic planning, finance, specialists in managing the organization of labor activities, a team of personnel departments, sales, and technology departments.

First, the organization needs to figure out which KPI is a priority. To do this, the enterprise clarifies and verifies strategic and operational goals. The formulation of the goal should ideally be such that it does not clearly indicate the financial component as the main indicator. It is better if the financial indicator follows from the main task. With this approach, the company will be able to feel confident even during a crisis.

A connection between the goal and the market environment and changes in the market is required. For example, a company may set a goal to become one of the TOP-3 in the market for its products or take a leadership position in a certain territory. Once formulated the main objective, subgoals are highlighted.

After setting goals, you should analyze how effectively the company is currently operating and how it solves current problems. At the same time, it is necessary to determine how employee salaries will be calculated.

When creating KPIs in an enterprise, it is important to draw up a budget for personnel costs. In this case, it is divided by type of payment. In addition, it is necessary to take into account salary indexation and career growth of specialists.

At the final stage of development, regulations are created, KPI maps are prepared, the methodology for calculating each key indicator is prescribed, and the system is agreed upon with the management of all independent units in the company.

The KPI statement must include information about the goals and objectives pursued by the system:

• Improving results and increasing the efficiency of specialists. Development and implementation of employee motivation.
• Increasing the company's profitability. Developing goals and performance indicators for each position in the departments and divisions of the company.
• Creation of an information base that will allow you to make the right management decisions. Ensuring prompt collection of information and control over the functioning of the system.

Key performance indicators and their types

Key KPIs are:

• lagging, reflecting the results of work upon completion of the period. We are talking about financial KPIs that indicate the potential of the company. However, such coefficients cannot show how efficiently departments and the organization as a whole operate;
• operational (anticipatory), which allow you to manage the state of affairs during the reporting period in order to achieve your goals upon its completion. Operational performance indicators help to understand how things are now at the enterprise, and, at the same time, demonstrate financial results in the future. Based on operational KPIs, one can also judge how well the processes are proceeding, whether the products are good, and how satisfied the clients (consumers) are with them.

Basic conditions - indicators must contribute to the implementation of intermediate and final goals, and all indicators can be quickly and easily calculated. Coefficients can be different - qualitative (in the form of ratings or points) and quantitative (in the form of time, money, volume of production, number of people, etc.).

KPI Examples

KPI for technical support worker. A specialist of this profile must advise those who are real buyers and help potential clients. The set of KPIs in this case is small. The employee’s work is evaluated based on how well he provides consultations, in what quantity, and whether clients are satisfied with the service.

Key performance indicators for a sales manager. The number of new customers should not be below a certain level, the sales volume should not be less than the established limit, the size of the average contract for a client within the designated boundaries, ownership English language at one level or another.

The KPI system consists of a number of indicators, but the universal ones are:

• Process ones, indicating what results the process brought, how requests from consumers are processed, how new products are created and launched into the market environment.
• Client: how satisfied are clients, how is interaction with sales markets conducted, how many buyers were attracted.
• Financial ones allow one to judge the foreign economic situation of an enterprise. Here we are talking about the level of profitability, turnover, market value of products, financial flow.
• Development criteria show how dynamically the company is developing. This is the degree of productivity of specialists, the level of staff turnover, the cost of each employee, and the motivation of employees.
• Indicators external environment: how the price fluctuates, what is the level of competition, what price policy On the market. These indicators must certainly be taken into account when creating KPIs.

How to calculate KPI

Stage 1. Selecting three key indicators of a specialist’s effective performance:

• the number of users who were attracted to the site;
• number of repeat orders from existing consumers;
• the number of recommendations and positive reviews that appeared after purchasing a product or ordering a service on the website and social networks of a trading organization.

Stage 2. Determining the weight of each indicator. The weight in the total amount is 1. In this case, the largest share belongs to the priority indicator. As a result:

• the number of new clients is assigned 0.5;
• number of repeat orders – 0.25;
• reviews – 0.25.

Stage 3. Analysis of statistical data for the past six months for each KPI and development of a plan:

Stage 4. KPI calculation. An example is presented in this table:

KPI calculation formula: KPI Index = KPI Weight * Fact / Goal

In this case, the goal is the marketer’s planned indicator. A fact is a real result.

It becomes clear that the specialist has not fully achieved his goals. However, based on the overall score of 113.7%, it is safe to say that the actual result is quite good.

Stage 5. Payroll preparation.

In total, the marketer is owed $800, of which $560 is a fixed portion and $240 is a variable portion. The full salary of a specialist is paid for an index equal to 1 (or 100%). Thus, the figure of 113.7% indicates that the plan was exceeded, which means that the marketer is paid a salary with an additional bonus.

Result:

560$ + 240$ + 32,88$ = 832,88$.

If the KPI index is less than 99%, the bonus amount is reduced.

A table like this allows you to see the problems in the work of a marketer, the difficulties that he cannot cope with. Possibly, insufficiently good performance results may be caused by an incorrect strategy for increasing the level of customer loyalty. At the same time, it is possible that the plan itself was initially drawn up illiterately. In any case, the situation needs to be controlled. If things don't improve further, reconsider your performance indicator requirements.

If you adhere to this policy, you will learn what KPIs are in the production process, sales, etc. You will better understand what indicators should be calculated and the actual process of their implementation.

The calculation can be modified taking into account the planned results, supplemented with new values: an indicator of the number of solved and unsolved problems, a system of fines for poor performance on the main points in the plan.

So, for fulfilling the plan less than 70%, the employee may not receive a bonus at all.

There is also the following scheme for calculating the bonus part of the salary for a specialist who has fulfilled the sales plan:

Implementation of KPIs in the company

Both employees and third-party consultants can be responsible for the process of implementing the KPI system created in the company. At the same time, one should take into account what the specifics of the enterprise are, how business processes take place in it, what goals and objectives the company sets for itself. It is necessary for ordinary personnel to understand how the wage system will change. Make it clear to employees that the main indicator will be their level of performance. When introducing a KPI system, specialists should be trained. Staff must understand that change is mainly beneficial for them. The implementation of the system involves the development of special documentation: employment contracts, staffing schedules, collective agreements and other papers related to payment for employee activities.

Before introducing a KPI system, test it through a pilot project. Take 1-2 departments and pilot new processes and payroll formation in them. The ratio of fixed and bonus components of payment can be adjusted in real time, taking into account target indicators for specific groups of personnel.

When the new order in the company has been tested and fully adjusted, it can be introduced into other departments. Remember that it is better not to implement a KPI system without testing. As part of the pilot project, it will be possible to clearly understand what difficulties the system causes for staff, learn about possible shortcomings and quickly eliminate them. All specialists of the enterprise must work to achieve a common goal. Otherwise, employees will only experience discomfort, and all actions and aspirations will be in vain.

In the process of introducing KPIs in the company, make sure that the indicators can be adjusted if the need arises. Thanks to constant monitoring of indicators, it will be possible to timely adapt to changes in market environment and edit the working strategy. In addition, every year the model for generating bonuses should be improved, that is, optimized. As part of optimization, the assessed indicators are changed to others that are more relevant for certain employees and departments.

What KPIs to set for the manager

KPIs of personnel and management should be related to the main objectives of the enterprise. You need to know exactly what you want to achieve after a certain period. You can strive to get ahead of competing companies and become a leader in your industry. Another option is that the head of the company wants to sell the business at favorable price. The KPI for the first case is an increase in the customer base and sales volumes; for the second, it is an increase in the company’s capital and achieving maximum sales value.

The main goal must be written down and formalized, and then divided into subgoals. When specialists successfully complete sub-goals, they move closer to solving the main task of the enterprise.

If we are talking about a large organization or holding, the director’s KPI is required for each division and branch. If the owner of a large enterprise plans to compare the performance indicators of General Directors geographically remote from each other, development is required unified system assessments. It must be remembered that KPIs that are easy to achieve in large regions are not always easy to achieve in small ones. In this regard, the system can be formulated approximately the same, but the indicator numbers should be different for managers in different regions.

When preparing KPIs, try to set indicators in optimal quantities so that the employee can easily track work performance. It would be better if there were five KPIs. When installing more indicators, the director may not pay attention to the main ones and focus on the minor ones.

When creating a KPI system for management, a combination of general and personal indicators is optimal. General indicators are the performance results of a department subordinate to a specialist. Based on general indicators, it becomes clear how the team works and how interested the manager is in solving the assigned tasks. Personal indicators refer to individually achieved goals and performance results.

If the KPI system is created with high quality, the coefficients show how each of the managers works, and this information is useful for the company.

Introductory. General description of typical processes in companies

Any company consists of many business processes: from strategic and financial management to detailed planning of production processes and quality management of manufactured goods/services.

Each company has its own degree of formalization of processes.

In some companies, processes are not formalized and work “on a whim,” while in some, strict regulations are formalized and developed, highlighting stages of work, job responsibilities and areas of responsibility.

It all depends on the size of the company, the volume of work and the degree of control required.

To achieve the company's success, quickly adapt to a changing market, ensure the quality of work and speed of service delivery, it is necessary to control the company's activities, both operationally and in the long term.

Any company manager, and even more so a business owner, needs to understand the performance of the company and its employees. At the same time, we must not forget that in addition to everyday “current” tasks, it is also necessary to perform tasks aimed at achieving the strategic goals of the company.

The company's strategic goals can be described both in enlarged form and worked out in detail. In any case, any goals must be measurable and achievable.

To implement and track financial and non-financial indicators of achieving strategic goals, a balanced scorecard (BSC) is usually used, which in turn uses a set of KPI indicators to measure performance and the degree of achievement of set goals.

According to the quality management system standard (ISO 9000:2008. Quality management systems. Fundamentals and vocabulary) :

KPI (Key performance indicators) – these are key indicators of efficiency and effectiveness, with efficiency defined as the ratio of resources expended and results achieved, and effectiveness as the degree to which planned results are achieved.

The KPI system is applicable in any field of activity and is aimed at company management to monitor the efficiency and effectiveness of activities.

The implementation of a KPI system in a company will allow:

Manage the performance of the company as a whole and monitor the achievement of the company’s strategic goals

Assess the performance of the company, departments, and specific employees in the operational and long-term perspective

Identify patterns of development of both the business as a whole and individual business processes

Ensure employee motivation to achieve the company's strategic goals

Increase employee loyalty and ensure effective system wages

Increase customer loyalty and satisfaction with the quality of goods/services provided

Reduce the cost of business processes and the cost of products

Lagging indicators = outcome indicators. Used to monitor performance results and achieve goals at the end of the reporting period. They set the strategic direction of activity, what the company wants to achieve at the end of the reporting period.


Leading indicators = operational. Leading indicators are used to monitor the operational activities of employees for the further achievement of lagging indicators, i.e. indicators for achieving the set goals at the end of the reporting period.

Indicators can be developed in relation to the goals of the organization, to the goals of departments, to business processes, to the functions and areas of responsibility of employees in accordance with their job descriptions.

For companies operating in various business areas, for each business direction We are developing our own group of KPI indicators. For example, in this way you can monitor the activities of branches and their compliance with the goals of the company as a whole.

When developing any indicator, it is necessary to identify the responsible person responsible for the implementation of this indicator. If the indicator is for the company as a whole, the responsible person can be appointed CEO, who in turn will outline more detailed goals and objectives for his subordinate employees. Similarly for the goals of the divisions.

Basic requirements for indicators:

Indicators should stimulate the employee’s work

Indicators must be clearly defined and measurable

Indicators must be realistic and achievable

Indicators should be distributed in accordance with the areas of responsibility of employees

When developing KPIs, it is recommended to use no more than 10 key indicators, which will avoid overloading management with planning and tracking indicators. To motivate employees, it is common to use 3-5 KPI indicators.

The development of a system of KPI indicators is carried out comprehensively for the entire company as a whole and consists of the following stages:

Project initiation


Methodology development


KPI system development

Project initiation

Any project begins with initiation: a preliminary survey, feasibility assessment, coordination and approval of the project, formation of responsible persons and recruitment of the project team.

Methodology development

To develop KPIs, it is necessary to develop a methodology to ensure that the KPIs are consistent with the company's goals and organizational structure.

When developing the methodology, the following is carried out:

Formalization and optimization organizational structure

Determining the list of positions for which the KPI system will be used

Determination of key KPI indicators, the procedure for their calculation and weights, taking into account the strategic goals of the company and the approved motivational model

Definition of reporting forms

Formation of regulations for planning, execution and control of KPIs

Development, coordination and approval of a motivational model for selected positions, taking into account KPIs

The result of this stage will be a well-developed methodology with developed KPI indicators and regulatory documents.

KPI system development

To monitor and control the company's activities, it is necessary to create a unified information system.

Main stages of development, configuration and implementation of the KPI system:

Writing technical specifications


System development and configuration


System testing


User training


Putting the KPI system into operation

The result of this stage will be the formation of a unified KPI system, providing a unified repository of management indicators, collection and analysis of KPIs for the company.

Depending on the company’s goals, different approaches are used when developing KPI indicators, but a general principle for developing indicators can be identified: first we define the business goal, and then we form the indicators.

As an example, consider the company's goal: From January 1, 2014 to December 31, 2014, increase sales by 10% monthly. Thus, indicators for the Sales Department Employee are immediately generated:

Examples of possible indicators:

For further evaluation of indicators, the plan/actual ratio is used.

To manage performance, companies optimize and automate business processes, implement CRM, SCM, EAM, PLM and ERP solutions, which also allow calculating business KPI indicators.

To build a unified KPI system, they organize a general integration interaction between all the company’s information systems, or implement a specialized software.

It should be noted that information systems there are usually many in a company, and implementing and setting up end-to-end integration information flows between them is one of the important, but also the most expensive tasks.

The most economical option is to implement additional specialized software with minimal configuration of the necessary integration interaction.

As an example, let’s look at the specialized software “ELMA KPI”, what it does and why it is needed.

The system is designed to improve the company's efficiency through the implementation and monitoring of the implementation of set goals and objectives.

The system supports the classic approach to developing a KPI system according to Norton and Kaplan:

For each indicator, a responsible person, a scale, a default value, methods for collecting and analyzing values, the need for coordination, approval and control of work results, and accounting for labor costs are determined.

Using a unified management system

Comprehensive formation of goals and objectives for the entire company, linked to performance indicators for their implementation

Organizing feedback for each task and each indicator

Visual representation of the status of implementation of strategic goals and objectives with the ability to drill down to the level of a specific employee

Using ready-made management indicators, reports and charts

The general concept of working in the ELMA KPI system is as follows:

Let's consider the capabilities of the system:

Managing the company's strategic goals


Event Management


Formation of SMART tasks


KPI indicator management


Performance matrix management


Operational task management


Managing communications between employees – Communicator


Customer service management


calendar of events


Grade


Monitoring and reporting

Potential data sources for calculating KPI indicators: databases, OLAP, CRM and BPM systems, various 1C: Enterprise configurations, specialized queries with additional business logic, email, results of launched and executed tasks, manual input.

Managing the company's strategic goals

The system allows you to manage strategic goals in various views: tabular and graphical, which is convenient for use in various management reports.

The system allows you to build and monitor strategic maps for achieving goals. Color indication displays the status of goal completion:

Event Management

The system allows you to track the timing, cost and status of planned activities to achieve your goals. For each event, you can assign a SMART task.

Formation of SMART tasks

The system allows you to create SMART tasks linked to strategic goals and activities. The system supports Work Flow for working with tasks; for each task you can assign an Executor, an Approval and a Controller.

KPI indicator management

Contains a number of built-in KPI indicators:

The System also allows you to generate indicators in the context of the organizational structure (taking into account substitutions and absence of an employee), configure the logic for the formation of indicators taking into account the strategic goals and objectives of the company, track the dynamics of changes and dependencies with other indicators.

For each indicator, it is possible to add comments and clarifications on the indicator.

Provides the opportunity to comprehensively view employee performance:

Performance matrix management

The system allows you to create and use performance matrix templates with the ability to assign a set of indicators and SMART tasks to a group of employees.

Operational task management

The system allows you to assign tasks, both according to business processes and specific documents, both to a specific performer and to a group of performers.

WorkFlow is supported for working with tasks (the ability to coordinate/approve, assign, execute and control the execution of tasks).

The system automatically counts completed and overdue tasks.

Managing communications between employees

The Message Feed is used as a communicator between employees in the system.

Customer service management

The system supports some CRM functions. Allows you to plan communications with Clients, keep track of potential contacts and Clients.

Grade

The system supports the ability to evaluate employee performance using KPI indicators.

Monitoring and reporting

The system supports various built-in monitoring, control and reporting tools.

In terms of functionality, control panels are a bit reminiscent of OLAP systems with their ability to view summary reports and further drill down when navigating to specific chart elements. based on 5 ratings