home > Initiation > Achievement of kpi plans. KPI, key performance indicators, what is it? Raw conversion - what does it mean


Achievement of kpi plans. KPI, key performance indicators, what is it? Raw conversion - what does it mean




Andrey

Preamble: “Listen, I found out about such a cool thing here! Let's launch!" said our founder, returning from another foreign trip to the distributor forum.

Thus began a two-year saga 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 outlined.

For some reason, many sources initially misinterpreted 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 assessment system.

I remember those debates at planning meetings - department heads arguing about how to correctly understand and calculate 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 leadership training.

We were lucky. Since the company 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 quantifiable indicator of actual results achieved. This is a figure showing the actual slice (at the moment) of the selected indicators. The scorecard itself has nothing to do with motivation and salary. into 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 of KPI other options can be displayed. “Key performance indicator” of an enterprise is a more convenient translation for me.

So what is KPI if you figure it out?

Each enterprise has many indicators, each of which someone must constantly monitor, well, 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, marginality, costs. Head of sales department - accounts receivable. Chief Accountant - properly executed documents. The head of the supply department is illiquid, 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 float? Usually these are stock brokers. But in my imagination, an image of a director is drawn, who monitors all the indicators in the same way as the results of the work of the business processes of his enterprise, and when the graphs “redden”, he recruits a responsible person, getting involved in correcting the situation.

Also, often confused KPI and BSC (Balanced Scorecard, Balanced Scorecard). KPI and BSC are of course related in some way, but this is far from the same thing. The BSC is a slice of the "business processes" on which the goals are located. As indicators of the achievement of these goals, indicators of these business processes are often used − 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 go back to our KPI. For example, we have now implemented monitoring of indicators based on 1C Volgasoft (a separate conversation about this buggy thing for the date of 2012, but which we did not find better) What happens next?

Let's say we have a 1% restocking rate and this is a problem (by the way, there are good methods for identifying company problems), as customers complain that the warehouse does not work well. How can we improve the situation? This is where it comes to mind that the system of indicators can be taken as the basis of the motivation system. And thanks to this, get the opportunity to manage the values ​​​​of indicators. Many here make the mistake of setting a plan for KPI for resort warehouse =0. In 2012, a major paint company, in my opinion, overdid it with KPI in the motivation system, making it difficult to understand and not feasible, as a result, the sales team was destroyed, since the employees did not receive bonuses all year. And, by applying the mechanism in building a system of retro bonuses (motivation built on KPI for the buyer 🙂) has also lost the loyalty of many of its large customers.

So, configured monitoring by indicators makes it possible to influence these indicators. Gradually move them, allowing the staff to get used to it, 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, as they depend on it. wage. And when the plan approaches the physical possible value, the same staff begins to look for problems that prevent them from improving the situation, which ultimately also gives a plus.

Where to begin?

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

The following types of key indicators are usually distinguished:
KPI of the result - how much and what result was produced;
Cost KPI - what resources were needed;
KPI of functioning - performance of BP (allows you to track that all algorithms are executed without failures);
Performance KPI - usually the time spent on processes;
KPI efficiency - the ratio of results to costs.

When developing process indicators, the following rules should be followed:

  • The set of indicators should contain the minimum required number to ensure full-fledged business process management;
  • 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, the motivation built on this system gives an awareness of the responsibility of each employee who performs his area of ​​work.

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

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 the result at all. For example, a storekeeper has a premium = 10,000 + fines - shortage.

Motivation built on KPI is fundamentally different from the old schemes. Basically, nothing can change. That is, the percentage of profit, as it was with the manager, remained 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 whole premium is 100%. The premium may be fixed or floating. I will give an example of motivation

Storekeeper:

1%Deviation of shipments, reaching the consumer 30%
2 Knowledge of the goods by the storekeeper 15%
3 Use of barcode or terminal 25%
4 Resorting in the warehouse 15%
5 Goods acceptance rate 15%

Senior storekeeper:

1 Conducting inventories 15%
2 Commodity loss during storage 20%
3 Marking of storage places of 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 valued. By setting it, we either lower the value of the indicator in the RFP or, on the contrary, make it significant. So it is 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 indicators:

  • calculated automatically and were not subjective.
  • were easy to understand for employees so that they could realistically evaluate their work.
  • The indicators must be achievable, but at the same time, employees need to make some efforts in order to achieve the planned result. If the plan is overestimated, then employees, seeing the unreality of the plans, will not even try to achieve it. If we already set an overestimated plan, then we must provide a tool for its implementation - promotions, discounts, etc.
  • Each indicator should 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 KPI take place, for example, to calculate the load on resources, but in motivation!? I, being a manager, would easily negotiate with clients and make 10 invoices instead of 1, while the amount of shipment and profit would not change.

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 work. Some particularly important indicators may be duplicated for different positions, but I would not get carried away with this, since this is how we reduce the total number of indicators tied to wages.

Also, it will not be superfluous to motivate employees to exceed the plan. By the way, let's talk about how all the same the plan is put?

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

What are we asking here? The fact that if an employee has fulfilled the plan by 84%, then he will not receive anything for this indicator. if 90% then 60% premium. If he overfulfilled, he can be rewarded with an additional 20%

Next, the manager inserts plans for each indicator. The slave must see at any time the % completed. 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 something like this:

It really works, I speak about it as a person who has tested the system in practice.

You will learn:

  • What are the pros and cons of the KPI system.
  • Which employees should not implement KPIs.
  • What KPIs to set for the manager.
  • What to do if employees sabotage KPI implementation.
  • How to review 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, KPI - 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 contradicting their business actions to each other. The activities of one specialist should not interfere with the work of another or slow it down. All employees must strive for a common goal and work effectively, receiving bonuses for this.

It is believed that KPIs are directly related to BSC (Balanced Scorecard - balanced system indicators), 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. BSC is endowed with the perspective of business processes, where the associated goals are present. To measure how these goals are achieved, specialists use business process KPI indicators.

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So what is KPI in simple words? These are certain indicators, thanks to which it becomes much easier to understand what actions should be taken to increase efficiency. At the same time, efficiency is not only the number of manipulations carried out over a certain period of time, but also the benefit that the company received from the work of a single specialist.

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

Here are some examples of KPIs . Possible KPIs for a sales manager are as follows: “Sales volume is not less than…”, “Number of new clients is not less than…”, “Average contract amount per client is approximately…”, “English proficiency is not lower…”.

Another example of KPIs. You are the owner of a large point of sale household appliances. 12 managers work for you. How effectively each of them works during the month is evaluated based on the following indicators:

  • how many people the manager talked to bought the equipment (percentage);
  • the amount of the average check;
  • to what extent the sales plan has been fulfilled (for example, the amount of the minimum bar is 350 thousand rubles a month; the level of overfulfillment of the plan as a percentage will affect the manager’s salary).

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 a minimum number of mixers equal to 5. If the manager sells equipment more than the planned number, he receives 3% of the cost from each "extra" mixer. For specialists, this is a great motivation, KPI of this type allows you 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 KPI

  • 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 states (Korea, Singapore, Hong Kong, Japan, Malaysia, Germany and the USA), the Key Performance Indicators system is a national idea. KPI is not just a concept there, but the basis of 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 magazine "General Director" considered 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 with the company's large-scale goals to the tasks facing the individual employee. To fully solve problems, it is necessary that all personnel be involved in the preparation of the KPI system. We are talking about employees working in planning, economic, financial, specialists in the management of the organization of labor activity, a team of personnel departments, sales, technology departments.

To get started, the organization needs to figure out which KPIs to prioritize. To do this, the enterprise specifies and checks the goals of a strategic and operational nature. The formulation of the goal should ideally be such that it does not have a clear designation of 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 in the crisis period.

Requires connection of the goal with the market environment, changes in the market. For example, a company may set itself the goal of becoming one of the TOP-3 in the market for its products or take a leadership position in a certain territory. After the main goal is formulated, subgoals are highlighted.

After setting goals, you should analyze how effectively the company is now working and how it solves current problems. At the same time, it is necessary to determine how the wages of employees will be calculated.

When creating KPIs in an enterprise, it is important to budget for personnel costs. In this case, it is divided by types of payments. In addition, it is required to take into account the indexation of salaries and career growth of specialists.

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

The regulation on KPI should 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 profitability of the company. Development of goals and performance indicators for each position in departments and divisions of the company.
  • Creating 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 the work at the end of the term. We are talking about financial KPIs that testify to the potential of the company. However, such coefficients cannot show how efficiently the departments and the organization as a whole work;
  • operational (leading), which allow you to manage the state of affairs during the reporting period in order to achieve the goals at its end. Operational performance indicators help to understand how things are now at the enterprise, and, at the same time, demonstrate financial results in the future. On the basis of operational KPIs, one can also judge how well the processes are running, whether the products are good, how satisfied customers (consumers) are with them.

The main conditions are that indicators should contribute to the implementation of intermediate and final goals, and all indicators can be quickly and easily calculated. The coefficients are different - qualitative (in the form of a rating or points) and quantitative (in the form of time, money, production volume, number of people, etc.).

Examples of KPIs

KPI for technical support worker. A specialist of this profile should advise those who are real buyers and help potential customers. The set of KPIs in this case is small. The work of an employee is evaluated on the basis of how well he conducts consultations, in what quantity, whether customers are satisfied with the service.

Key performance indicators for a sales manager. The number of new buyers must not be below a certain mark, the volume of sales must not be less than the established limit, the size of the average contract per client is within the indicated boundaries, the ownership English language on one level or another.

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

  • Process, indicating what result the process has brought, how requests from consumers are processed, how new products are created and brought to the market environment.
  • Client: how satisfied are the customers, how is the interaction with the sales markets, how many buyers were attracted.
  • Financial allow you to judge the external economic situation of the enterprise. Here we are talking about the level of profitability, turnover, market value of products, financial flow.
  • The development criteria show how dynamically the company is developing. This is the degree of productivity of specialists, the level of staff turnover, the cost per employee, employee motivation.
  • Indicators of the external environment: how the price fluctuates, what is the level of competition, what price policy on the market. These indicators should certainly be taken into account when creating KPIs.

How to calculate KPI

Stage 1. The choice of three key indicators of the effective activity of a specialist:

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

Stage 2. Determining the weight of each indicator. The weight in the total is equal to 1. At the same time, the largest share belongs to the priority indicator. As a result:

  • the number of new customers is given 0.5;
  • the 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 planned indicator of the marketer. The fact is the real result.

It becomes clear that the specialist has not achieved his goals to the end. However, based on the overall rate of 113.7%, it is safe to say that the real 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 indicator of 113.7% indicates that the plan was overfulfilled, which means that the marketer is given a salary with an additional bonus.

Result:

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

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

Such a table allows you to see the problems in the work of a marketer, the difficulties with which he cannot cope. Possibly, not enough good results of activity can be caused by the wrong strategy of increasing the level of customer loyalty. However, it is possible that initially the plan itself was drawn up illiterately. In any case, the situation must be controlled. If things don't improve in the future, reconsider the requirements for performance indicators.

If you stick to such a policy, you will learn what KPIs are in the process of production, sales, etc. You will better understand how the calculation of indicators and the process of their implementation should be.

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

So, for the implementation of the plan for 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 KPI 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 the specifics of the enterprise, how business processes flow in it, what goals and objectives the company sets for itself. It is necessary that the rank-and-file staff be aware of how the payroll system will change. Communicate to employees that the main indicator will be the level of their effectiveness. When introducing a KPI system, specialists should be trained. Personnel must understand that changes are beneficial mainly to them. Implementation of the system involves the development of special documentation: employment contracts, staffing, collective agreement and other papers related to payment for the activities of employees.

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

When the new order in the company is tested and fully adjusted, you can introduce it to 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 personnel, learn about possible shortcomings and quickly eliminate them. All employees of the enterprise must work towards 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 necessary. Thanks to the constant monitoring of indicators, it will be possible to adapt in time to changes in the market environment and edit the working strategy. In addition, every year it is necessary to improve the model for the formation of premiums, that is, to optimize it. As part of the optimization, the evaluated indicators are changed to others that are more relevant for certain employees and departments.

What KPIs to set for the manager

KPI 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 of time. You can strive to get ahead of the competition and become a leader in your industry. Another option - the head of the company wants to sell the business at a bargain price. KPI for the first case is an increase in the customer base and sales volumes, for the second - an increase in the capital of the company and the achievement of the maximum sale value.

The main goal in without fail it is necessary to write down and formalize, and then break it into subgoals. When specialists successfully fulfill subgoals, they approach the solution of 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 performance indicators General Directors geographically remote from each other, it is required to develop a unified assessment system. At the same time, it must be remembered that those 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 in approximately the same way, but the numbers of indicators should be different for managers in different regions.

When preparing KPIs, try to set indicators in the optimal amount so that the employee can easily monitor work performance. It is better if there are 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 called the results of the activities of the department subordinate to the specialist. On the basis of general indicators, it becomes clear how the team works, how much the manager is interested in solving the tasks. Personal indicators are called individually achieved goals and results of activities.

If the KPI system is created well, the ratios show how each of the managers works, and this information is useful for the company.

It's time to touch on a deep topic. KPI, what is it in simple words, why is it needed, is it worth implementing this whole thing for you personally, and so on. It sounds strange, but most entrepreneurs for the time being do not think about implementing a kipiai system to evaluate the performance of their employees.

They say it is labor-intensive, it is not clear why it is necessary, and indeed how can one measure something that sometimes cannot be measured? But the whole situation is aggravated by the fact that if something cannot be measured, then the effectiveness of such a link in the business will be equal to zero, or even lower.

For example, if an entrepreneur does not consider conversion, advertising costs, or he simply does not know the price that he can pay for one , then the efficiency of attracting customers by paid channel in such business it is impossible to calculate. This means that this is the weakest link in the business process and it brings a stable loss.

But okay - these are clear numbers that, if desired, can be taken under control in a week, another, if there is enough motivation. But what to do with positions that do not have clear performance indicators? For this, the brightest heads of management introduced kipiai.

What is KPI and why is it needed in simple words

What if I can do everything? What should I do if there is no better professional than myself within a radius of 1000 km? Any entrepreneur asks similar questions sooner or later when developing his business. And such a transition from a self-employed artisan to a business owner is quite difficult.

This is due to several internal beliefs. Here are some of them.

Core Beliefs When Delegating

  1. Employees will not do the job as well as I personally do
  2. In addition to the fact that the product will not be at the same quality level as before, workers will miss the deadlines under the contract.
  3. The most important. They will have to pay wages.
  4. The cost of the product increases. And there are two ways: either get less profit, or raise prices.

So, as soon as the entrepreneur has the answer “Well, to hell with him!” to all these beliefs, this is precisely the first step towards delegation. And then the next problem arises.

Which employee should be paid more and who should be paid less? Let's turn to history, which, as usual, knows everything. Since ancient times, there has been the surest way to evaluate an employee.

A bit of history

Some modern managers ironically call it "Sultan". This is when the feudal lord determined the degree of fulfillment of the duties of an employee based on his personal mood. Well, for example, yesterday the king drank a lot of wine at a ball, so today all the workers had to cut off their heads because the roses turned out to be white, not red.

The Sultan's method is when your boss is in a bad mood, that is, there is every chance that at the end of the month the salary will be cut. At the same time, it does not matter at all how well or poorly the duties were performed.

In my last job, I had cases in which I was fined when it seemed like it should be the other way around, because I was sitting late this month and finishing another urgent project.

Who invented KPI

So, there was a sociologist Max Weber who defined this approach to determining labor productivity as completely vicious, and came up with another method. They called it meritocratic.

This is when an employee is evaluated according to real, pre-approved indicators, and not based on the emotional state of the boss.

Your self-branding

KPI (from the English - “Key Performance Indicators”) are agreed upon criteria, thanks to which you can track the level of compliance of the work done by an employee or an entire department with respect to the set strategic objectives. This abbreviation means “Key Performance Indicators”.

Perhaps it is difficult to explain in simpler words. But let's try to chew this topic more carefully.

Universal types and categories

The question logically arises, what types of KPIs exist and what do they depend on? In fact, the Kipiai system, in most cases, is individual for a specific type of business. The criteria and coefficients for calculating labor productivity are those that are most important in each specific case.

For example, when I worked as a sales specialist, we had this system generally called differently. TQM stands for trade market quality. The main thing in it was the percentage of presence of goods on the shelves of stores served by a sales representative, and not the number of sales generated.

But the trick is that if the seller, even if the product was available, forgot to put it on the shelf, then this was all recorded by the supervisor and directly affected the level of salary received at the end of the month. But that's another story.)

Let's still try to decompose KPI into main groups.

Cost indicators

Show the amount of resources spent to achieve the goal and their deviation from the planned indicators

Performance Indicators

This includes indicators that somehow relate to the ratio of resources spent and the result achieved. By resource we mean finances, people and time.

Outcome indicators

Here are the results of the execution tasks, their deviation from the planned ones. Secondary benefits received are also calculated. These are additional "buns" after the work done.

Sales indicators

These indicators demonstrate the effectiveness of the sales department, as well as each individual seller. The main coefficient is considered to be the conversion between incoming and closing sales.

Some companies additionally calculate the amount of money that falls on one seller, the average check, as well as the number of positive reviews from customers. But this is an additional option.

By the way, I almost forgot. KPI can be applied to three categories of business process participants:

  1. Individual KPI. Personally for each individual employee
  2. Team KPI. For a workgroup or department.
  3. Project KPI. In general, for the launched project.

In fact, there are a lot of KPI types, you can’t count them all. Now there are quite specific indicators that have appeared thanks to . For example, Process KPI, KPI of the external environment, or the speed of iteration by an individual employee.

Let's move on to the calculations.

An example of calculating KPI in practice

On the Internet you can find a lot practical examples, where it is described in detail how KPI can be calculated. But all these examples not only explain how to calculate these indicators, but, on the contrary, they confuse the common man.

The purpose of this article is to tell everything about KPI in simple words, so that even a tenth grader can understand it. Therefore, we take the usual example of an individual kipiai for a sales representative of a retail company.

We determine the main indicators

For the seller, these will be the following criteria:

  1. Number of processed
  2. Number of closed deals

It is clear that here you can add the number of repeat sales and the number of new customers and the rate of good reviews, and so on. But we are for the simplicity of knowledge. right? Therefore, this example of a KPI sales representative will be in a lightweight form.

Analyzing data

Next, we look at the actual numbers and those that were planned. Let's say the seller had to serve 150 leads and make 37 sales. But in fact, 160 applications were processed and 30 checks were received.

Efficiency is calculated using the following formula:

As a result, we get that according to the first indicator, the efficiency is 106%, and according to the second - 81.08%.

Calculate the overall KPI

The overall coefficient is calculated based on the arithmetic average data. We take the sum of all indicators and divide by the number of these indicators.

In our case 106+81.08/2=93.53 or 0.9353 in decimal.

Payroll preparation

Suppose a sales representative has an average salary of $ 1,000, of which $ 500 is a fixed salary, and another $ 500 is a bonus with 100% fulfillment of all indicators.

We count the number of bonuses: $500*0.9353 = $467.65. As you can see, the premium this month is lower than usual, as the performance of the sales specialist is lower than planned. Total salary received: $967.65

Important clarification

If we were to take a more complex KPI system, then each of the indicators would have to be prioritized. They are determined by the weight of the coefficient.

For example, if conversion is the most important criterion, then the weight of this indicator is 1.0. Or if the number of reviews plays an insignificant role in the work of a sales representative, then we put a weight of 0.2 for this value.

Suppose the salary depends on the number of positive reviews. The telephone operator has 20 positive reviews, and 10 were planned. It turns out that the efficiency for this indicator will be 200% (actual divided by planned and multiplied by 100%), which is 2.0 in decimal. And in theory, the amount of bonus received should be multiplied by 2.0

But this indicator is multiplied by another 0.2, because it has the corresponding priority, expressed in the weight of the coefficient. As a result, instead of 2.0 we have the number 0.4. It will affect the final amount of the premium for this indicator.

To be or not to be, that is the question

Imagine that your business has 5 people. And you approximately know who and what is busy during the month. Moreover, you also know the level of efficiency and quality of work of each specialist.

At the end of the month, it is possible for approximately each of the employees to calculate a bonus or a fine for failure to complete the planned amount of work. But what if there are significantly more employees than 5?

Naturally, without a clearly built system for calculating indicators, it is impossible to control labor efficiency and predict results in advance. And here are some more advantages from the introduction of Kipiai.

Benefits of KPIs

  1. The ability to influence the work of employees. There is no need to stand in each of them over the soul, if everyone knows what they are getting money for.
  2. A clear understanding of who is doing what at a given time.
  3. Early detection of workers sabotaging the process.
  4. Ability to make operational adjustments to the business process

And most importantly, KPI is a great opportunity to predict the results of the entire business project. Starting with costs and ending with the amount of attracted financial resources. But, like any system, it also has its drawbacks.

Cons of KPIs

  1. Since this is a quantitative indicator, it is sometimes difficult to assess the qualitative side of the process. For example, how well the packer packed the candies into boxes.
  2. This whole thing is very difficult and expensive to implement. Sometimes Excel spreadsheets are more than enough to keep employees happy.
  3. I admit honestly that in the countries of the post-Soviet past there are very few specialists who can correctly implement the KPI system.
  4. emergency situations. Or rather, the inability to take them into account in most cases.

And let's be honest.) Practice has shown that as soon as such a system is introduced, it causes a lot of unrest in the ranks of employees. Most of them will sabotage the new instructions in every possible way.

Your self-branding

This can affect both the internal situation in the team and the productivity of work in general. But keep in mind that there are niches in which KPIs are generally very difficult to implement. For example in interior design or web design. In general, here we include everything that is connected with the so-called creative professions.

Common KPI Implementation Mistakes

Many entrepreneurs, when implementing KPIs in their projects, expect that this will help save the payroll. Say, this system, which will help to cut off a piece from each cake for a rainy day.

Well, to some extent, this is true. But setting the main goal to reduce the wages of your employees when implementing KPIs is a vicious practice. It doesn't end well.

And the wolves are full, and the sheep are safe

It is necessary that employees are happy with the introduction of such a system of indicators, otherwise nothing good will come of this idea. KPI is not about reducing the payroll. This is about more efficient distribution.

Explain to your employee that now his neighbor will receive less if he does not fulfill the plan, and he, in turn, will receive more money for exceeding the indicators.

I want a Bentley, but I can buy a Lada

If you think that by implementing KPIs you can demand from people what they have not done before, then you are certainly right. But do not immediately demand too high results from the staff.

When implementing KPIs, the company's average indicators are first planned. They can be slightly increased already during the implementation of the plan for the next period. In any case, remember that the human resource has its limitations.

Uncle Vanya sang

But I didn't listen personally. This is me about completely random indicators that I had to meet. One company introduced a KPI for a dress code, can you imagine that? You didn’t tie your tie correctly and you have minus 25% of the salary).

Do not enter into KPI those indicators that do not affect the size of the company's profit, otherwise it will really look like a highly accurate system of penalties, not efficiency.

It's not all easy

To begin with, the implementation of KPI should be carried out by a specialist with experience in this field. And all calculations and formulas should be carried out as simply as possible.

The simpler the system of rewards and penalties, the more understandable it will be not only for those who will be involved in its further maintenance, but also directly for employees.

Stages of implementation of the KPI system

The first thing to start with the implementation of KPI in the enterprise is with a sincere conversation with employees. I'm serious). You can even hold a corporate party dedicated to the day of the founding of the company or something like that in honor of this.

The main thing is to tell all employees that such an unpleasant, at first glance, thing as KPI is knocking hard on the door of your office. But almost nothing new is required from employees. They, as before, must perform their duties at the same level and, in addition, allocate 1 hour of time per week for reporting.

The main thing is to explain to employees that such a system is not a way to fine them, but, on the contrary, an opportunity to figure out who gets paid for what and reward those who work harder and better than anyone else.

Your self-branding

Then a test group is selected. For example, a sales department or a delivery department. You should not start implementing KPIs for the entire company at once. It is better to allocate a separate test site for this case. If your company employs 5-10 people, then select 1-2 employees for innovation. And then we proceed step by step.

We define strategic indicators

For each business, such a list of indicators will be individual and depend on many factors. But we highlight the following criteria, which can fit in 90% cases.

  1. or the number of visitors
  2. Number of attracted
  3. Average value
  4. Sales Conversion
  5. Number of repeat sales
  6. Service quality assessment
  7. Return on investment per client
  8. Average check
  9. And so on

Development of a scorecard

After forming a list of main results, you need to determine their priority among themselves. Based on the importance of a particular indicator, its weight is added relative to the overall development strategy.

For example, sales conversion will be more important than service quality score. This means that these goals will have different weights and will have different effects on employee salaries.

Distribution of indicators

At this step, we explain to employees who is responsible for what and what numbers to strive for in the future period. If the employee knows exactly his tasks, then his work efficiency will be an order of magnitude higher.

Additionally, at this stage, strict documentation of new metrics for employees is introduced, job descriptions, the main criteria are documented.

Development of a motivation system

It would seem that everything is simple here. The better an employee works, the more money he gets. But besides increasing the bonus, there are other ways to push the employee to perform more efficiently.

For example, for the fulfillment of a certain indicator, you can provide the opportunity to pass for free for advanced training. Or once a month to choose the best employee of the department. And so on.

Implementation of calculations

At this stage, all schemes and formulas for calculating KPI are written in the form of a table or time sheet. Depending on the nature of the business, it may be in electronic format or printed.

The duties of the employees will include entering real data into each cell of the indicator for a certain period. Planned values ​​should be distributed by the person responsible for maintaining the KPI system.

Control

Don't forget that this whole thing needs to be controlled. Usually these gloomy guys in long leather coats follow this). They are also called supervisors. As a rule, no one likes these colleagues, because they are the ones who take honestly earned money from other employees).

After these steps, the KPI system is tested for several trial periods, and then transferred from a small group to the rest of the company.

Execution cannot be pardoned

We are close to completion, but there is one question left that may be of interest to a novice entrepreneur. Do I need it? Let's look at the cases in which KPI will be completely redundant.

For starters, if a business project has 5-10 employees. In this case, the manager, and this is precisely the role played by the founder of a business in small enterprises, can really navigate the performance of each of the employees without additional calculations.

In addition, calculating indicators at the end of the month is still work. You need to allocate time for it and, as a rule, directly to the manager. This is not to mention the fact that the implementation of KPI itself can cost a round sum.

Your self-branding

In addition, some items in the business process cannot be quantified in any way. The example of a designer has already been voiced, but here we can also include repairmen of household appliances. What is their KPI?

Let's say a customer returns a washing machine for repair. Suppose we need to evaluate the performance of the wizard. How can this be done? Time spent on repairs? No, fast doesn't always mean good.

Or the number of positive reviews? Perhaps, but not always satisfied customers leave a review. Usually quite the opposite: people share negative emotions much more often.

Instead of conclusions and conclusions

Keep in mind that not all positions can be standardized as in the above examples. Remember that when implementing a KPI system, there is a chance that in the race for indicators, employees will forget about the quality of work.

Although a lot here depends on the realism of the tasks set, but still think about what is important to you at this stage. Quantity or quality? Think ten times if it IS NECESSARY before implementing it).

In any business, KPIs begin to be implemented from the person who is responsible for the direct . determines the number of applications and subsequent sales. And where can you find it besides the Internet, you can link .

That's all. I hope that KPI is already completely familiar to you in simple words. I tried to simplify all the terms as much as possible, but if something in this material is not clear to you personally, you can leave your comment. I will gladly answer any questions.

Be sure to pay attention to the colored buttons under the article. With their help, you will share this material with your friends on social networks, if any). And don't forget to subscribe to ournewsletter. So you'll know everything that's new on this site.

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The implementation of the KPI system is an important step for the company towards increasing the efficiency of each employee and the enterprise as a whole.

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

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

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

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

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

Definition of key indicators

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

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

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

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

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

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

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

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

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

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

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

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

2. Introduction to the process, explanation to employees.

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

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

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

3. Control.

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

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

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

The ideal solution should:

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

4. Analysis of efficiency and refinement.

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

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

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

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

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

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

Payroll based on KPI

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

Common Mistakes When Entering KPIs and Changing Payroll:

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

You can use the formula to calculate:

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

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