How to develop KPI
Video: How to Develop Key Performance Indicators 2024, July
The high efficiency of the enterprise is often due to an established and clearly functioning system for monitoring the results. That is why, when solving the problem of evaluating the performance of their employees, more and more companies are introducing KPI into their management system, which is traditionally translated as “Key Performance Indicators” (Key Performance Indicators) - indicators of achievement expected from an employee or unit of an organization.
Instruction manual
1
KPI development helps to structure the goals and tasks performed by each department and employee, to understand what contribution each link makes to the achieved result, in other words, how efficiently the organization works. Therefore, the development of key performance indicators should begin with the definition of strategic goals, taking into account which goals are set for each employee (department).
2
When developing strategic and personal goals, remember the mandatory criteria first proposed by Peter Drucker in The Practice of Management, 1954:
- specificity (clear wording, excluding ambiguous interpretation);
- measurability (the ability to measure the result using certain parameters, best quantitative);
- reachability (avoid setting unrealistic goals);
- focus on the result (the result is important, not the process);
- limited time (the goal is achieved for a specific specific period of time).
3
Relate your goals to key performance indicators. Each indicator should serve as the main strategic objective, bring it closer to its implementation, and better - be part of a global goal. As you formulate KPIs, keep an eye on the simplicity, clarity and transparency of the criteria. Indicators should not be ambiguous.
4
Monitor the implementation of KPI. Award employees for the results of successful work. Remember that employees should clearly know their KPI - the criteria by which they are evaluated. Only in this case, key indicators will motivate for effective work.
5
The implementation of performance indicators can become a stumbling block between management and subordinates. Here it is important to convey the understanding that the introduction of KPI benefits all employees whose activities are aimed at achieving high results. On the other hand, the KPI system will also help identify inefficient personnel.
