How to calculate motivation. How to implement a KPI system in your company

KPI key performance indicators: what is it, examples of such systems, as one of the tools to increase business profitability, are becoming more and more in demand in the information field dedicated to entrepreneurship.

KPI solves the problem of transferring the evaluation of the company's performance from the sphere of subjective assessments to the world of reality and objectivity, allows you to identify weaknesses and bottlenecks in the business, optimize activities aimed at obtaining the highest possible profitability.

KPI is used as part of a strategic balanced scorecard, which performs the task of establishing cause-and-effect relationships between indicators and goals, identifies factors of mutual influence and business patterns through the dependence of some performance results on others (BSC system)

What does KPI mean?

This abbreviation came into Russian from English (Key Performance Indicators), most often translated as “key performance indicators”. “Efficiency” in the definition does not correspond to the full meaning of the word “Performance” in English management science, where this concept came from. The full meaning is described in the ISO 9000:2008 standard. 2 values are accepted:

performance, according to the standard, this corresponds to the degree of achievement of planned results;
efficiency, this concept determines the correlation of the resources expended and the results that have been achieved through their use.

Thus, the term KPI is better understood more broadly - as "a key (main) indicator of performance."

Understanding the term KPI in this interpretation makes it clear that it can be used to evaluate the company's activities only in conjunction with the content of the goal, its content. Therefore, it was KPI that formed the basis of the modern concept of management "Management by Objectives". And the KPI itself is used to control the business activity of employees, departments of the company, the success of its activities as a whole.

Benefits of a KPI system

The KPI system has undergone many changes since the time of Peter Drucker and, in an effort to meet the ever-changing realities of the business world, has absorbed many management concepts that creatively develop the main one - “Management by Objectives”.

The advantage of the KPI system in comparison with others aimed at solving the same problems, first of all, is that KPI provides an inextricable link between such business components as plan, execution, result, motivation. Today, KPI allows, using the data it generates, not only to evaluate the effectiveness of employees, departments and the company as a whole, but also to build a perfect motivational mechanism for stimulating employees.

Not every indicator can be considered key. This includes only those indicators that are related to the purpose of the business and for which planned indicators and norms for employees are set. For example, it is illiterate to attribute timely accounting reports to KPI indicators, since it is not directly related to the specifics of the unit's activities.

Types of KPIs

KPIs are divided into several types:

KPI of the result - what results have been achieved and their quantitative expression;
Cost KPI - how many necessary resources were used;
KPI of functioning - determines the execution of current business processes, evaluates their compliance with the desired execution algorithm;
Performance KPIs are derived indicators that characterize the ratio of time spent on achieving the planned result in the value of the result itself;
Efficiency KPIs are derived indicators that serve to assess the ratio of resource costs to the results achieved with their help.

In turn, efficiency KPIs are divided into:

lagging, that is, those that will reflect the results of the work after the passage of some time;
Leading(another name - operational) - these are those that allow management to manage the work during the selected reporting period, allotted to obtain the specified results after its completion.

lagging These are primarily financial indicators. They are aimed at demonstrating the connection between the desire of management and the ability of the firm to generate cash flows. Their disadvantage is that due to the delay in the manifestation of efficiency, it is not possible to describe the effectiveness of the company as a whole and its divisions at the current time.

Leading indicators if necessary, they are involved in analyzing the work of the enterprise at the current time, to give an objective assessment of the quality of current activities, the degree of satisfaction of customers' needs, how satisfied they are with cooperation, to identify the possibility of increasing cash flows for the future, to evaluate the quality of products.

What to keep in mind when developing KPIs

When developing indicators, the following rules should be observed:

strive to minimize the set of indicators that are needed to manage the process of doing business;
each indicator must be such that it can be expressed in a measurable numerical indicator;
the cost of funds that need to be spent in order to measure the indicator should not exceed the monetary value of the profit as a result of its use.

KPI development algorithm

This work is carried out in several stages.

Pre-project work. This stage consists of:

obtaining the approval of a higher manager and finding out ways to interact with him;
project initiation and planning;
creation of a project team;
work on conducting a pre-project study.

Development of KPI methodology. At this stage, perform:

optimization of the organizational structure;
develop a methodological model;
develop a company management process using KPI;
develop regulations (a system of normative and methodological documents).

The stage of development of the KPI information system. It includes:

development of technical specifications for setting up an information system and its setting;
user training;
performing trial operation.

When developing a KPI methodology, attention should be focused on:

development of KPI as a holistic development strategy;
the availability of an explanation of the benefits of KPI for staff;
identification and clear recording of corporate key success factors;
creating understandable reporting for all levels;
ways to refine KPIs to keep them relevant when existing business conditions change;
development of coordination and application of decisive KPIs.

Project completion stage. Putting into practice the methodology of the KPI system.

Characteristics of effective KPIs

Key performance indicators will be effective if they meet the following characteristics:

Address affiliation. This means that each KPI must be associated with the direct executor (it can be either an individual employee or a structural unit), who are responsible for the results of activities that are in their area of responsibility;
Correct Orientation- KPIs must meet key development projects, strategic goals of the company, key business processes;
Reachability- the implementation of KPIs must maintain a balance between the necessary efforts to achieve them and the probability of their implementation, it should be in the range from 70% to 80%;
Openness to action- KPIs should be set in such a way that there is an opportunity to intervene in processes to improve them;
Ensuring forecasting- it should be possible to assess the factors that directly determine the planned results and have a direct impact on the value of the business itself;
Limitation- KPI should be oriented in such a way that the performers focus on the implementation of priority tasks and do not scatter their efforts on the implementation of minor ones;
Ease of perception- KPIs should be accessible to their understanding by performers;
Balance and interconnectedness- key performance indicators should not be included in the zone of mutual conflict, they should complement each other;
Initiating change- KPI measurements should cause positive changes in the company like a chain reaction, that is, the implementation of some causes a natural process of improving others;
Ease of measurement- KPIs should be left in such a way that users can independently quantify progress;
reinforcement- KPIs should motivate employees, that is, be supported by individual material stimulation;
Relevance- since after a while the influence and effectiveness of even professionally created KPIs can significantly weaken, they need to be updated periodically;
Comparability- KPIs should provide the possibility of comparison in such situations, for example, it would be wrong to use the ratio of average revenue per day for single-format outlets, but having such a different location as a regional center and a small district town;
reasonableness- each indicator should provide an opportunity to conduct an analysis based on it and carry a semantic load. As a negative example of the lack of meaning, one can cite such a key performance indicator, which is calculated as all expenses for the maintenance of the administrative apparatus to the mass of profit (total). Such an indicator will meet the above characteristics, but in reality it will be meaningless.

General principles and rules for implementing KPI

To successfully complete the tasks that the system is aimed at, certain rules must be followed.

The 10/80/10 Rule this rule sets the number of key indicators in the system. It states that a company must have ten key performance indicators, no more than eighty production key indicators, ten key performance indicators. This ratio avoids overburdening managers, as well as significantly reducing the time that management spends discussing the implementation of the program.
The rule of observance of the principle of controllability and manageability. It states that each unit that is responsible for a certain indicator must be provided with the necessary resources for implementation and management, and the result must be monitored.
Rule of the principle of partnership. When developing, and even implementing, the moment of mandatory application of establishing an effective partnership between all elements of the system, employees, a clear understanding of the need for change should be taken into account.
The principle of focusing efforts on the main direction. This principle establishes the need to analyze the activities of employees in order to identify the possibility of expanding their powers, identifying those who require advanced training, determining what training employees need, making them responsible for developing their own KPIs, establishing effective communication links (both vertically and horizontally).
The principle of integrating the processes of improving productivity, evaluating reporting and evaluating indicators. It is important to think over and implement such systems of reporting and evaluation of indicators, which would be aimed at stimulating concrete actions and understanding one's responsibility. A strict schedule for reporting meetings should also be established.
The principle of coherence between the overall strategy and performance indicators. This principle requires linking key performance indicators to the current critical success factors and inclusion in the overall balanced scorecard and company strategy.

Variability in KPI selection options

KPI- these are indicators that shape the direction of employees' actions, are the main indicators on the basis of which it is possible to evaluate the effectiveness of their work

For example, you want the sales manager to bring some profit to the company. How can he do it?

Make a very big deal with one very wealthy client. But there are few such clients, and there is an active struggle for them.
Therefore, he must work through a large array of smaller clients. To get this pool of potential clients, the manager will have to make a large number of phone calls, send commercial offers to do a lot of work to create communication links with potential clients.

For a manager, when building a system of indicators, KPI is the right choice of indicators that will most effectively influence the achievement of the goal, for example, the company's profit.

How the KPI system is built

We write out those indicators that, in your opinion, will lead to the required results. For example:

volume of sales;
percentage of customer service;
quantity of goods sold x and y;
markup.

Mistakes when creating KPIs

As an example, we can analyze the creation of a KPI system for a company that itself manufactures and sells products.

Structurally, such a company can be represented as consisting of:

department that purchases the necessary materials;
production department;
sales department;
financial division.

The purchasing department is focused on reducing costs when purchasing materials. Naturally, in order to fulfill your planned KPI, you need to create a system for obtaining sustainable discounts, bonuses, and so on.

For the production unit, the main KPI is the equipment load (it should be above 80%). For example, if two types of products are produced, you need to have an effective scheme for redirecting the work of equipment so that it does not stand idle.

Now let's analyze the mistakes that will inevitably occur if KPI is introduced mechanically, without taking into account the strategic activities of the company.

Meeting the goal for the purchasing department of reducing the cost of purchased materials includes opportunities to reduce their cost by:

purchases in large quantities, and this, in case of excess materials for the production unit, will entail additional costs for storing and freezing money in stocks;
purchases of lower quality materials - this can cause equipment breakdown;
prepaid purchases - this entails a freezing of funds.

The second mistake is the implementation of KPI without taking into account the motivation of employees. For effective work, it is necessary to ensure the connection of KPI with the system of bonuses and fines, that is, with the system of material motivation.

The third mistake is the substitution of KPI indicators for result indicators, for example, revenue, profit, marginal profit. KPI indicators are correlated with the employee's activities in order to achieve such a result that you need to specifically perform today, tomorrow, the day after tomorrow, that is, the leading indicators described above. If we consider the sales manager, this will be:

number of clients to meet;
how many contracts to conclude;
how many calls to make;
how many potential customers to find.

The fourth mistake is the lack of a planning and KPI accounting system. These indicators can be taken from the operational accounting system, the management personnel control system. Planning means setting targets for a certain period.

Using the KPI system for motivational purposes as an indicator that affects the increase in base wages should be done very carefully and legally correctly. If this variable part is introduced into the employment contract, then the court will consider those payments that were made before the case was considered in court as wages. In the event of a labor dispute, an employee, even if he did his job poorly, will be able to receive additional money from the company. Therefore, it is better to draw up an additional production contract or efficiency contract to the main employment contract. which displays the variable part of the salary.

In order for KPI to become not just a fashionable innovation, a kind of marker for the company's management as trying to keep up with the times, but really effective tools for increasing the company's profitability, three points must be observed:

introduction of a norm- this is the KPI that is achievable by an employee during normal work, this is not a dynamically changing indicator, but a static one, for example, in order to receive a regular salary, a manager must conclude a minimum of 10 and a maximum of fifteen contracts. The norm excludes the factor of chance, as well as the factor of luck;
introduction of the concept of purpose- this is the money that an employee can receive if he achieves outstanding results, for example, based on the above, an employee will conclude from 15 to twenty contracts;
introduction of the concept of "Challenge"- this is the money that can be received when achieving results that are significantly higher than the average for the company, for example, not thirteen contracts concluded per month, but forty.

How to evaluate the performance of an employee

The first indicator is the result, that is, something measurable (square meters of tiles laid, the number of contracts concluded, and so on).

The second factor by which it is possible to evaluate the activities of employees is the time factor, that is, how quickly the business process is performed. For example, the time of fixing an error in a call center by IT services. This time, regardless of the type of business, can be normalized and entered into KPI.

The third factor is the quality factor, that is, the absence of returns, complaints, complaints, and so on. Also, when introducing such a performance indicator, it is required to take into account that if an employee has achieved a satisfactory planned result for a period of planned time, the quality can be considered satisfactory.

You can also measure efficiency by estimating the amount of resources that should be spent on the execution of a business process.

How to develop KPI for a specific department, examples

Although the competent development of efficiency ratios is an individual process, taking into account all the specific features of a company or production, examples of typical developments can still be given. This is especially applicable for services with typical functionality, such as accounting. Below are some examples. At the same time, it should be noted that correctly created KPI systems also take into account the workload, if it is more than 100% - an employee and bonuses, if it falls below 70% - the manager is fined because he could not provide employees with work.

You can learn more about KPI, its development, implementation and use by viewing the webinar recording.

KPI (Key Performance Indicator stands for) is a key performance indicator. Simply put, this is an indicator of the achievement of a result in a particular activity, which can be digitized and measured.

Motivational KPI system - in the Russian version, the abbreviation KPI (Key Performance Indicators) is sometimes used - an indicator of the effectiveness and success of meeting the goals. The task of this system is to direct the actions of employees of all departments in a single direction through the implementation of specific indicators. The KPI of each individual employee determines the effectiveness of the performance of his specific work and is financially reflected in his salary, and in general is aimed at solving the business goals of the entire enterprise.

Key parameters can be divided into two types:

Operational, which fully reflect the current activities of the enterprise and allow you to solve problems in connection with changing conditions.
Strategic, which reflect the work of the enterprise for the entire period and allow you to make adjustments to the plan for the next working period.

There are the following types of KPIs:

Cost KPIs - illustrate the amount of costs;
Efficiency KPI - characterize the ratio of the result obtained to the costs;
KPI functioning - evaluate the compliance of a process with a given algorithm;
Performance KPIs - evaluate the ratio of the result to the time spent to achieve it;
Result KPI - show what result you got.

The last indicator is of the greatest importance in personnel management, as it shows what results employees achieve as a result of their labor activity. Also, the KPI of the result is used when calculating the bonus part of the salary, if the enterprise has an appropriate remuneration system.

What is KPI in salary

When developing and implementing efficiency parameters for remuneration, it is necessary to clearly understand what goals the company is pursuing. These goals should have specific features, and for goal setting, verbs and numbers must be used.

For example:

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

Any motivational system should be aimed at increasing interest in the work and the quality of the indicators being implemented. But you also need to understand that not all departments can influence the implementation of the company's business goals. For example, a secretary or an accountant. But even for such employees, you can set criteria for the effectiveness of their work. Just tie them not to common business goals, but to the implementation of the goals and objectives of the unit.

For a secretary, this can be: the quality of processing incoming and outgoing documentation, the speed of answering incoming phone calls, and for an accountant, the time for processing documents or the quality of interaction in matters of document management with accountants of counterparties.

The implementation of the KPI system provides for:

clearly defined goals for the business;
development of the lowest and highest performance indicators;
proper distribution of powers and responsibilities among employees;
determining how and which indicators to achieve the goals are affected by each unit;
finding out what exactly within the department an employee of the company can influence;
search and formulation of specific indicators for each employee;
creation of a new payroll algorithm taking into account KPIs.

When implementing a KPI system, it is advisable to first implement it as a pilot or test project in one department whose work has a direct impact on the company's financial performance (for example, in the sales department). And then, after correcting possible errors, extend its effect to all other units. In the event of a change in the conditions of the external market environment or a change in the strategy and goals of the company, KPI indicators are necessarily revised.

It is important that the development of the KPI system is not carried out only by employees of one department, for example, the personnel department. This should be a team effort of the heads of all departments in order not to make mistakes in determining the key parameters. Within the department, it is necessary to develop a system from top to bottom, i.e., first to the head, and then to his subordinates, so that the goals and objectives within the unit are uniform. Instead, it would not work that, for example, the head of the department should increase the sale of low-margin positions, and managers receive a percentage of the sale of positions with high profitability. With such indicators, managers are generally not interested in selling positions with low profitability, and the tasks of the manager will be difficult to fulfill.

In a properly built system, each KPI coefficient is a well-thought-out and defined value.

It is also very important to understand: KPI salary - what is it. One employee should not have many indicators for which he is responsible (3-5 is the most optimal number). Each indicator must have its financial value, which will be reflected in the salary. It is also recommended to keep the employee's salary, and make the motivational component additional, and not part of the former salary.

Development of KPI, rules and principles of implementation:

there should not be many indicators;
each indicator must be measurable;
the costs (time and financial) for measuring a parameter should not exceed its cost.

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

In general, the development of a KPI system is a very controversial topic for any leader. This process can be quite costly and painful for employees, but with the right approach, it is an excellent tool for motivating and stimulating employees to work.

How to evaluate performance

Evaluation of the fulfillment of the tasks set is an important element of the work of this motivational system. The standards of ordinary workers should be transparent in their assessment, so that a person himself can understand during the accounting period whether he fulfills them or not, and not learn about it after the end of the period. Managers may have indicators that may take time to determine the implementation of, such as % of the company's return on sales. But within a month, the employee should understand in which direction he is moving, and be able to evaluate his current work by other indicators.

In large companies, performance evaluation is usually automated, and the results are determined "with a button". In small companies, either managers or representatives of the personnel department are involved in evaluating the results.

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

The following calculation formula is usually used:

KPI weight - the weight of each indicator of the system in the total amount equal to one. The maximum weight is given to the most significant indicator. For example, the main achievement of a sales manager will be an increase in the amount of sales;
plan - the planned result that the employee must achieve;
fact - the result actually achieved.

By calculating the index for each indicator, you can immediately see which tasks the employee had problems with and how this affected the overall results of his labor activity for the reporting period.

To determine the appropriateness of bonuses and calculate the bonus component of wages, a general performance ratio is used, which is the sum of all indices.

If it is more than one, then this indicates an overfulfillment of the set plan, which means that the employee can be rewarded.

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

In addition to paying a bonus, an employee can be encouraged in some other way. For example, provide an unscheduled day off, transfer a more promising project to him, include him in the personnel reserve for a higher position, etc.

It is optimal to combine material and non-material incentives. It is this motivational system that will allow employees to work well and efficiently, and companies to achieve high financial results.

Pros and cons of the KPI system

Pros (and, as a result, the achievement of goals):

the employee's ability to influence his salary;
responsibility of the employee for his area of work and transparency of tasks;
participation of the employee in achieving the overall goal of the company;
the possibility of adjusting the goals of the head in the process of work;
the interaction of the leader with the subordinate in a more dense mode.

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

unattainability of the set parameters;
a small share of each indicator in the total bonus due to their large number;
labor input of the system implementation;
uneven problem solving due to incorrect determination of the cost of standards.

KPI examples for different positions

It is necessary to understand very clearly, speaking about KPI, what it is when paying. For different positions, even to achieve the same goal, it is necessary to use different indicators.

Consider examples of indicators for achieving the goal of “increasing profitability (delta between revenue and expenditure) of sales” in a company that sells sweets.

What is a KPI matrix

On the Internet you can find different interpretations of this concept. Sometimes the concept of "KPI matrix - agreement on goals" is used. But the most accurate interpretation is the efficiency matrix.

This table contains indicators of the employee's KPI system, planned and actual values, as well as the KPI coefficient for each item. The final average value in this matrix reflects the effectiveness of the employee in his activities within the framework of the tasks set and the indicators determined for his position.

An example of a KPI matrix for the above employees of a company that sells sweets, within the limits of the indicators defined for them.

Special opinion

When developing KPIs, there are 2 main mistakes. The first is the confusion between KPI and money. KPI is not a description of a bonus system. Yes, bonuses can be paid for the achievement of indicators. But in general, KPI is a reflection of the effectiveness of an employee, department, direction, department. For example, in production, there should be a client assessment of the quality of work. Most large companies do not include it in the bonus system, but fix it only as a KPI - if an employee is in critical areas, they pull him up to the desired level or part with them, but he is not paid a bonus if 90% of customers are satisfied with his work.

The second is KPI for the sake of KPI. KPI is always a decomposed goal of a company. For example, in a salon, the arrival of an administrator by 9 am can be recorded in KPI (otherwise the shopping center will fine the company for a closed salon), but in production, such an indicator is meaningless (an employee can come at 9 and leave at 18, but the amount of work will not change, namely, the volume of work affects profit).

Boris Teklin

Head of Customs Department in Russia DHL Worldwide Express

It is believed that correctly selected KPIs must meet the so-called SMART criteria (Simple, Measurable, Agreed, Relative, Timebound). This means the following: KPIs must be understandable to the employee and easy to calculate. KPIs should be "digital", that is, measurable in certain units (in cubic meters of excavated soil, tons of cargo transported, the number of calls answered, the percentage of the plan completed, etc.). You cannot use unmeasurable "analogue" indicators as KPIs, such as "quality", "good", "beautiful", etc. KPIs must be consistent with the goals of the unit and agreed between the employee and his manager. KPIs should be related specifically to this employee and the work assigned to him, the expected result of the work should be dependent on this employee. KPIs should be measured at the agreed time intervals (if there is a link to a premium, then it is logical to "link" the indicator to a month or quarter).

KPIs should be as clear as possible to those who set the task and those who complete it. Their main task is to contribute to the achievement of planned indicators and to motivate them to fulfill new ones. Based on our experience, we highlight a few errors.

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

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

3. KPI indicators are only financial. In a properly designed KPI system, there are a large number of not financial, but leading indicators by which we control the activities of the business and the achievement of the necessary results.

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

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

In our opinion, KPI is not effective in creative professions and in unstable markets. Today we see the following alternatives to the traditional KPI: a) The employee makes decisions independently (the principle of work according to the "Turquoise Management Model"); b) Planning for performance targets.

Olga Pavlenko

HR manager Soyuzkhimtrans-Auto

The article presents in sufficient detail the important aspects in the development of a KPI system. I would like to add an important, in my opinion, nuance that there should not be too many key indicators. Of course, there are positions in which it is very important to take into account many different factors and components. But the more parameters for taking into account the effectiveness of an employee, the more difficult it is to keep them all in the head and the more difficult it is to focus. After all, developing a KPI system is still half the battle, the system must work. And for this, one should not forget the basics of psychology, namely the features of attention and memory. 3-5 indicators are exactly what is optimal for a working KPI system.

And the second important point that I would like to add concerns the base salary paid to the employee. The salary part of the salary must be unchanged and indivisible. This state of affairs gives the employee a sense of stability and confidence. Complementing the base salary, payments according to the KPI system should motivate and encourage the employee to professional development and more successful completion of tasks. If the base salary also becomes a variable value, there is a risk of demotivating the employee and provoking him to avoid difficult situations instead of solving them.

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

1. An employee must necessarily influence KPI.

2. Achievable KPI. An ambitious goal is good, but keep in mind that it is impossible to build a house in 2 days.

3. Relevance to functionality. KPI - an indicator for the achievement / improvement of which this position exists (marketing - attracting customers; seller - sales).

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

5. The optimal number of KPIs is from 1 to 3.

KPI is not effective in the following cases:

1. High degree of uncertainty of the final result/product.

2. The competencies of the employee are unique (in the company/industry).

3. We need a super result (build a house in 2 days).

4. The employee does not have tools to influence the result. KPI will push and limit, which will lead to regression.

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

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, since their wages depend on it. 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.

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

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

find out the goals of the company and convey them to employees;
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. The implementation of KPI is a complex and lengthy process that requires a lot of time and effort, both from the manager and employees. The whole company should be involved in the process of developing a system of key indicators - this is the only way to avoid the effect of "rejection of novelty", and the most adequate perception of the new scheme of work.

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

Definition of key indicators

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

Today, many companies are trying to get their employees to work according to the KPI system ( Key Performance Indicators- key performance indicators). What are the monetary pros and cons of KPIs?

The goal is one, the tasks are different

KPI is a scorecard by which employers evaluate their employees. It has much in common with the usual planned approach. With one major difference: the performance of each individual employee is tied to the overall KPI of the entire company (such as profit, profitability or capitalization). The purpose of the system is to make sure that the actions of employees from different departments are not contradictory and do not slow down the work of specialists from other departments. Everyone contributes to the common cause, works to achieve their goals and as a result receives bonuses for their implementation.

KPI work allows specialists to better understand what they need to do in order to be effective. By "efficiency" is meant not only the amount of work done per unit of time, but also the benefits received by the company from the activities of the employee.

In each department, the company's general KPIs are "split" into smaller ones - personal ones. There should not be many key indicators for each. Three to five well-defined KPIs are enough. The main thing is that each of them can be easily measured. An example of the indicators of one of the sales managers: "sales volume is not less than ...", "the number of new customers is not less than ...", "the size of the average contract for a client is within ...", "the level of knowledge of English is not lower than .. .".

Measure of result

In large Western companies, where everything is spelled out and detailed to the maximum, work on the KPI system is a good option for employees. The specialist understands how much, for what and when he will receive in excess of the salary. And what is included in his salary. Clear, documented information about what the employer expects from you makes the job very easy. Each employee has personal tasks and deadlines for their implementation, and the company regularly monitors his work with the help of evaluation.

In many companies, in addition to monthly monitoring, the results of all KPIs are taken as the basis for an annual assessment of staff performance. After the annual assessment, the HR Directorate draws up lists of the most promising specialists for enrollment in the company's personnel reserve and promotion.

But if the “head office” helps foreigners in developing goals, then domestic employers, in order to determine the goals and objectives of their specialists, act in different ways. Some invite consultants, others manage on their own: the goals are prescribed by the personnel directorate. Since neither the first nor the second features of the work of each particular specialist are known, it happens that the indicators are formulated inaccurately.

“At the exit”, the employee is faced with the fact that his KPIs turn out to be impossible. Or, on the contrary, such a system allows the specialist to find legitimate “loopholes” so as not to strain especially. The IT director of an industrial holding, Alexander, recalls that before the introduction of KPI, his subordinate "system administrators" solved user problems "on the first call." Now, when calls like “Help! Computer froze!" they react "bourgeois". They demand that they write a request with the essence of the problem and pass it on to the senior “sysadmin”. Then it is queued for execution. “Yes, I could do it in three minutes, but it will not be recorded anywhere. What do I care about the difficulties of other employees and departments? I will be evaluated according to KPI, the achievement of which I am motivated.”

Plus bonus

The described system is good for employees whose work results most affect the financial and economic performance of the enterprise. In trading companies, these are, first of all, top managers and sales managers, in recruiting offices - recruitment consultants.

Communications manager Elena says that in her company, the achievement of goals by an employee also affects the individual size of the annual salary review: the higher the score, the higher the percentage of salary growth. “The managers' annual bonus consists of two variables, which depend on the results of meeting individual goals and on the achievement of company performance indicators. This approach encourages better performance of functional duties.

For employees from different departments, the size of the bonus, which is affected by KPI, can range from 20% to 100% of salary.

At the same time, the formula for accruing the bonus itself is quite complicated: it takes into account the number of KPIs, the coefficient of completion of each of them, as well as its “weight”, that is, the coefficient of influence (the more important the indicator for the company, the higher the “weight”).

If the KPI scale is compiled incorrectly, there will be little result from it. For example, if there are too many KPIs, the impact of each on the amount of the total bonus will be small. Economist Lyudmila says that at first she had about 20 KPIs, but a year later they were reduced to five. “Most of the indicators accounted for a small share of the bonus, and for me the loss of 5% in the bonus was not of particular importance. A 20% KPI weight motivates much more effectively,” she admits.

System Disadvantages

One of the main disadvantages of KPI is that if a department performs poorly, all of its employees can lose salaries at once. After all, personal KPIs are associated with key indicators of the entire department. If the planned indicators are systematically not achieved, the employee may be demoted. Therefore, KPI forces you to always be in shape. Who does not withstand this rhythm, he leaves himself.

The disadvantages of working in the system of key indicators include the fact that not all employees can directly influence the company's strategic KPIs. If the bonus depends on net profit and sales, it is unlikely that sitting in the office, a secretary or an economist will be able to influence it.

Very often, in Ukrainian companies, the KPI motivation system is “one-sided”: everything that an employee overfulfills is just a job well done, for which he receives a salary, and for underfulfillment he is deprived of some part of his salary. Or another option: a system of key indicators is being introduced, but there is no link to the employee motivation program.

The work of technical specialists (accountants, engineers, programmers) is easier to describe with a job description. And it is very difficult to find a fair “line” for them.

And further. Keep in mind that planning and KPI calculations take time. The head of the logistics department of a transport company, Roman, is dissatisfied with the fact that the introduction of this system turned out to be additional hours of work for him. “Now, at the end of each month, I have to spend time setting and calculating KPIs for all my subordinates. All indicators have to be coordinated with the HR Directorate. At the same time, they don’t pay me extra for calculating the size of bonuses,” he complains.

The transition to a KPI system is usually accompanied by unrest among employees: some innovations are “quietly sabotaged”, others do not completely accept it and leave the company. It is difficult to immediately change your habits, the order in which functions are performed, and get used to the new conditions of remuneration.

Andrey, a former regional manager of a confectionery company, recalls that when he was given the goal of “selling not a lot of cheap sweets, but a lot of expensive ones,” he had to change a lot in his work. Misunderstanding of innovation by the team and partners interfered. While he was retraining his subordinates, some of the people left. And when he negotiated with retail chains, based on the new goals of the company, he was forced to agree to more stringent conditions.