Recently, the scope of application for the procedure for assessing the productivity of employees has been expanded - it has become used not only for top managers. Evaluation of key performance indicators (KPI of employees) has ceased to be a hallmark of foreign companies; case studies can be found in different industries and for various categories of employees from marketers and business analysts to financiers and economists.
Managers are assessed by competencies by Aleksey Shirokopoyas, Development and Assessment Expert managerial competencies. Developer of educational and game programs. Project founder. 8-926-210-84-19. [email protected]
Typically, KPI-based motivation systems measure key indicators performance (KPI employees), because they are based on SMART criteria. Therefore, such motivation systems are convenient for applying to employees employed in profit centers, where there are objective, and most importantly, measurable criteria: sales volumes, financial key performance indicators (KPI employees), deadlines, etc., and work based on SMART -goals and objectives, has a specific result. However, not all types of work can have such goals and objectives. For example, how to evaluate process activities (not implying the achievement of a specific result), where there are no SMART tasks and those who are "remote" from the economic and operational processes of the company - "clerks": a secretary, a call center operator, a system administrator of a support service, inspector for personnel office work, accountant, personnel officer, etc.? These workers (back office) perform routine functions, and, unlike the work of managers, the work of "clerks" is difficult to evaluate. How to assess the quality side of the work of this category of personnel?
In this case, it is necessary to evaluate the performance of functions. To a large extent, this is only a qualitative assessment, and, as you know, a qualitative assessment is an expert assessment. The method proposed in the article helps to evaluate the work from this side.
Each leader appreciates in his employees the ability to perform work quickly and efficiently. And laments when these requirements are not met. Often he has to put up with this and hope that he will someday find a better employee, but everything repeats with a new employee. Why is this happening? To answer this question, let's delve into the nature of the parameters under consideration and their relationship.
What is "working speed"? From physics, we know that speed is the ratio of the amount of work to the time it takes to complete it. This means that the manager evaluates his employee according to three parameters: the amount of work, the time it takes to complete it, and the quality of the work.
Thus, any activity can be evaluated by three key performance indicators (KPI employees), let's call them the "efficiency triad" (see Appendix):
Moreover, each leader can decide for himself what kind of work he evaluates:
However, it is not so easy to "reconcile" the speed of work and quality. Indeed, one can be convinced that it is easy to implement only any two parameters of the "triad" and it is difficult to make sure that all tasks are completed on time, efficiently and in the right amount. It is difficult to balance such a system - and this is the responsibility of the leader.
Most often, the work is done efficiently and on time, but perhaps this will not be the entire amount of work. Often an employee manages to complete all tasks, but either with a decrease in the quality of some of them, or with violation of deadlines.
And you can completely forget about the expectations of early completion of all tasks while maintaining excellent quality to the authorities. Not only that, managers are accustomed to seeing an employee's ability to complete an increased volume of tasks ahead of schedule and with superior quality as signs of underutilization rather than talent. Isn't this the reason for the modern personnel trend of "talent search"? The employers' dream of so-called talent is the dream of employees who are able to sustainably fulfill these three criteria to the fullest. Agree, there are not so many of them.
In itself, accounting for tasks and functions is a creative matter. They have different significance, which means they should be with different weights. In addition, all key performance indicators (KPIs of employees) can have their own weight in the system (see Table 1), which is determined by the manager based on current tasks, work characteristics, etc., thereby highlighting what is most important. For example, timing is important for the recruitment department, and quality is important for the accounting department.
The final grade is calculated as a weighted average of grades. This is the sum of the products of the assessment for each of the key performance indicators (KPI employees) and its weight:
35% x 3 + 40% x 4 + 25% x 1 = 1.05 +1.6 + 0.25 = 2.9 (with a maximum of 4 points)
or
35% x 75% + 40% x 100% + 25% x 25% = 26.25% + 40% + 6.25% = 72.5%
The second option for calculating the final score of this technique is given in the Appendix.
It is worth repeating: naturally, such assessments are subjective. If the amount of work can be determined, and the timing is measurable, then the quality (in the absence of specialized measurements, for example, the number of customer complaints or the results of a technology assessment " Mystery shopper”) is judged subjectively.
Firstly, evaluation criteria are formulated in a special way. This was not done by chance: after a month, the manager cannot always remember in detail which deadlines were violated and how many cases the employee completed with proper quality. However, he developed a common the whole picture the work of a subordinate, written in “large strokes”. With the same "large strokes" he is invited to draw a "portrait of efficiency" of the employee.
Secondly, the objectivity of the methodology increases the practice of its application. More than ten years of experience in using the methodology shows that the effectiveness is high when it is filled out by both the manager and the employee himself. They then discuss their results, and this makes a lot of sense:
Thirdly, by virtue of these effects, both sides strive to reach an agreement, which, as the satirists have formulated, is "the product of non-resistance of the parties." Since the main practical use of this method lies in the ability to regulate the monthly or quarterly premium (see Table 2), it is this circumstance that makes the technique valuable, because agreement leads to justice, and this is more important than the accuracy of measurements, and motivates more than mathematically accurate and sometimes impersonal scores.
Fourth, the objectivity of the methodology increases due to the “scale effect” if it is applied in all divisions of the company. This effect makes it possible to compare the result with objective data, and this is another powerful verification criterion and a source for correcting results. So, a senior manager, having received a complete picture of the assessments for the company (a set of performance assessments of managers employed in profit centers, and assessments of the effectiveness of employees of the company's cost centers), can compare it with financial and other objective key performance indicators of an employee (KPI of employees) of the organization's efficiency in in general. It may turn out that overall score of all employees according to the Efficiency Triad methodology will be overestimated compared to the objective key performance indicators (KPIs of employees) of the organization. Then the employer has the right to introduce a correction in the payment of bonuses by his authority.
Table 2 shows that employee Danilin had a vacation in February, and in accordance with the company's policy, no bonus was accrued during this time. Shirokova has a tendency to increase efficiency. For other workers, efficiency has declined.
Please note: the implementation of even 50% of the plan can be rewarded, especially since at the same time three key performance indicators (KPIs of employees) of the “triad” are difficult to achieve, and two out of three can be high due to the resource of the third. In this regard, any number less than 50% is also a definite achievement.
The method can be applied in a cascade (when higher-ranking employees evaluate downstream ones), across the entire organization and regardless of whether employees have “objective key performance indicators (KPIs))” or not. The cascading application of the method gives the assessment a systematic and additional objectivity, especially when it comes to awarding bonuses.
And if, moreover, the method is applied for a long time, then it acquires a number of useful properties. Let's consider them.
So, the figure shows that the subordinates of the head of department 1 have different skills (this is clearly shown by the "mini-diagrams"): the engineer works slowly, but with high quality, the specialist works quickly, but not with high quality. The superior manager evaluates the work of the chief, and hence the entire department 1 as follows: the department solves a large amount of tasks with average quality and with some violation of deadlines. BUT general analysis the work of the entire department shows that the manager has an additional amount of tasks - in addition to those that his subordinates solve, and this may indicate problems with delegation. In addition, the activities of the boss somehow "worsen" the quality of the engineer's work and "slow down" the work of the specialist. As a result, the terms and quality of the work of the department are not above average. The head of the head of department 1, perhaps, should think about his effectiveness as a manager.
The head of department 2 works quickly, but gives out fewer cases than his subordinate. Leading specialist slowly performs a large amount of work. This means that this boss takes on those tasks that can be solved quickly, while the quality of his work cannot be called low. Obviously, everything is in order here with delegation, quality of work and meeting deadlines, and hence with responsibility.
So, despite the obvious subjectivity of the Efficiency Triad method, its useful properties are obvious:
And most importantly, this is not just another “precise tool”, but a way to mediate a dialogue between a manager and a subordinate on the issue of remuneration. After all, nothing reduces employee motivation as much as the lack of recognition and understanding of development paths. In such a dialogue, the employee can understand what his boss is dissatisfied with and what he pays attention to. In other words, the method gives motivation a very important managerial effect - feedback to the subordinate about his work.
should be calculated to diagnose corporate problems. Key performance indicators of an employee allow you to take timely measures to improve the efficiency of his work.
Kipiai, or key performance indicators, is a unique system that has recently come into Russian business. To date, there is no more reliable method by which to evaluate the efficiency of the enterprise, so the use of this system is practiced not only in Russia, but throughout the world.
To begin with, let's fully reveal the question of what it is - KPI, or key performance indicators.
Ki Pi Eye is a unique system with which you can calculate the performance of each individual employee of the organization. Thanks to such a system, one can not only understand how effective the activities of employees are, but also motivate them to improve their working skills. The most optimal performance indicators for each individual employee should not exceed the figure 5.
To understand how to operate this system correctly, it is necessary to more carefully and deeply study the types of performance indicators, as well as consider examples of KPIs.
Kipiai indicators are usually divided into several subgroups, based on the results obtained in the calculation of the results of a certain area of activity.
A key performance indicator is built on several principles. If you do not take them into account, then the data obtained will be unreliable. These are the principles:
Earlier, we considered the question of what is KPI, dividing it into 3 small subgroups. However, the gradation does not end there, because this system also has its own varieties. There are two of them in total. These are operational and strategic KPIs. Let's first understand what kind of operational KPI system it is.
Operational KPIs are indicators by which you can evaluate the effectiveness of the company's activities at the moment. Simply put, the data obtained when calculating kpi reflects how well the company's employees work in the current period of time.
In addition, kipiai operational systems help to compare the tasks performed by employees with the conditions that were created for this. Based on the results obtained, the management of the enterprise can evaluate the quality of the manufactured product, the conditions for its delivery and further distribution.
What is a strategic KPI? Such indicators reflect the performance of the company for a certain period of time. With their help, you can find shortcomings in the work of personnel and adjust its activities for the next period of time (for example, for the next month, quarter, six months, etc.).
In addition to the quality of work of employees, financial data can also be processed. Based on the results of the KPI calculation, cash flows are characterized, which help to understand how profitable the organization itself is, and how much the products produced by it are in demand.
Since with what is kpi, or, speaking in simple words, key performance indicators, we figured out, it is necessary to move on to the next, no less important, question: where and why are they used? And also consider the formula by which they are calculated.
A performance indicator is a numerical measurement of the set (and achieved) goals and objectives that play an important role in the successful promotion of a business. Thanks to the prepared report, where all the necessary indicators are taken as a basis (they were discussed above), the management of the organization has the opportunity to fully assess how the developed plan was carried out, as well as what was achieved over a certain period.
KPIs are used in various business areas. Each of them has its own list of indicators that are being processed, and on the basis of which an indicator is calculated that reflects the efficiency of the enterprise.
To multiply your fortune, you need to understand what KPIs are in sales and what an important role they play. These indicators can be calculated based on:
KPI indicators in retail are based on 5 main principles:
Thus, having received all the necessary calculations, you can quickly adjust the work of the staff, significantly increasing the number of transactions, which, in turn, helps to increase the store's income.
What is a key indicator in production, and on what basis is it calculated? First of all, when calculating the efficiency coefficient, they take as a basis:
To get the right data, you need to know how to calculate KPIs. There is a special formula for this:
(qf/ qpl)×100%
Now let's decipher the indicators:
The data obtained through this form is the so-called performance criterion.
To fully understand what kipiai is, let's look at some examples of key performance indicators. For a better understanding of the essence, each of the professions that are taken into account in the calculation will be considered separately. The table below shows not only the type of activity, but also the indicator on the basis of which the efficiency criterion is calculated.
| Number | Job title | Indicator for calculation | Formula for calculation |
| 1 | Head of Marketing Department | Total percentage from the implementation of a previously developed plan. | The general calculation formula described above. |
| 2 | Marketer | Overall percentage of all brands on the market | Calculated based on data from all third-party marketing firms. |
| 3 | chief accountant | Timeliness of submission to the tax service of the declaration on the income of the enterprise. | Data obtained from the tax authority. |
| 4 | Accountant | Total percentage of completed financial transactions | This profession has its own formula for calculating kipiai: (qpsr/qtot) × 100%, where the first indicator in brackets means the number of financial transactions that were completed on time, and the second - the overall results regarding all payment transactions. |
| 5 | Head of the legal department | The total number of lawsuits won is taken as a basis. | The ratio of the number of cases won to the total number of trials. The result is multiplied by 100%. |
| 6 | Lawyer | The amount of money that was collected from other enterprises in favor of the organization where the person works. The amount of money that was saved by the company is also taken into account. | All data from reports prepared by the legal department are taken into account. |
If we again take the example of a sales manager's kpi as a basis, then with the help of the data obtained after the calculation, the head of the management department will be able to identify not only positive, but also negative aspects in the activities of his subordinates. So, he will know exactly how many calls and meetings the sales manager made, whether they were effective, how many people became regular customers, etc.
If the data obtained do not correspond to the developed plan, then this means that the person involved in this type of activity lacks either knowledge and skills, or perseverance and desire to work.
All the above examples of KPIs, or key performance indicators, fully reflect the essence of this concept. Of course, it is difficult to immediately understand all these subtleties (especially for a novice businessman). However, it is better to spend some time on deep study this important topic than to incur financial losses that can seriously harm the development and successful promotion of the business.
The main responsibility of the top management of the company is to create a strategy, determine the goals and objectives of the enterprise. The implementation of these goals is entrusted to the shoulders of employees from structural divisions. The development of a company can be jeopardized if communication between employees and management is poor. This is mainly due to the information overload of the leadership and the inability to rationally assess the situation in the working positions. This, in turn, affects the quality of control over the actions of staff and the implementation of the strategy.
If specific strategic goals the staff lacks, and also lacks sufficient motivation, this leads to the fact that employees are not able to determine the right course and are not able to act for the benefit of the company's development. This inconsistency often leads to a waste of company resources on tasks that are secondary. Such problems occur quite often, and many enterprises around the world suffer from them.
It is difficult to call a self-sufficient strategy of the enterprise. The aspirations of management are to achieve goals by setting goals for the staff, as well as quality control over the quality of work performed. In the chain of elements that are necessary to realize these goals, which is the control cycle, there are two elements:
That is why many modern entrepreneurs are interested in KPI (Key Performance Indicators), what it is and how it can help in management. After all, the weak link in the chain shown above is, in fact, the connection between management and staff. If failures occur in its work, then decisions will be made taking into account information that is incomplete. According to some managers, the guarantee of the correctness of their decisions depends on the amount of information collected. But in this case, this is a wrong opinion, since the time for evaluating information increases, and its quantity is not at all responsible for its quality.
Any management needs a tool that allows them to receive high-quality and adequate information for decision-making. Western companies have long been using key performance indicators of the company and the balanced scorecard for this.
Under the KPI, a system of indicators (financial and non-financial) is considered that have an impact on the qualitative and quantitative change in the result of the work of the staff or the result that is expected. It includes the coefficients of each controlled object, as well as the methodology for their assessment. This allows you to focus on achieving strategic goals, based on an assessment of the organization's performance. 
The assessment of key performance indicators is precisely the tool that can show how well management is carried out in relation to the results in relation to the goals set, taking into account the value and position of the company in the market. It should be borne in mind that this tool can facilitate the decision-making process of management through complete and high-quality information, but it cannot solve serious systemic problems of the organization. This technique does not provide ready-made solutions, it only reveals the area in which the problem arises.
The transition to new methods of progressive company management is justified by the fact that the old methods, which include increasing the scale and pace of production, as well as improving product quality, do not create the necessary competitiveness. Thanks to modern instruments management, the organization can quickly respond to any change that occurs in the market. 
The main task pursued by the system of key performance indicators, together with balanced scorecards, is to translate the company into a comprehensive set of necessary indicators that can highlight the main elements of management and measurement. Thanks to this set, an organization's strategy is formed, which is able to include all the necessary quality and quantitative characteristics to inform workers in a timely manner of the factors that influence present and future success. Having formulated the results to be achieved, the organization not only defines the goal, but also works on the conditions that allow better and faster to come to its implementation. 
It is not the amount of information that is important, but its objectivity, accuracy and relevance in order to correctly carry out all the necessary calculations. The concept of balanced scorecards is that traditional financial and economic indicators are not enough for the success of the strategy. To solve problems, it is necessary to better balance key performance indicators, taking into account various planes, in order to control the factors that have an impact on these indicators. You should not pay much attention to past achievements, it is worth evaluating future results. If you focus the indicators on only one area of activity, but this, of course, will have a bad effect on the final result.
To implement the system in an enterprise, there are certain steps that should be performed sequentially. Violation of this sequence can adversely affect the final result.
A clearly formulated strategy should describe the main steps to achieve the desired results and goals. It needs to be broken down into specific initiatives, where tasks for individual departments of employees will be allocated. This results in significant savings not only in money but also in time.
Here it is necessary to determine the most important factors, or rather, the parameters of aspects of economic and economic activity having an impact on the implementation of the tasks set and the implementation of the strategy. These factors have a significant impact on success.
It defines the activities necessary for the strategy to be successfully implemented. KPI is used as a tool for their determination. It is worth highlighting only the most sensitive of them, while not using secondary indicators. They should be stimulating for the staff. Among the main requirements for the system of key performance indicators, the following should be highlighted:
Take, as an example, a well workover shop (WOC). The strategic task for this organization will be to increase the level of production of the product, which will be expressed in the debit of wells and reduce the factors that provoke the loss of the product and reduce its cost. In this regard, the KPI should be set in such a way that it reflects not only the goals of the company itself, but also raises questions regarding a specific unit. If repairs are carried out, then the operation of the well is stopped, therefore, it is worth considering the costs caused by the shutdown. 
The structure that key performance indicators for this unit have can have the following structure:
Thus, using KPIs (key performance indicators), examples of which are discussed above, employees are encouraged to reduce costs and increase oil production. This not only corresponds to the overall goals of the company, but also affects the quality of work of a particular unit.
This stage involves the development of a generalized system that includes financial and non-financial indicators. This takes into account both the object of control and the assessment of factors affecting the overall picture of the efficiency of the enterprise.
At this stage, the data source is determined, through which the indicators will be filled, it must satisfy all the conditions for the reliability of the information received. You must first create a strategy that allows you to implement new tool management. Determine the goals, considering how positively they will affect the state of the company. It is also necessary to set up the information flow in order to correctly calculate all indicators. There are many more points needed to achieve the main goals and objectives of the organization, which will help to cope with key performance indicators.
KPIs are key performance indicators with which you can evaluate the results of the work of employees of various departments of the company. Based on them, employees are promoted up the career ladder or they are paid bonuses.
Relatively recently, company leaders began to actively introduce such a concept as KPI into their work. Now the most valuable thing for which employees work is tied to it - wages. Moreover, the KPI indicator becomes important not only for administration, managers or office employees - line managers, but also for representatives of working specialties.
The main idea of KPI (Key Performance Indicator - usually translated as "key performance indicator") is that it can be used to unambiguously and objectively evaluate the work and performance of any employee, group of people, department, project and company as a whole. The indicator will reflect the whole picture of the processes taking place in the company, using numbers.
The most important thing is to develop the right KPI for each position and enter real indicators. It is very important for an employee who encounters this concept, having received a job in a company, to immediately understand and understand what exactly is included in his personal set of KPIs (criteria for evaluating his work). The list of indicators will allow the beginner to quickly understand what exactly the employer wants to receive, what results he expects from the employee. The KPI range will immediately show how much effort you need to put in to achieve the desired level wages whether this work will be within the capacity of the applicant, or, conversely, his abilities will significantly increase the requirements and, accordingly, wages.
Scorecard
The KPI system gives specialists clear work goals and transparent bonuses. But the indicators may turn out to be unattainable, and the transition to such a system can be painful.
In large foreign companies, where everything is spelled out and detailed to the maximum, work on the KPI system is a great option for an employee. He understands how much, for what and when he will receive in excess of the salary. He has personal tasks and deadlines for their implementation, and the company can regularly monitor his work with the help of evaluation.
In many organizations, in addition to the monthly report, it is the KPI results of all employees that serve as the basis for the annual assessment of the performance of the company's personnel. After the annual assessment, the HR Directorate draws up lists of the most promising specialists for enrollment in personnel reserve companies and promotions.
But if in foreign companies the head office helps in developing goals and indicators, then Russian employers act in a slightly different way. Some invite consultants, others do it on their own: KPI is prescribed by the HR Directorate. Since neither one nor the other thoroughly knows the specifics of the work of each particular specialist, it happens that the indicators are formulated inaccurately. It even happens among us that the most advanced, in quotation marks, organizations for KPI development involve managers and employees of the units being assessed.
Types of indicators
There are some key performance indicators in the KPI assessment system: financial, client, process and development criteria.
To financial indicators include, for example, market value, return on investment - ROI, turnover, cash flow, internal rate of return - IRR, share price, total assets and many others. These indicators reflect the external economic condition of the company as a whole.
Customer indicators characterize individual employees who deal with customers and create the external image of the company in the market. These criteria include market share, number of new markets, customer satisfaction, quality, image indicators, and more.
Process indicators include indicators that grow along with the speed of various processes in the company: time to develop and launch new products on the market, processing a client's request; time spent on logistics and delivery of goods, etc.
Development criteria - KPI indicators that characterize the degree and level of development of the company itself (external development processes of the company in the market and internal development processes human resources): staff productivity, profit or administrative costs per employee, staff satisfaction level and its "churn".
The employee works as a consultant in the sales department, answering questions from potential buyers by phone. For him, the following key performance indicators (KPIs) are defined: customer satisfaction and the number of purchases that people made after consulting an employee over the phone.
Pros and cons
The KPI system is good for employees whose work results affect the financial and economic performance of the enterprise. In trading firms, these are, first of all, top managers and sales managers, in recruiting companies - recruitment consultants.
In some companies, the performance of an employee's KPI also affects the individual size of the annual salary review: the higher the score, the higher the percentage of salary growth. For example, the annual bonus for managers may consist of two variables that depend on the results of meeting individual goals and on the performance of the company. 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 percent 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”, called the coefficient of influence.
If the KPI scale is compiled incorrectly, there will be little benefit from it. If there are too many KPIs, the impact of each on the amount of the total bonus will be small. For example, initially there were about 20 percent of KPIs, but a year later they were reduced to five. Most of the indicators accounted for a small share of the bonus, and the loss of 5 percent in it is not particularly significant. A 20% KPI weight motivates much more effectively.
One of the main disadvantages of the KPI system is the dependence of the quality of work of an individual employee and the performance of the entire department. If the unit did the work poorly or not quite qualitatively, without fulfilling the general plan, then all employees of the department can lose their salary at once. After all, personal KPIs are associated with key indicators of the entire department. In case of systematic non-fulfillment of planned indicators, an employee may be demoted or dismissed. Therefore, KPI forces you to always "be in shape and tone." Who can not stand this rhythm, leaves himself.
Another disadvantage is that not all employees can directly influence the company's strategic KPIs. When the bonus depends on net income and sales, the secretary or economist will not be able to influence it.
From experience it can be said that very often in Russian companies the KPI motivation system is one-sided: everything that an employee over-fulfills is just a job well done, for which he receives a salary, and for under-fulfillment he is deprived of some part of his salary.
Many managers international companies believe that it is easier to describe the work of technical specialists (accountants, engineers, programmers) with a job description than to prescribe KPIs for them. We must not forget that the planning and calculations of this system take time. Heads of areas or departments at the end of each month spend time setting and calculating KPIs for all their subordinates. The indicators have to be coordinated with the HR department, and the main work of managers goes by the wayside, and after all, bosses have their own KPI.
As a rule, the transition to a KPI system is usually accompanied by unrest in the team: some quietly sabotage it, others completely do not 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. It is easier for new employees if the HR manager explains to them in an accessible way what the company pays bonuses for, and newcomers, most likely, will normally perceive work according to such rules.
Opinion 1:
Ludmila Shusterova, Deputy General Director of the outsourcing division of BDO
Original KPIs
KPIs are usually associated with either an increase in the profitability of the company and its turnover, or with an increase in productivity and efficiency in the use of capital assets. Based on these conditions, it is unlikely that it will be possible to draw up some fundamentally new and original KPIs. Unless, of course, the work is connected with something very non-standard. For example, you can put an increase in the number of koalas by n percent in the KPI for the head of a biological station. But for a typical manager, it is unlikely that it will be possible to invent something better than increasing revenue, margins, increasing customer satisfaction, or reducing staff turnover. It is desirable that there are several KPIs, but not too many. Indeed, in the pursuit of business and profit growth, it is important that both customers and staff do not suffer - and this is not a trivial task at all.
But the main task of indicators is not to be original, but effective.
Opinion 2:
Dmitry Pelah, Director of the Financial Consulting Agency
Regulation on KPI
In order to start applying the KPI system in your company, you need to fix it in internal documents. A regulation on KPI should be developed, which will be approved by the head of the company. In this position, it is desirable to provide formulas and calculations on the basis of which the system of indicators is built. It is also important to link indicators to accounting data or to IFRS indicators if the company uses international standards.
The regulation on the KPI system should establish a causal relationship of indicators with the main goals of the company and determine the level of responsibility for the values of the indicators of employees to whom this system will be applied.
There is no standard form for a KPI statement, so a company can develop it on its own or seek help from specialized consulting firms.
Opinion 3:
Ivan Shklovets, Deputy Head of the Federal Service for Labor and Employment
Dismissal for low performance
Such grounds for dismissal as a low performance indicator, labor law does not contain. Therefore, the employer has no right to dismiss an employee with such a wording.
It is possible to dismiss an employee due to inconsistency with the position held only on the basis of the results of the employee's attestation, which must be carried out in the manner established by the employer himself in the form of a local regulatory act. In this case, there must be a protocol of the attestation commission. However, even in this case, before dismissal, the employer will be obliged to offer the employee other available vacancies or work that he can perform taking into account his state of health.
Non-compliance by an employee with established labor standards or quantitative (qualitative) indicators may affect the amount of remuneration. For example, incentive payments may be reduced or canceled. However, when working out the established norm of working hours, the employee in any case will have a guaranteed right to receive the salary (tariff rate) established for him. If the employer nevertheless dismissed the employee on the above grounds, he has the right to appeal such dismissal in court.
Pros and cons of using KPI to evaluate employee performance
|
pros |
Minuses |
|
The amount of an employee's bonus directly depends on the fulfillment of his personal KPI |
Due to too many KPIs in the total bonus, the share of each of them is small |
|
Each employee is assigned responsibility for a specific area of work. |
Too much weight of one of the indicators leads to distortions in work (the employee does not pay enough attention to the functionality that has the least weight in the KPI system) |
|
The employee sees his contribution to the achievement of the overall goal of the company |
Really unattainable KPIs demotivate employees |
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If employees perceive remuneration as fair, their labor contribution remains approximately at the same level. The biased attitude of management initiates the emergence of tension and motivation aimed at reducing the degree of injustice. If employees perceive remuneration as too high, equity theory states that they will feel an imbalance in their relationship with the employer and seek to restore balance.
How to build the practice of personnel management in your company based on the theory of motivation, read the article.
Recruiters at recruiters say that employers are increasingly resorting to counter-offering (i.e., offering better terms than a new employer) in an attempt to retain a good employee who has already decided on a new job and is leaving. How relevant is the counterproposal today? Many companies are not only not retaining employees, but on the contrary, they are reducing staff. Nevertheless, the topic of the counterproposal remains relevant to this day, because good specialists or leaders are needed always and everywhere. Accordingly, accepting or not accepting a counteroffer is one of the defining choices in a person's career. After all, your future fate as a specialist or as a leader will depend on which offer you choose. You will learn about what is happening in the labor market now from the article
The article discusses the motivation factors that most often cause employees to change jobs. Given practical advice and advice on how to eliminate and/or reduce the negative impact of these factors or reduce the risk of their occurrence.
The question "How to motivate someone who already has everything?", from my point of view, is an epic. What is the difference between a true story and an epic? A true story is a story that happened once, and an epic is a repetition of this story many times with distortions in legends and myths. That top manager who already has everything has never met in my life, this is an epic.
Employees should be stimulated on intermediate achievements, without waiting for the completion of all work, since great successes are difficult to achieve and relatively rare. Therefore, it is desirable to reinforce positive motivation through not too large intervals of time. It is important to make employees feel confident, because this is required by the internal need for self-assertion. Success brings success. In general, it is possible to formulate a number of rules for the effective motivation of employees.
The article is devoted to research and evaluation strategic development systems for managing the motivation of the labor activity of managers and specialists, as well as their remuneration at the enterprises of the construction complex of the Penza region. The possibility of existence of unused managerial reserves in strategic system work motivation.
Managers are characterized by territorial mobility, high sensitivity to changes in the labor market and are not limited to a specific geographical area. They live and work throughout the space Russian Federation. At the same time, there are pronounced local features that significantly distinguish, for example, a information technology the city of Voronezh from the same specialist in the city of Yekaterinburg. The differences come down to three main parameters: the size of the "satiation threshold", the format of leisure activities and self-esteem.
The most important task facing the modern Russian business community is the development of mechanisms for managing the organizational behavior of an employee. Organizational behavior will be effective if it contributes to the achievement of the strategic goals of the organization, i.e. the main vector of behavior of all employees coincides with the movement of the organization to achieve its strategic goals. However, the achievement of these goals will be possible only if this movement is sustainable. Job satisfaction (job satisfaction) can give such stability to the behavior of employees.
Perhaps the key condition for increasing the efficiency of the internal segment of corporate management remains the choice of adequate methods for activating personnel at all levels of the hierarchy: from an ordinary performer to a top manager.
Why, in an atmosphere of budget cuts and staff cuts, some employees are loudly indignant, while others are quiet? Does this mean that the former began to work worse? How demotivated are the “quiet ones” who are completely withdrawn into themselves? This article briefly describes W. Marston's DISC, a little-known but very effective for business model of personality differences, explains why different people react and behave differently in a crisis, and gives recommendations on individual motivation for representatives of different personality types.
In job advertisements, one can often read the following: "Sociability, initiative, discipline and creative thinking are necessary conditions." Of course, we all want "everything and a lot", not assuming that some requirements may be incompatible.
Why is it necessary to focus on the strategic goals of the company when developing employee incentive programs?
How to make the motivation system as transparent as possible?
The crisis situation threatens the company not only with financial problems and the loss of its positions in the market, but also with the loss of qualified personnel, without which it is impossible to overcome the crisis. Retention of key employees is one of the main tasks of management at the crisis stage, and this goal can be achieved if the staff is informed in a timely manner and an adequate motivation system is implemented. Let's talk about this in more detail.
Key performance indicators allow you to evaluate the effectiveness of the actions performed. They can be used both to evaluate the work of the entire company, its individual divisions, and specific employees. With the help of the KPI system, you can not only monitor and evaluate the effectiveness of the actions performed, but also build an effective remuneration system. The condition for the indicator to work is the possibility of its measurement.
Often the work of the company contains a lot of words and few numbers. Moreover, sometimes there are no numbers at all - they are replaced by emotions, personal opinions and subjective assessments. If the company does not have a system of motivation for the result, conversations with managers will have the character of persuasion. If it meets the goals of the company, you can continue to work in this format.
If the task is to obtain a specific result, it is recommended to develop tools to achieve the required indicators and implement them in everyday practice, as well as develop and implement a personnel motivation system “tied” to specific figures and indicators.
KPI(key performance indicator) is a key performance indicator. They allow you to evaluate the effectiveness of the actions performed. KPI can be used both to evaluate the work of the entire company, its individual departments, and specific employees. With the help of the KPI system, you can not only monitor and evaluate the effectiveness of the actions performed, but also build an effective remuneration system. The condition for the operation of the indicator is the possibility of its measurement ( tab. one).
Tab. 1. The most common KPIs and their measurement/calculation system
| Key Performance Indicators | Measurement/calculation system |
| Commercial indicators | |
| Revenue | Plan/actual (ratio of actual revenue to revenue plan) |
| Profit | Plan / fact (the ratio of the fact of profit to the plan of profit) |
| Accounts receivable (AR) | Plan / fact (relation of the fact of remote sensing to the plan of remote sensing) |
| Other indicators | Plan fact |
| Non-commercial (qualitative) indicators | |
| Timeliness of reporting | Plan / actual (the ratio of the actual deadline for submitting a report to the planned deadline for submitting a report) |
| Execution of the customer visit plan | Plan/actual (the ratio of the fact of customer visits to the plan of customer visits) |
| Personnel turnover | Plan / actual (the ratio of the actual percentage of "turnover" to the planned percentage of "turnover") |
| Number of new clients attracted | Plan / actual (the ratio of the actual number of attracted customers to the planned number of attracted customers) |
| Other indicators | Plan fact |
Requirements to the KPI system:
I. The payroll system as part of the motivation system
The personnel management system runs the risk of being costly and ineffective if the staff does not feel loyalty to the company. To build employee loyalty, it is useful to have an idea of what motivates them to perform their duties most effectively, that is, their motivation. There are many definitions of motivation, but in our case, by motivation we mean the process of stimulating employees to achieve their goals and tasks.
It is desirable that the personnel motivation system includes material and non-material motivation. Below, the main attention is paid to the material component - this is the payroll system (motivational scheme), to which the employees of any organization are most sensitive.
KPI-based payroll system allows:
II. Methodology for the formation of the remuneration system
1. Determine the list of positions (position) in the structure of the company, for which the following motivational scheme will be formed (the principle of correspondence of key performance indicators to the level of the organizational structure):
2. Determine the key performance indicators (KPIs) for the position and the weight of each, based on the goals set for this level of the organizational structure.
3. Determine the order in which indicators are calculated ( tab. 2):
Tab. 2. Linking goals to key performance indicators
| № p/n | Company goals | Possible key performance indicators and calculation procedure (measurements) |
| 1 | The commercial goal is to fulfill the monthly sales plan for product A in the amount of 350,000 rubles. per month in territory B from 01/01/11 to 12/31/11 | 1. Key performance indicator - sales plan. Measurement system: (sales fact) / (sales plan). 2. Key performance indicator - an increase of 20%. Measurement system: (actual increase) / (planned increase). |
| 2 | Business goal to increase the average shipment amount by 15% | The key performance indicator is the average shipment amount. Measurement system: (actual average shipment amount) / (planned average shipment amount on the date). |
| 3 | Qualitative goal to increase the number of customers by 10% during the period from 01/01/11 to 07/01/11 in territory B | The KPI is the number of customers in the company's database. Measurement system: (actual number of clients in the database) / (planned number of clients in the database). |
| 4 | Qualitative goal to develop and hold an event for 50 clients (30% key and 70% potential) during the period from 02/01/11 to 03/01/11 | 1. Key performance indicator - customer attendance at the event. Measurement system: (actual number of visitors) / (planned number of visitors). 2. Key performance indicator - event budget. Measurement system: (actual budget) / (planned budget). |
4. Determine the spread of the percentage of performance of the indicator, the value of the coefficient of the indicator and the meaning of its value ( tab. 3):
Tab. 3. Percentage of performance indicator and coefficient (example)(*)
| Coefficient | The meaning of the coefficient | |
| Implementation of the plan is less than 50% | Unacceptable | |
| Implementation of the plan 51–89% | 0,5 | Low level |
| Implementation of the plan by 90–100% | 1 | Achievement of the target value (implementation of the plan) |
| Implementation of the plan 101–120% | 1,2 | Leadership |
| Implementation of the plan more than 120% | 1.5, 2 or 1(**) | Aggressive leadership or planning precision control** |
| (*) This table is a sample. The coefficients are given as a possible option. (**) The coefficient is set depending on what policy exists in the company regarding overfulfillment of the plan. A coefficient of 1.5 or 2 means that the employee is motivated to significantly overfulfill the plan. If there is no such task, then the value of the coefficient = 1 will serve as a limitation for the employee - he will not underestimate the plan in order to overfulfill it later, since in this case he will receive a coefficient corresponding to the fulfillment of the plan by 100%, and not more. |
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5. Form a motivational formula by which wages will be calculated. Determine the ratio of "fixed part", "variable part" and "bonus" in wages.
6. Determine the formula for calculating the variable part of wages.
7. Check: Calculate all possible salary options for all possible KPI values.
8. Prepare an employee motivation scheme.
As you can see from point 1, key performance indicators (KPIs) differ depending on the level of the position in organizational structure and meet the objectives of this level. This connection, using the example of second-level goals, was discussed above in tab. 2.
Key moment in the measurement of the indicator - the ratio of the actual result to the planned one.
An example of calculating the indicator "Monthly sales plan"
The planned value of the indicator per month: 350,000 rubles.
The actual value of the indicator at the end of the month: 330,000 rubles.
Calculation of the percentage of the plan completed = 330,000: 350,000 x 100% = 94.3%.
***
After the percentage of completion of the plan is set, you need to determine what meaning the result has for the company. In other words, is achieving 94.3% of your monthly sales target a good thing or a bad thing? This meaning is reflected by the value of the coefficient and directly affects the employee's salary.
The spread of percentages of the plan and the values of the coefficients (meaning) is determined by the company independently (they are affected by: the amount of salaries for a given position, the result to be obtained, the specifics of the market and the company's product, goals, mathematical calculations of payroll standards).
In a motivational scheme, it is optimal to use 3–5 KPIs.
III. Principles for the formation of a motivational formula
The standard motivational formula is:
Salary = Fixed part (salary) + Variable (changeable) part.
If bonuses are provided, then:
Salary = Fixed part + Variable part + Bonus.
The ratio between the fixed and variable parts will differ depending on the goals, the situation in the company and the specifics of the market in which the company operates. For example, if you are just launching a product on the market, you need an aggressive scheme in which the fixed part can be 30% of the planned income, and the variable part, respectively, 70%.
Example
Suppose the average salary in the market for the position of "sales manager" is 30,000 rubles. per month. It can fold in different ways. For example, 30% of the fixed part, i.e. 9,000 rubles, and 70% of the variable, i.e. - 21,000 rubles. Total: 30,000 = 9,000 (fixed portion) + 21,000 (planned variable portion). This is an aggressive scheme that can be used, for example, when introducing a product to the market.
If the company already occupies the desired market share and the task is to keep it, the situation in the company and the market is stable, then the fixed part can be equal to 70%, and the variable 30%. In this case, 30,000 = 21,000 (fixed portion) + 9,000 (planned variable portion).
This is a rare case when the sum does not change due to a change in the places of the terms, since the total sum of the variable part can have different values.
For further examples, let's take the ratio of fixed and variable parts in wages "50 to 50", i.e. 30,000 = 15,000 (fixed part) + 15,000 (planned amount of the variable part).
IV. Influence of key performance indicators (KPI) on the variable part of wages
Define key performance indicators for the required position, for example:
To establish the extent to which each of the selected KPIs will affect the variable part, we determine the contribution (weight) for each of them ( tab. four):
Tab. 4. Influence of the indicator on the variable part of wages (example)
As seen from tab. four, both indicators affect the variable part of the salary equally. This means that achieving each of them is equally important.
Tab. 5. Coefficients of the indicator depending on the percentage of the plan
To simplify further calculations, we will set the same values of the coefficients for KPI1 "implementation of the sales plan" and KPI2 "implementation of the work plan" ( tab. 5 will be suitable for the calculation of each of the indicators).
V. Possible scheme for calculating the variable part (PV) of wages
PV = Planned amount of the variable part x (KPI1 Weight x KPI1 Factor + KPI2 Weight x KPI2 Factor)
Tab. 6. Checking all possible salary options for all possible KPI values
(with a detailed breakdown of some values)
| KPI1/KPI2 | <50% | 51–89% | 90–100% | >100% |
| <50% | 5000 (option 4) | 18 750 | 22 500 | 26 250 |
| 51–89% | 18 750 | 22 500 (option 3) | 26 250 | 30 000 |
| 90–100% | 22 500 | 26 250 | 30 000 (option 1) | 33 750 |
| 26 250 | 30 000 | 33 750 | 37 500 (option 2) |
Option 1
Fulfillment of the sales plan 90–100% (value of the KPI1 coefficient = 1). Implementation of the work plan 90–100% (value of the KPI2 coefficient = 1). The variable part (FC) is 50% and is equal to 15,000 rubles.
IF \u003d 15,000 rubles. x (1 x 50% + 1 x 50%) = 15,000 rubles.
Salary per month \u003d 15,000 (fixed part) + 15,000 (variable part) \u003d 30,000 rubles.
Conclusion : the employee receives a planned salary established according to the payroll standard.
Option 2
Fulfillment of the sales plan by more than 100% (the value of the coefficient KPI1 = 1.5).
Fulfillment of the work plan by more than 100% (value of the KPI2 coefficient = 1.5).
IF \u003d 15,000 rubles. x (1.5 x 50% + 1.5 x 50%) = 22,500 rubles.
Salary per month \u003d 15,000 (fixed part) + 22,500 (variable part) \u003d 37,500 rubles.
Conclusion : the employee receives more than 7500 rubles. planned wages, but the implementation of the plan for each of the indicators is more than 100%.
Option 3
Fulfillment of the sales plan 51–89% (value of the KPI1 coefficient = 0.5). Implementation of the work plan 51–89% (value of the KPI2 coefficient = 0.5).
IF \u003d 15,000 rubles. x (0.5 x 50% + 0.5 x 50%) = 7,500 rubles.
Salary per month \u003d 15,000 (fixed part) + 7,500 (variable part) \u003d 22,500 rubles.
Conclusion : the employee receives less by 7500 rubles. planned salary.
Option 4
Implementation of the sales plan is less than 50% (the value of the coefficient KPI1 = 0). Implementation of the work plan is less than 50% (the value of the KPI2 coefficient = 0).
IF \u003d 15,000 rubles. x (0 x 50% + 0 x 50%) = 0 rub.
Salary per month \u003d 15,000 (fixed part) + 0 (variable part) \u003d 15,000 rubles.
Conclusion : the employee receives less than 15,000 rubles, since the variable part is 0 due to the implementation of the plan for each indicator is less than 50%.
Calculate how much wages will be accrued if the implementation of the sales plan is 101%, and the implementation of the work plan is 49% (the correct answer is 26,250 rubles)
Tab. 7. Completed form illustrating the methodology for the formation of a motivational scheme
№
| Methodical procedure | actual value |
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Determine the position in the company structure |
Sales manager (sales department) |
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Determine key performance indicators (KPIs) for the position and the weight of each, based on the goals set for this level of organizational structure |
KPI1 - fulfillment of the sales plan. |
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Determine the order in which indicators are calculated |
Fact: plan x 100% |
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Determine the spread of the percentage of performance of the indicator, the value of the coefficient of the indicator and the meaning of its value | Percentage of performance indicator | Coefficient |
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Form a motivational formula by which wages will be calculated. Determine the ratio of "fixed part", "variable part" and "bonus" in wages |
30 000 = 15 000 + 15 000 |
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Determine the formula for calculating the variable part of wages |
PV = planned amount of the variable part x (KPI1 weight x KPI1 factor + KPI2 weight x KPI2 factor) |
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Check: Calculate all possible salary options for all possible KPI values |
See above “Checking all possible salary options for all possible KPI values (with a detailed breakdown of some values)” ( tab. 6) |
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Execute the document "employee motivation scheme" | |||
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