How is KPI deciphered? Which KPIs to choose and why. The goal is the same, the tasks are different

Any company is interested in increasing the efficiency of business and staff performance. Achieving these goals is largely facilitated by the introduction of quantitatively measurable and reliable indicators – KPI (Key performance indicators).

The main advantage of a system built on the basis of key indicators is its versatility. It is also aimed at increasing the interest of staff in the results of the company’s activities. When developing KPIs, the specifics of the organization's activities are taken into account. KPIs can be used to evaluate the performance of the entire company, its individual divisions, and specific employees. In addition, the KPI system allows you to compare homogeneous processes that occur under different conditions. It also makes it possible to compare performance across several divisions for the same period.

The main advantage of KPI systems is that the decision-making process is reduced to the analysis of data that is available at any time and presented in a pre-approved format.

Calculations and application of KPIs

It is most effective to use KPIs in large retail companies that have an extensive network. In this business, each outlet generates the same business processes. This enables head office top management, through the development of simple indicators, to see differences in the performance of branches and predict difficulties. Moreover, on the basis of these indicators it is quite possible to build a staff motivation system. In addition, by constantly comparing and analyzing the results of each division, it is highly likely that trends in business development as a whole can be predicted.

The simplicity of calculating financial indicators is ensured by a transparent form of presentation of financial or management reporting. All necessary data is contained in the balance sheet and profit and loss account. Management can obtain information for any period as quickly as the accounting system used allows it. In practice, this time ranges from three to five days to 20. This period is quite acceptable in order to carry out management influence in a timely manner.

The development and comparison of indicators should be carried out by an internal business analyst, due to the need to provide accurate data. He must clearly understand all the pros and cons of each of them. After all, indicators applicable to evaluate a top manager and the business as a whole often cannot be used to evaluate any department. This is explained by the specifics of the work of each structural unit. For example, to evaluate the head of a responsibility center, an indicator of the profit remaining at the organization’s disposal before taxes and interest (EBIT - earnings before interest and tax) is suitable. However, this indicator is completely inapplicable to assessing the work of a customer service manager. The fact is that EBIT is purely a financial indicator. It characterizes the efficiency of doing business, that is, it directly depends on the company’s income and expenses. The customer service manager does not directly influence these numbers. His work should be assessed by another, non-financial indicator. For example, the number of customer claims settled or the percentage of this number to the total number of claims.

Basic requirements for KPIs

The value of the indicator system does not lie in monitoring data according to the “count-compare-forget” principle. The main thing is that it allows you to identify patterns of business development as a whole or individual business processes. In addition, KPI indicators are used in short-term and long-term budgeting. After all, a budget in its essence is a set of financial indicators that lead the company to the fulfillment of pre-planned strategic and tactical goals. Moreover, usually the main one is making a profit, the same EBIT, in accordance with which the work of a top manager is evaluated. This is the relationship between the KPI system and budgeting. But the system of key indicators is not limited to just the connecting function of budget support. In addition, KPIs perform other functions, for example:

• allow you to evaluate the work of each employee or group;
• help motivate staff to achieve results;
• increase the responsibility of each employee for their area of ​​work;
• provide an opportunity to develop and improve the most promising areas of business;
• provide management with a basis for finding “weak” points in the business
• show in an accessible and visual form the influence of a particular process on the result;
• give meaning to every management decision.

When developing a KPI system, you should take into account certain requirements that apply to each of the coefficients:

Each coefficient must be clearly defined, then any user can measure it. Including the employee, whose results are assessed using this indicator. For example, organizing simple accounting at the workplace of a customer service manager makes it easy for him to calculate “his” KPI using data that is always at hand.

Approved indicators and standards must be achievable. The goal should be realistic, but at the same time be an incentive.

Each of the indicators should be the responsibility of those people who are being assessed.

Indicators should contribute to the motivation and growth of staff efficiency, and this is directly related to goal setting. So, if the sales department fulfills the plan to attract new clients (KPI - the number of new clients attracted during the period), the department can count on an additional bonus. If the plan is not met, on the contrary, no bonus is paid.

The indicators must also be comparable, that is, the same indicators can be compared in two similar situations. For example, the average receipt (KPI - the ratio of average daily revenue to the number of receipts per day) cannot be compared in a store located in a regional city and a store of the same format, but located in the outback.

The dynamics of changes in the coefficient must be able to be presented visually (graphically), so that conclusions can be drawn and decisions can be made based on the results.

And finally, each indicator must have meaning and be the basis for analysis. At first glance, the principle is banal, but it is fundamental. For example, let's take a KPI such as the ratio of the amount of expenses for maintaining the administrative apparatus to the total amount of profit. Formally, oddly enough, such an indicator satisfies all of the above criteria: it is quantitatively measured, can be normalized, presented graphically, shows dynamics, and so on. But let’s think for a second, what is its meaning and what does such a coefficient show? Of course, this example in a grotesque form shows the operation of the principle of correspondence of form to content. However, in practice, when developing KPIs, similar incidents can occur. Particular attention must be paid to the implementation of new indicators, involving experts in the analysis process. They can be managers, as well as the most trained specialists of financial and commercial structures of enterprises.

Examples of using indicators

In addition to generally accepted indicators (usually financial), each company will also have to develop its own. This is due to the fact that there are different specifics of the business and different goals that are determined by the owner. Thus, a developing business can be assessed using the already mentioned EBIT ratio. But a company that has already passed the period of its formation can be assessed by the level of gross profit (Gross profit) or, alternatively, by the level of profitability (Gross Margin). At the same time, of course, other “related” components of the activity are also analyzed: administrative, general, marketing expenses, etc.

In conclusion, it makes sense to list a few of the most common KPIs (see table). They can be used to evaluate a particular manager or department. By filling out a similar table for each of the indicators being developed, a manager at any level will be able to find the answer to the question of what he wants to improve in his work or how to use existing resources more efficiently.

Examples of performance indicators

Index	What does it mean	Who is being assessed?	Possible frequency of calculation	What can it be used for?
EBIT, profit remaining after taxes, interest and dividends	Profit remaining after taxes, which is affected by levels of income, expenses, investments (depreciation)	General Director, branch directors responsible for the revenue and expenditure parts of their budget		Calculation of bonuses, self-financing reserve, obtaining loans, assessing return on investment, etc.
Gross Margin, level of profitability (usually as a percentage)	Ratio of gross profit to revenue (total sales)	Heads of departments, business areas developing a product or service	Annually, monthly, and up to the product or technologically completed process	To assess the prospects for product development, the impact of demand for a product or service, the impact of competition
Turnover ratio, personnel rotation	The ratio of the total number of people laid off during the period to the average number of employees for the same period	HR director, heads of structural divisions of the company with a separate staffing table	monthly, quarterly annually	To assess the impact of staff turnover on business results, predict the periods of the most active search for personnel, determine the loyalty of each category of employees, to identify hidden savings reserves, assess the efficiency of the personnel apparatus
Average sales volume	Sales volume (in pieces, monetary units) that each seller brings	Sales department, sales manager	Daily, weekly, monthly, quarterly, annually	Planning the revenue side of the department's budget, measuring the performance of each person or department and, as a result, distribution of the bonus fund, identifying seasonality
The ratio of the turnover periods of receivables and payables (as well as each of the periods separately)	The ratio of the average payment period for buyers to the average payment period for suppliers	Customer service department, financial department, commercial department, sales department	Monthly, quarterly, annually	Planning cash flows and cash gaps, obtaining loans, calculating deferred payments under contracts, establishing discounts for early payment, identifying internal sources of financing

Motivation of employees based on work results

Using key indicators, you can evaluate the performance of each employee - from the cleaner to the top manager - and calculate their bonus accordingly. This contributes to the development of motivation among employees, because they understand that the size of the bonus depends on their efforts. However, when implementing KPI, or more precisely, when determining key performance indicators, you may encounter some difficulties. It is not easy to isolate the success parameter “in its pure form,” and the higher the employee’s position, the more difficult it is to separate the factors that depend only on him. Then, each parameter must be assessed in monetary terms.

KPIs are Key Performance Indicators. Indicators vary. Key ones are those that affect profit. The indicator itself may change quite a bit, but the profit can change significantly.

For example, the owner of a barbershop calculated that if he increases the average bill of a barber by 100 rubles, annual revenue will increase by 300 thousand rubles. If expenses remain the same, profits will increase. The average check of a barber for a barbershop is a key indicator.

Why are KPIs needed?

The purpose of KPI is to make life easier for the head of the enterprise, the business owner and ordinary employees. I implemented a KPI system when our team grew from two people to 22. Too much time began to be spent on solving operational problems, and there was not enough time for direct directorial responsibilities. Thanks to KPI, I have delegated authority and responsibility to the level of department heads and ordinary employees, but nevertheless I control everything.

When KPIs are not useful, the fact is that the company is not working with them correctly. This is exactly what happened to the co-owners of a cosmetology clinic. They worked with the sales funnel, collected indicators, but did not know what to do with them next. And when we figured out what indicators affect and who should be responsible for each, in three months we turned the business from unprofitable to profitable.

How to work with KPIs

We implement KPIs

Authors of books on management depict the implementation of KPIs as a multi-stage procedure: describe the organizational structure of the company, financial structure, business processes. With this approach, the process threatens to drag on for at least six months. Large businesses may be able to do this. But small businesses cannot afford to mark time for so long.

But there is an easier and faster way. You will need to determine which indicators have the most significant impact on profits and who in the company influences these indicators. There is no universal set of indicators. They are individual for each business. For online sales, the key indicators are cost per click and website conversion. For a call center - the duration of operator conversations.

We identified an indicator that affects profit, understood who it depends on, and appointed someone responsible.

We motivate staff

The next step is to create a staff motivation system. The popular option, when an employee’s bonus is tied to the overall result of the company or division, does not work well. The employee is responsible for his own results. But how will it affect the results of colleagues? Therefore, you need to know what a specific subordinate influences and is responsible for, and tie everyone’s bonuses to their individual results.

It is necessary to take into account whether the employee directly or indirectly influences the financial result. Our team includes an editorial team that produces content for the site. Content works to increase demand, but indirectly. The editorial office is a cost center. Therefore, there is no point in tying the editor-in-chief’s motivation to profit. But the sales department has a plan for the number of calls and the conversion of applications into sales. They directly affect revenue.

A sign of a good KPI motivation system is when an employee in the middle of the month sees how much has already been done and what needs to be done to get as much as he wants.

Drawing conclusions based on KPIs

Employees do not always achieve targets. And not always through your own fault. When you see that something is going wrong, do not rush to shoot the staff in the corridor. First, figure out what the reason is. If the employee is not at fault, then we need to help him and create conditions under which he can achieve target indicators.

If an employee does not fulfill the plan from month to month and the problem is with him, all that remains is to replace him with someone who will cope. Neither charm nor the good attitude of management will save you here. These factors are powerless against indicators.

We audit the KPI system

Implementing and establishing a KPI system is not everything. You must understand: the system you have implemented is not once and for all. Things are constantly changing in business. With each change, the KPI system may need to be adjusted. You need to be prepared for this.

When you need to adjust the KPI system, figure out which indicators are no longer relevant, which ones need to be replaced, and who should be responsible for the new indicators. It is easier to adjust a system than to create it from scratch.

The motivation system also needs adjustment. This is best done with the involvement of employees. Every employee has personal goals. And the motivation system works best when both you and the employee understand what he wants and what he must do for the company in order to realize his personal goals. If an employee wants to earn 150 thousand a month, let his salary be 75, and the rest - bonuses. So he will understand that he costs 75 thousand, but can earn 150 if he is a successful professional.

Remember

• Understand what indicators affect profits and who in the company influences them.
• Select the key indicators that have the greatest impact on profits and assign responsibility for them. Set 2-3 clear KPIs for each department.
• Motivate employees based on their key indicators.
• Monitor whether employees are achieving targets.
• When the indicators are not achieved, figure out what the reason is. If an employee needs help, help. If this is the case, replace it with something else.
• Constantly audit the KPI and motivation system. Make adjustments when you realize the system needs them.

How, after all, to develop a really working KPI system in a company? There are many methods, there are individual examples, but it is practically impossible to find an algorithm for developing a real KPI system. I hope the reader will be interested in the proposed algorithm for developing a KPI system “from scratch” (when there is nothing yet), ending with the final result - a working system. About this in this article.

“God is not on the side of the big battalions, but on the side of the best shooters.”

Voltaire

In the article “How to develop a motivation sheet for a seller? Strategy and Tactics,” which was published on December 27, 2016, showed specific KPIs for sellers, taken from the author’s real practice.

In this article I will try to give an algorithm for creating a KPI system in the company as a whole. Using the example of a design company (IT company) implementing large and technically complex projects.

KPI - Key Performance Indicators- key performance indicators of a division, company or enterprise. The Russian abbreviation uses the abbreviation “KPE”.

I'll start with the main thing. Questions that usually arise are:

1. Where can I get these same KPIs, and what should they be? Will these KPIs be achievable, and how can this be determined?
2. Which KPIs are important and which are not?
3. How can you use KPIs to link key areas of a company’s activities, so that KPIs for marketing do not contradict KPIs for sales?
4. What project implementation methodology should I use? Let's say we chose the Balanced Scorecard (BSC) methodology - Balanced Scorecard. What should you do next?
5. Where to start such a project, and how should it end? Etc.

There are a lot of questions. The answers, as usual, are many times smaller.

In the article “How to develop a “Leader’s Steering Wheel” for managing a large company,” which was published on January 10, 2017, there is some material on this topic, since the basis of the “Leader’s Steering Wheel” is the KPI system.

If a company has a business development strategy, strategic goals are the basis for strategic KPIs, which are easy to decompose into individual divisions of the company. We will not consider this case in this article.

Let's consider an algorithm for creating a KPI system when the company does not have a business development strategy. Step by step.

Step 1. Select the methodology for implementing the project to create a KPI system. For example, the Balanced Scorecard (BSC) methodology. I wrote about this in the article “How to develop a “Leader’s Steering Wheel”,” but I will repeat it. These are the classic 4 “walls”. See Fig.1. The essence is short:

A. Finance. Finance in the company is provided, after all, by sales of goods and services.

B. Sales. In order for sales to go well, we need technologies/products - those that are in demand by the market and those that can be offered (sold) to the market.

C. Technologies/products. In order for everything to go well with technologies/products, we need specialists - people who create them.

D. People. In order for people (capable of this) to create competitive products, they need to be paid, they need to be trained and developed, etc. Then they will create products, the products will sell, and the company’s finances will be fine. Then the company will be able to invest in people again and again to create new technologies/products. Technical specialists (production personnel) implement projects for which customers, in fact, pay money.

Rice. 1. The essence of the Balanced Scorecard (BSC) methodology is very simplified.

Step 2. We form the structure of the main areas of the company’s activities. For example, for a design company it is:

"Wall" A

A set of more complex macro parameters. Somehow: liquidity indicators, capital structure, business profitability, business activity and others will not be considered in this article.

"Wall" B

2. Sales.

3. Marketing.

"Wall" C

4. Key areas of development(their condition). Let's say this is the modernization and expansion of the product line.

5. Presale.

"Wall" D

6. Production(implementation of projects).

7. HR(personnel Management).

Comment: it is worth noting that many companies add their own “walls” (5th, 6th) to the classic 4th “walls”, which are the most important in the company’s activities. For example, a logistics block.

Step 3. Determine the areas that we want to strengthen. Or areas in which we have obvious “points of failure.” “Failure points” are not complete business failures. This is something that doesn't work, or doesn't work very well. The task is clear - to eliminate “points of failure.” There are such “points of failure” in every company.

Sample task. Let's say that, in general, everything is more or less normal here, except for the fact that Industry Segment 1 stopped making a profit, but we see that it is promising Industry segment 2(or a new promising niche) that you urgently need to start working with.

Example of an action plan.

1. Prepare/adjust the product line for the new Industry Segment 2 (for short, a new industry - “BUT”). This is the “wall” of S.

2. Find a professional sales director for “NO”. This is the “wall” B and D, since this is a task for the company’s sales director and for HR.

a. Develop a client profile “BUT”. This is "wall" B.

b. Develop a profile of the director of "NO". This is "wall" B.

c. Develop the main parameters of motivation for the director of “NO”. This is "wall" B.

d. Develop a motivation sheet for the director of “NO” and approve it. This is "wall" D.

e. Carry out a search/hunting for the director of “NO”. This is "wall" D.

3. Form a new industry department - for short - “NOD” - (budget, responsibility centers, staffing, etc.). This is "wall" B.

a. Assign tasks to the director of “NOD”. This is wall "B".

b. Develop the main parameters of motivation for “NOD” sellers. This is “wall” B.

c. Develop motivational sheets for “NOD” sellers and approve them. This is wall "D".

d. Search/hunt sellers in "NOD".

e. Transfer some of the sellers, hire some to work at NOD, and possibly fire some. This is "wall" B and D.

4. Set pre-sale tasks to promote the company’s solutions in the “BUT”. This is "wall" D.

5. Set marketing tasks to promote the company’s solutions in the “BUT”. This is "wall" B.

An example of a tree of goals and KPIs.

"Wall" C

KPI (Technical Director):

• Prepare/adjust the product line for “BUT”.
• Set pre-sale tasks to promote the company’s solutions in “NO”.

"Wall" B

KPI (Company Sales Director):

• Develop a client profile “BUT”.
• Develop a profile of the director of "NO".
• Develop the main parameters of motivation for the director of “NO”.
• Create a “NOD” (budget, responsibility centers, staffing, etc.).
• Assign tasks to the director of “NOD” (after HR finds the director).
• Set marketing tasks to promote the company’s solutions in the “BUT”.

KPI (Directors of "NOD"):

• Develop the main parameters of motivation for “NOD” sellers. Coordinate them with the company's sales director and transfer them to HR.
• Look at sellers (existing and new), make decisions.

"Wall" D

KPI (HR Director):

• Develop a motivation sheet for the director of “NO” and coordinate it with the Sales Director of the company.
• Search/hunt for a “NO” director (find a professional sales director).
• Develop motivation sheets for “NOD” sellers and coordinate them with the “NOD” director.
• Search/hunt sellers in "NOD".
• Transfer some of the sellers, hire some to work at NOD, and possibly fire some.

Comment: it is clear that there are tasks for “wall” A - to plan new expenses in the company’s budget, etc.

So, we have formed a tree of goals and set goals and objectives that will ensure the creation of a new industry department (SOD).

1. The department will need to be headed by a professional sales director in this industry.

2. We have planned all the necessary actions related to closing or downsizing Industry direction 1, if it cannot be closed yet.

3. The technical department, marketing, HR and pre-sales have been assigned appropriate tasks, which must perform their part of the work, according to their profile, and support the new direction “on all fronts”.

Dear reader, will probably think: “It’s easy to say: hire a professional sales director for a new industry segment!” Difficult! How did the author do it? I created several lists for HR.

1. List No. 1. Large and medium-sized companies in which it makes sense to look for a director or deputy director of a similar direction. It doesn't work, then:

2. List No. 2. Smaller companies where it makes sense to look for a director. The person will grow a little, but he will be within a more established company. And for him this will be career growth. It doesn't work, then:

3. List No. 1. Look for a strong salesperson in large and medium-sized companies, not a manager. Also for growth. It doesn't work, then:

4. List No. 1. Look for a director close to your industry, taking into account his ability to master a new industry.

5. Etc. There were other options.

By the way, the HR service, having received such lists, could quickly figure out where and who to look for. As a result, candidates were usually found.

“For a man who does not know which harbor he is heading for, no wind will be favorable.”

Lucius Annaeus Seneca the Younger

KPI details can be generated using, for example, the well-known S.M.A.R.T goal setting methodology. That's why,

Step 4. Study the goal setting methodology that will be used when setting goals.

For example, the goal setting methodology S.M.A.R.T.

Go ahead. We have identified areas that we want to strengthen. Or areas in which we definitely have “points of failure.” What's next? Next, we develop an action plan (see example above) that will allow us to strengthen these areas and/or eliminate “failure points.” Without a holistic action plan, it is not realistic to build a KPI system that will unite the work of various company services. In any case, it's quite difficult.

Step 5: Develop an action plan.

In Step 3, I showed an example of an action plan, not the most trivial, but which can be implemented, and such action plans are quite often implemented by companies. What is important? - a meaningful approach to problem solving!

Step 6. Checking the action plan for feasibility.

Experience shows that most often, it is immediately clear which points of the plan are definitely feasible. The main thing is to look carefully at those points that clearly raise doubts. And either think a little (for example, brainstorm), or involve experts, or perhaps take another, simpler route. But you should not set clearly impossible (unattainable) goals and objectives!

Step 7. Building a tree of goals (and tasks).

So, there is an action plan. There are goals and objectives. All that remains is to build a tree of goals (and tasks) and assign those responsible. If new Responsibility Centers have appeared - well, these functions did not exist before - then it is necessary to modify the organizational structure of the company in accordance with the new Responsibility Centers. This is, in general, how companies grow.

Step 8. Formation of a list of KPIs with the appointment of responsible employees for specific KPIs.

An example of a tree of goals and the formation of a list of KPIs based on an action plan is given in the example above.

Step 9. Formation of motivational sheets.

Until quality goals similar to those (given above) appear in the motivation sheets (and in the example above there is not a single financial goal!), the KPI system will not work! It will remain “on paper”. What is given in the example above is what needs to be done urgently! Exactly in order not to “accumulate” a bunch of extra costs, and what’s even worse - losses, and exactly in order to ensure the further growth of the company as quickly as possible. Of course, financial!

“It is impossible to solve a problem at the same level at which it arose.

We need to rise above this problem by rising to the next level.”

Albert Einstein

How to implement such a project?

I very often hear “we tried, but it didn’t work!” There are quite a few reasons why such projects do not reach the operational stage and the final result.

We often forget that a person is not a machine. Therefore, based on my own experience, I would recommend the following:

1. Start with small pilot projects, limited by the company’s areas of activity and the range of tasks. The goal is simple - quickly develop a skill. It is not at all necessary to immediately put the developments into action. You can simulate the situation (see point 3).

It is not always effective to launch a large and complex project.

Example. Motivation systems in large companies, as a rule, take 2-3 years to perfect. In one of the companies I worked for, we arrived at a balanced new motivation system only after 3 years. Moreover, already in the first year a fairly good and correct motivation system was developed. The second year we had to make her more aggressive. In the third year, the motivation system was already balanced, including by the market, and tested in practice for 2 years. Of course, subsequently the motivation system was adjusted every year.

2. Small pilot projects are best done in the simplest and most understandable tools (for example, Word or Excel). To start. The main thing is that this is the content of such projects, “put on paper.” When implementing a very small task, mistakes made (and they will be!) can be quickly corrected.

3. Carry out a full cycle of modeling - from solving some small problem to forming KPIs with the conditional “appointment” of those responsible and the formation of conditional motivation sheets.

Example. Let’s say the company does not have motivation sheets (yet), there is no KPI system (yet), and the company has not previously implemented this project. How to simulate the situation? Follow steps 1-3. KPIs should not be assigned (!), and motivation sheets should not be handed out (!). Just entrust the responsible manager with what is prescribed for him. And then compare what was planned and what actually happened.

It is extremely important to try to avoid “classic” mistakes. To do this you need to do the following:

1. Be sure to formulate the final goals of the project to create a KPI system. The goal - “set KPI” - is “clear”. But this is the same as “increase business efficiency”, “ensure further growth of the company”, etc.

Let me give you an example of the range of practical goals for creating a KPI system:

a. Goal 1.1: checking the competencies of managers and key employees in order to identify “points of failure” (incompetent employees) and promising employees (capable of growth). Still, key performance indicators should (and do!) show efficiency and inefficiency.

b. Goal 1.2: checking the effectiveness of the company’s business areas (sales, production, pre-sale, marketing, etc.) for the same purpose.

c. Goal 1.3: checking the effectiveness of business processes and communications in the company. Most major goals and objectives are implemented by various departments. The growth of the company depends on the coherence of their work. No more and no less! This is the very efficiency that we often talk about.

2. The action plan must be checked for feasibility. So that there are no unattainable goals (and tasks) in it.

3. Be sure to assign responsibility for specific KPIs. At least simulate it (for starters). So that it doesn’t turn out that no one is really responsible for specific KPIs.

“What is everyone's business is no one's business» .

Izaak Walton

4. A project to create a KPI system must end with motivational sheets. So that the generated KPIs do not turn out to be “outside the law”. If this is a pilot project, let it be several KPIs for a period of 2-3-4 months. This is also correct.

A case study based on the Balanced Scorecard (BSC) methodology.

I will give an example based on the above, taking into account the mentioned methodology and in the form of a sequence of practical actions. Let's say you start at the top of “Finance” and you are worried about the “margin” indicator. It is clear that there are a lot of ways to increase the marginality of projects, so there is no point in listing all these methods. You need to choose methods specific to your company, and also identify the reasons for insufficient margins.

So, a very conditional plan - just for example.

1.KPI-1. Increase project margins by no less than 7% over a period of no more than 6 months.

Let’s say the key reasons for insufficient project margins are the following (conditionally):

• High project costs due to failure to complete projects on time.
• Most projects themselves do not have sufficient margins. Further, we often miss deadlines and budget, and the margin becomes even smaller.
• There is no opportunity to select more profitable projects from the existing portfolio of projects. There are already few projects, and there is almost no portfolio of potential projects.
• The high cost of purchasing equipment for projects, which does not add to the margin.
• There are no unique (almost unique or high-quality) services due to which the company can “charge” additional money for projects.
• Etc.

From here, KPIs of the next level “grow” for a number of company services. Namely (again - conditionally):

2. KPI-1-1(for the Technical Directorate and Project Managers (PM)): completing projects on time and within the project budget. KPIs for the project were met - the RP received a bonus. No - you need to figure out why, and perhaps change the RP.

3. KPI-1-2(for the Marketing Block): calculate industries, segments and niches that are more solvent than those with which the company operates today. Prepare a presentation and justify your proposals. During<такого-то срока>.

4. KPI-1-3(for the Sales Unit): create a portfolio of projects with a volume of at least<такого-то>, for at least<такого-то срока>(in close cooperation with marketing, so as not to waste time). To have the opportunity to select projects for implementation.

5. KPI-1-4(for the Procurement Block) not yet. Initially, you can set a task - work it out and give suggestions on how to reduce the cost of purchased equipment for projects.

Today, many companies are trying to force 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 the same, the tasks are different

KPI is a system of indicators with which employers evaluate their employees. It has much in common with the conventional planned approach. With one major difference: the performance indicators of each individual employee are tied to the general KPIs of the entire company (such as profit, profitability or capitalization). The purpose of the system is to ensure that the actions of employees from different services 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.

Working on KPIs allows specialists to better understand what they need to do to be effective. “Efficiency” refers not only to the amount of work done per unit of time, but also to the benefit received by the company from the employee’s activities.

In each department, the company’s general KPIs are “split” into smaller, personal ones. There shouldn’t be too many key indicators for each. Three to five clearly defined KPIs are enough. The main thing is that each of them can be easily measured. An example of indicators from one of the sales managers: “sales volume is not less than...”, “the number of new clients is not less than...”, “the size of the average contract for a client is within...”, “the level of English knowledge is not less than.. ."

Measure of result

In large Western companies, where everything is spelled out and detailed to the maximum, working according to the KPI system is a good option for employees. The specialist understands how much, for what and when he will receive extra salary. And what is included in his salary. Clear, documented information about what the employer expects from you makes your job much easier. Each employee has personal tasks and deadlines for their completion, and the company regularly monitors his work using assessments.

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 compiles lists of the most promising specialists to include them in the company's personnel reserve and promote them to positions.

But if the “head office” helps foreigners in developing goals, then domestic employers act differently in determining the goals and objectives of their specialists. Some invite consultants, others manage on their own: the goals are prescribed by the HR directorate. Since neither the first nor the second know the specifics of the work of each specific specialist, it happens that the indicators are formulated inaccurately.

At the end, the employee is faced with the fact that his KPIs turn out to be impossible to achieve. Or, on the contrary, such a system allows a specialist to find legal “loopholes” so as not to strain too much. The IT director of the industrial holding, Alexander, recalls that before the implementation of KPI, the “sysadmins” subordinate to him solved user problems “on the first call.” Now, when calls like “Help! Computer froze!" they react “in a bourgeois way.” They demand that you write a request with the essence of the problem and pass it on to the senior “sysadmin”. It is then queued for execution. “Yes, I could do it in three minutes, but it won’t be recorded anywhere. Why should I care about the difficulties of other employees and departments? They will evaluate me based on the KPIs that I am motivated to achieve.”

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 - personnel selection 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 rating, the higher the percentage of salary growth. “Managers' annual bonus consists of two variables, which depend on the achievement of 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 influenced by KPI, can range from 20% to 100% of the salary.

At the same time, the formula for calculating the bonus itself is quite complex: it takes into account the number of KPIs, the rate 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 not compiled correctly, there will be little result from it. For example, if there are too many KPIs, the impact of each on the size of the overall bonus will be small. Economist Lyudmila says that at first she had about 20 KPIs, but after a year they were reduced to five. “Most of the indicators accounted for a small portion of the bonus, and for me the loss of 5% in the bonus was not particularly significant. A 20% KPI weight motivates much more effectively,” she admits.

Disadvantages of the system

One of the main disadvantages of KPIs is that if a department performs poorly, all its employees can lose their salaries at once. After all, personal KPIs are linked to key indicators of the entire department. If targets are systematically not achieved, the employee may be demoted. Therefore, KPI forces you to always be in shape. Those who cannot withstand this rhythm leave on their own.

The disadvantages of working in a key indicator system 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 a secretary or economist sitting in the office will be able to influence it.

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

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

And further. It must be taken into account that planning and KPI calculations take time. The head of the logistics department of a transport company, Roman, is dissatisfied that the introduction of this system resulted in 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 must be agreed upon 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 “quietly sabotage” the innovation, others do not accept it completely and leave the company. It is difficult to immediately change your habits, the order of performing functions, and get used to new conditions of remuneration.

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

The implementation of a KPI system is an important step for a 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, but in our country only large organizations are beginning to gradually introduce a similar approach, and not always correctly.

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

• find out the company’s goals and convey them to employees;
• motivate the team to achieve goals and perform high-quality assigned duties;
• ultimately increase the growth of the enterprise's performance.

But you shouldn’t take KPIs as a panacea. It is not enough to simply “set the bar” for each employee, tie wages to this bar, and watch employees jump over their heads in pursuit of a bonus. The implementation of KPIs is a complex and lengthy process that requires a lot of time and effort from both the manager and employees. The entire 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 work scheme.

KPI is best introduce gradually. Observe the reaction of your employees - if they are negative about this idea, it is better not to rush, but first conduct extensive outreach and training. Only if the staff is favorable towards the changes and understands why they are needed will it bring good results.

Definition of key indicators

It is very important to develop such KPI , which will be consistent with the main goals of your company and will be realistically achievable. That is, those that can be influenced by the employee himself. There is no point in setting indicators that a person cannot influence in any way - for example, the number of calls from the website for the sales department (for tracking connect call tracking). ThisKPI for a marketer or SEO specialist.

Think about what role the employee plays in your company, and what you want him to do better. This could be an option KPI. 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, transactions concluded, the number of CP sent.

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

Marketing job can be assessed by the market share that the enterprise occupies, by the number of attracted customers and by ROI.

ForSEO specialist Key indicators can be site positions, ROI, the number of applications from the site.

Developing KPI, it is very important to correctly write down the calculation formulas, explain them, and agree with each employee. It is important to achieve an understanding of what exactly and how the salary will be calculated for each employee. 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 KPIs 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 could be entering the top 10 companies in its niche in the region, a certain sales turnover, entering the international market, and others. Once you have identified your goals, you need to divide them into important (priority) and non-priority. Otherwise, you may direct your employees' efforts in the wrong direction.

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

Let's take the sales department in your company as an example. Discuss with the department head and employees how realistic it is to increase sales by X percent. To do this, each employee needs to increase the average bill 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 of this department.

2. Introduction to the process, explanation to employees.

The implementation of the system must begin with explaining to employees why it is needed. If you simply implement key indicators, as directed from above, you may encounter misunderstanding and rejection of this system. If the opinions of employees are not taken into account and they are simply presented with a fait accompli, it will not be possible to create a strong team and achieve your goals.

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

Each new employee, when hired, must be familiarized with the performance evaluation system and explained what stands behind each indicator.

3. Control.

Now the next question arises: you need to somehow determine the performance of employees, monitor and keep track of key indicators. This is the only way you can pay them fairly for their work. You will have to calculate and take into account specific key indicators: for example, the number of calls per day for the sales department, the number of units of production for the production department, etc. Therefore, it is necessary to think through and introduce a reporting system and automate the process of recording indicators.

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

You can choose some good tracker for team work - there are a huge number of them on the market.

The ideal solution should:

• ensure control over the work of each employee;
• collect data in a unified format and bring it into one database;
• help calculate payroll.

4. Performance analysis and revision.

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

Analyze the effectiveness of subordinates. A correctly introduced system for assessing key indicators will allow you not only to summarize the results at the end of the month or quarter - you will be able to see inconsistencies even in the process of completing the work. Your task as a manager is to identify such problems in a timely manner and eliminate them.

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

You will also need to periodically 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 the quantitative indicators will need to be revised. You can assign this task to a member of the HR department.

Be sure to give feedback. An employee must understand which actions lead to a positive result and which do not. It may be possible to develop a development system for each individual employee.

What will definitely emerge over time is that you will see who is ready for a promotion and who has no place at all in your company.

Payroll calculation taking into account KPI

The introduction of a KPI system must necessarily influence the procedure for calculating wages. The following scheme is usually used: wages are divided into salary and bonuses. The 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 part directly depends on the employee’s efforts, on how many indicators he has achieved or not achieved.

Common mistakes when introducing KPIs and changing payroll calculations:

• When KPIs are introduced, salaries are cut. If an employee received 15,000 rubles, and after the introduction of a system of key indicators, his salary dropped to 10,000, and the rest still needs to be earned, this poorly 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 should have additional funds allocated for bonuses to employees;
• an insignificant bonus, or, conversely, a too small salary. In the first case, the employee has little financial motivation to work well enough, in the second, too, since if the indicators are not achieved, the person will be left with nothing. And this will discourage new potential employees from working for your company. The ideal ratio is 75% salary and 25% bonus.

You can use the formula for calculation:

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

The implementation of 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 qualitative and quantitative growth of your company. It will immediately become clear which employees are ballast, and those who do their jobs well will be rewarded according to their merits. And most importantly, everyone will understand the common goal of the company and contribute to its achievement.