KPI (Key Performance Indicator) is an indicator of success in a certain activity or in achieving certain goals. We can say that KPI is a quantitatively measurable indicator of the results actually achieved.

The term is most often translated into Russian as "key performance indicator", which is not entirely correct: efficiency characterizes the relationship between the achieved result and the resources expended, and other parameters can be measured using KPI. A more correct translation is "Key Performance Indicator".

KPI and BSC

There is a misconception that KPI is directly related to BSC (Balanced Scorecard). However, the developers of BSC - Norton and Kaplan - did not use the term KPI, but used the term measure - “measure”, “meter”.

There is a rather indirect connection between KPI and BSC: in BSC there is a “business process” perspective, which contains goals related to business processes. Indicators of these business processes - KPIs - are often used to measure the achievement of these goals.

The most relevant use of the concept of KPI is. business process management: KPIs are measures of effectiveness, efficiency, productivity of business processes.

The following types of key indicators are distinguished:

1. KPI result— how much and what results were produced;
2. Cost KPI— how many resources were spent;
3. Operational KPIs— performance indicators of business processes (allows you to assess the compliance of the process with the required algorithm for its execution);
4. Performance KPIs— derived indicators that characterize the relationship between the result obtained and the time spent to obtain it;
5. Efficiency KPIs(efficiency indicators) are derived indicators that characterize the ratio of the results obtained to the expenditure of resources.

When developing process indicators, you must adhere to the following rules:

1. The set of indicators must contain the minimum required number to ensure full management of the business process;
2. Each indicator must be measurable;
3. The cost of measuring an indicator should not exceed the managerial effect of using this indicator.

Algorithm for developing business process indicators

Let's consider the types of key performance indicators using the example of the “Logistics and Technical Support” process of a Manufacturing Company (Fig. 1)
It is most convenient to highlight indicators in relation to the Process depicted in the IDEF0 notation, when the figure shows Inputs, Outputs, Control (process execution rules) and Mechanisms (equipment, personnel). Key performance indicators and performance indicators, being derivatives, when using such a scheme, characterize the process as a whole.

Figure 1. Process "Logistics"

Identify the process and its result.

For example,

The process “Material support” is the result of “Useable inventory items”.

Identify input-resources (resources processed in one cycle of the process) and input-mechanisms (resources that ensure repeated execution of the process - equipment, personnel).

For example,

Inputs-resources of the Logistics Process:

• Applications for the supply of inventory items;
• Inventory assets (materials and materials) - raw materials and materials that must be provided according to the procurement plan or according to supply requests;
• Information about the availability and cost of goods and materials on the market.

Input mechanisms of the process under consideration:

• Equipment of workplaces for supply department employees;
• Supply department employees.

1. Identify control inputs (rules and requirements for process execution)

   For example, the process in question may be regulated by:

   • “Instructions for the acceptance and storage of raw materials, semi-finished products and materials in the warehouse”;
   • “Methodology for selecting suppliers”;
   • “Rules for concluding a contract for the supply of raw materials and supplies”;
   • "Procurement Plan".

2. Knowing the result that should be obtained, it is necessary to evaluate it quantitatively - to form result indicators. They can be either simple or calculated (using a formula or other method).

   KPI 1— the number of applications for goods and materials (inventory items) completed on time.

   KPI 2— % of applications for inventory items completed on time.

   KPI 2 = KPI 1 / Z x 100%,
   Where Z is the total number of submitted applications for the supply of goods and materials.

   KPI 3— % of goods and materials of appropriate quality that entered production.

   KPI 3 = A / B x 100%
   Where, A is the number of goods and materials of appropriate quality entered into production,
   B is the total number of goods and materials received into production.

   Based on the process inputs, cost indicators can be generated.

   KPI 4— Costs of purchasing goods and materials (costs of resources).

   Based on the process mechanisms, additional cost indicators can be generated.

   KPI 5— Costs of carrying out activities (costs of personnel and equipment).

   The correctness of the process, in addition to the cost indicators for carrying out the activity, is also reflected by the performance indicators.

   KPI 6— The number of failures to submit a draft budget to the financial department during the year.

   Performance indicators are calculated as the ratio of the result obtained to the time.

   Performance indicator KPI 7 can be the average number of orders processed by the purchasing department per day.

   KPI 7 = C/r
   Where C is the number of processed applications per month,
   r — Number of working days in a month.

   Calculation of key performance indicators is carried out on the basis of pre-allocated KPI results and KPI costs. Efficiency indicators, therefore, act as integral characteristics of activity.

   Example:
   An indicator of enterprise production efficiency KPI 8 You can consider the cost of completing one application. This indicator is calculated using the following formula:

   KPI 8 = KPI 5 / KPI 1
   Where KPI 1 is the number of applications for inventory items completed on time,
   KPI 5 - Costs of carrying out activities.

Using this principle (the ratio of costs to results obtained), it is possible to calculate both production efficiency indicators and project efficiency indicators or management efficiency indicators.

Practical application of KPIs

Use in the planning and control cycle

Since KPIs are measures of results and costs, they can be used when planning and monitoring activities as elements of a plan.

Indicators whose values ​​can serve as plan elements for the Logistics Department:

• % of timely fulfillment of requests for goods and materials - 99%;
• % of goods and materials of appropriate quality entered into production - 100%.

After the activity is carried out, the actual values ​​of the indicators are measured and recorded. In case of serious deviations of actual values ​​from planned ones for the worse, it is necessary to conduct an analysis of activities and develop corrective measures.

Benefits of using a KPI system c. ordinary activities of the company: planning and analysis of activities are carried out on the basis of the results that the business system needs. All indicators are not invented in the abstract, but “originate” from a process that consolidates the activity necessary for the system. If planning occurs on its own, in isolation from real activities, then often the choice of indicators and their target values ​​does not contribute to achieving the main goals of the organization, but is arbitrary and not always justified.

Staff motivation

When implementing KPIs, the motivation system becomes clear and transparent: since planned and actual values ​​are recorded, it is clear to the manager why and how to motivate the employee. He, in turn, understands well under what conditions and what reward he will receive, and for what he will be punished.

Head of Procurement Department:

• Rewarded for successful achievement of planned efficiency and effectiveness indicators;
• Deprived of bonuses for failure to meet performance indicators (missing the deadline for submitting the draft budget to the financial department);

Thus, thanks to the KPI system, the company rewards the employee for obtaining the results it needs, and the employee is interested in obtaining results on an equal basis with the company.

Key performance indicators KPI (Key Performance Indicators) is a term that came to us from the Western management system. Companies in America and Europe have been using this performance analysis tool for several decades.

KPI allows you not only to analyze, but also to monitor the activities of employees, departments and the company as a whole.

We will look at what key performance indicators are and examples of KPIs in this article.

Key performance indicators KPIs - what are they?

People make more efforts when they believe that they are justified and will help achieve the desired goal.

IMPORTANT: Motivation at the enterprise is built in such a way that the goal of the company itself is achievable through employees achieving their goals.

Of course, employees need to understand the purpose of the enterprise and how they can influence it, as well as what they will receive as a reward for doing a great job towards achieving the goal (for example, an increase in their income).

That is why middle and senior managers often receive a bonus in addition to their basic salary.

How are they developed?

KPI is not a system based on motivation, but just one of the management tools in an enterprise. The peculiarity of this management tool is that employees from different departments in the company meet key performance criteria.

In order to build a KPI system at an enterprise, it is necessary not only to create the list of indicators itself, but also to describe how they will be calculated, as well as create reporting forms for such indicators.

The first thing the director or shareholders must do is to restate the long-term and short-term goals that the company strives for.

Based on these goals, criteria are built, combined into a subsystem, and then into a KPI system. Once KPIs are defined, the manager will need to assign responsibility for their implementation.

Their types

All key criteria can be divided into two large groups:

• lagging;
• operational.

The first ones show the result at the end of a certain period. For example, most financial indicators are lagging indicators, since they can reflect the company’s potential, but they cannot convey how things are going in the company for a specific period of time.

Operational indicators can be adjusted during the reporting period in order to achieve the desired results at the end of it. Using such indicators, you can judge how things are going in the company for a specific period, and you can also use them to predict what to expect in the future.

Moreover, operational indicators make it possible to judge whether the company’s customers are satisfied, as well as how smooth the business processes in the organization are.

Key indicators differ by type:

• indicators result– demonstrate the quality of the result, as well as the ratio of its actual quantity to the expected one;
• indicators costs– show the amount of costs incurred;
• criteria functioning– most often they show how well the algorithm of a particular business process corresponds to the required one;
• criteria productivity– show the ratio of the result to the resources spent on its acquisition;
• indicators efficiency— just like the previous indicators, this group of criteria relates to production assessments and demonstrates the relationship of the result to the amount of resources spent on its achievement.

How the system works

The KPI system is based on two theories: control and management according to goals. The essence of the system is that the company has the opportunity to plan and anticipate the result by meeting certain indicators.

The KPI system is primarily created so that staff, as they perform their direct duties, do not forget that the company has global goals and that if they invest their efforts to achieve them, they will be rewarded. Remuneration most often includes bonuses and other monetary incentives.

Video - how to implement a KPI system in a company:

Currently, such a system is recognized as one of the most effective systems for motivating employees, as well as stimulating their work activities. Of course, first of all, this system is applied to management personnel, for example, middle and senior managers, as well as managers, economists and all those who have a direct influence on the company’s profit, as well as its positioning in the market.

In sales

As a rule, in most sales departments it is customary to reward managers for achieving individual indicators. Thus, you can even find entire nominations, for example, “salesman of the year.”

Of course, such competition sometimes does not benefit the team, because “sales people” begin to work not for the team, but for themselves, so collective incentives and rewards are recommended.

Key criteria in sales are calculated based on financial indicators, for example, such as:

• revenue from sales;
• production cost;
• revenue;
• cost of inventory, etc.

In production

Most often, when implementing KPIs in production, the management of the enterprise faces two tasks: to maintain production volumes, and also to maintain quality at the position level.

Thus, the following types of bonuses can be introduced in production:

• achieving or exceeding production volumes;
• no more than a specific number of claims from customers per unit of time;
• percentage of defective products.

Of course, these are not the only criteria that can be assessed, and depending on the type of product and production volume, the enterprise management can implement a completely different KPI system.

In the service sector

The service sector requires the largest number of key indicators. For example, you can highlight performance criteria, which include the number of sales per day, month, week and year, order size, comparison of the number of orders a month, quarter or year ago with the current indicator, etc.

Marketing in the service sector is also not left without the use of KPIs. The following criteria are distinguished:

• quantity and quality of reviews for the service;
• number of clients who have become regular;
• number of subscribers to the company page on social networks;
• advertising return indicators;
• number of letters received from customers;
• the time it takes to resolve one request;
• effectiveness of affiliate programs, etc.

IMPORTANT: As a rule, in a company in which KPI practice has become the daily norm, constant monitoring of key performance indicators becomes the norm.

After a certain period of time from the introduction of a practice to its successful execution, monitoring it turns into a routine. All subsequent decisions are usually made based on these indicators.

Examples of KPIs

Depending on the position, amount of work, stage of the organization’s life cycle and other important indicators, KPIs will be different for all employees.

So, for a marketer, this will be the share occupied by the company in the market, and for an accountant, it will be the timely execution of transactions for paying taxes, transferring wages, etc.

Let's look at key performance indicators using specific examples.

For the manager

Management is a very loose concept and therefore there are no indicators that could be used both in sales management and, for example, in advertising. Let's look at the main types of management and KPIs.

By sales

Most modern companies today have a KPI system in place, in which sales managers receive a stable salary, as well as a bonus based on the results of sales.

This system is quite understandable and transparent, however, it also has some disadvantages. For example, each “sales person” works exclusively for himself, forgetting about the team; moreover, the quality of service with such an established KPI system suffers greatly, since management is aimed exclusively at increasing sales.

Video - key performance indicators KPIs for a sales manager:

An alternative to such a KPI system is a system that combines several indicators. So, in order to calculate the effectiveness of a person in the sales department, it is necessary not only to find out how many purchases he helped clients complete, but also how satisfied they were with the purchase.

By purchases

The functions of a purchasing manager vary greatly depending on the company's field of activity. In its most simplified form, it is simply the selection and purchase of goods.

The maximum possible areas of responsibility of a purchasing manager are:

• Inventory Management;
• making purchases;
• price analysis;
• product promotion;
• launch of new product lines.

KPI indicators for a purchasing manager include not only economic indicators, but also qualitative ones, i.e. criteria for the manager’s activity.

So, when calculating KPIs you can use:

• timely payment to suppliers;
• no delays in placing an order;
• analysis of product prices from competitors;
• launch of new product lines.

By advertisement

Depending on the volume of tasks performed, the focus of the company, as well as the skills of the advertising manager, the following KPI indicators in advertising management are found:

• effectiveness of advertising campaigns;
• effectiveness of promotions;
• merchandising;
• the number of new clients of the company;
• efficiency of working with Internet sites and social networks.

In trade

Key criteria in retail may or may not be financial. KPIs in retail should be used constantly, because they greatly simplify the life of any organization associated with retail trade. Analysis of indicators will help not only determine the company’s future goals, but also identify all existing shortcomings in the existing business model.

For a grocery store clerk

The following indicators can be used to evaluate the work of a grocery store seller:

• sales growth;
• sales volume per physical unit (for example, per 1 sq. m. of sales area or the length of a display case);
• sales volume per 1 transaction performed;
• sales volume per 1 hour of work.

Also, in addition to the above indicators, you can use such a value as the efficiency of use of goods. Product utilization efficiency involves calculating the ratio of net sales over a certain time to the amount of inventory.

For seller of non-food products

For a non-food seller, some indicators may be involved that are similar to those for a food seller. So, this could be the sales volume for 1 hour of work. In addition, the following criteria should be taken into account:

• average purchase receipt;
• number of returns over a certain period of time;
• salary intensity criterion.

For other professions

Sometimes the KPI system is introduced not only for the management team, but also for people involved in the sales process, but also for other employees of the company.

For employees involved in production, the key performance criteria will be, for example, the growth of labor productivity, the relative release of workers, wage intensity, as well as the increase in production due to increased productivity.

The main indicator of work efficiency accountant is the payment of all main payments on time, as well as an indicator of interaction with tax authorities and extra-budgetary funds.

For lawyer The main performance indicators will be the percentage of claims closed out of court by the company's counterparties, as well as the percentage of cases won in court.

Conclusion

KPIs are indicators of an organization's performance. created to achieve its goals. Performance indicators are an indicator of what success a company has achieved at a certain stage of its activities.

In order to develop and implement such a system in an organization, it is first necessary to determine goals, on the basis of which a list of performance indicators will be built.

In addition to compiling a list, the head of the organization should assign responsible persons, as well as determine the form of reporting on indicators.

Depending on the focus of the company’s activities, its stage of the life cycle, as well as other important indicators, employee KPIs can be completely different.

So, for one advertising manager, only one efficiency criterion will apply - the effectiveness of advertising campaigns; for another advertising manager, in addition to this criterion, the criterion of working with promotions on social networks will also be introduced, etc.

Optimal conditions for opening and maintaining a current account for entrepreneurs

In this article you will learn

• What is KPI and what types of key performance indicators are there?
• Why KPI systems often don't work
• How much does it cost to implement a KPI system in a company?

This article is about developing KPI in organizing and understanding the necessary criteria that need to be taken into account to increase the effectiveness of the implementation of the new system.

Any personnel motivation system should be aimed at finding connections between the goals of the enterprise and the employees themselves. The effectiveness of such a link between personal and corporate goals is possible in a situation where employees clearly understand the goals of the enterprise and understand the opportunity to influence their income (and not just receive a standard salary that does not depend on the employee’s performance). Therefore, the remuneration of employees at the level of department heads should include a variable part - approximately 25% of total income.

What is KPI?

The KPI system itself cannot be considered a personnel motivation system. It is simply a tool for the control system. Today, almost any indicator is usually called KPI. I can’t understand why many enterprises name the payment of percentages on sales to managers as a KPI. Or why KPI is usually called the coefficient of labor participation - probably just some fashion trends that are not entirely correct.

KPI – key performance indicators (performance indicators). Setting up a management system for KPIs is based on the ability to achieve the main goal of the enterprise by meeting the performance indicators of employees from various departments.

Types of KPIs

1. Target indicators. These indicators reflect the degree of proximity to the goal. We will pay special attention to these target indicators in the article.
2. Process indicators. Evidence of the effectiveness of the process. They allow you to evaluate whether a certain process can be completed faster or costs can be reduced without affecting quality.
3. Design indicators. These indicators are related to specific project goals - they indicate the effectiveness of the entire project and its individual parts.
4. Indicators of the external environment. These indicators cannot be directly influenced. However, they must be taken into account, for example, when developing targets. External KPIs include price fluctuations and the current price level on the market.

Is the KPI system effective in small businesses?

It makes no sense to introduce KPIs if the enterprise does not have a management system in place - when success depends solely on the efforts of the owner, who combines the functions of the chief financier, general director, and chief personnel officer (mostly these are enterprises in the 1st phase of development).

The success of KPI integration is not affected by the number of employees. Another condition must be met - appropriate business maturity and an adequate accounting system. One of the classics of management emphasized that it is impossible to manage what cannot be counted. KPI – countable key indicators. They can be qualitative (in the form of ratings, points, etc.) or quantitative (time, money, volume of goods, people, etc.). However, in any case, key performance indicators must be countable for objectivity and comparison of data.

A mature accounting system does not necessarily include, for example, a fancy CRM module or other popular applications. It is possible to fix and process the corresponding parameters in Excel. The main condition is maintaining not just formal accounting records in the company, but also management ones. Consequently, there will be a clear understanding of the trajectory of your money, the budget of income and expenses, there will always be an understanding of business trends, with the ability to calculate the balance.

When deciding on the relevance of KPIs in your company, you need to take into account that implementing the system will require expenses of at least a million rubles. Therefore, when investing in such a project, it is necessary to understand the expected return and the period of its receipt. If your system is operating normally, with the achievement of your goals and business development, but at the same time you are using long-standing, proven management tools, you need to switch to settings for KPIs only for a certain expressed reason, and not just to follow fashion trends. The KPI system will ensure the effectiveness of the result within the framework of projects of product diversification, significant scaling of your business, increasing market share by an order of magnitude, entering the regions, etc.

KPI development: how to implement key performance indicators

It is recommended to develop KPIs in a top-down hierarchy - from the main goal of the enterprise to the goals of departments and functionalities. Sometimes formation begins from the bottom - from the indicators and goals of a certain performer (usually from a top manager to a middle manager), then the path begins upward to the formation of a common goal. Indeed, at the level of everyday consciousness, one gets the impression that it is much easier to set a goal for an employee than to achieve an understanding of the overall goal of the organization. But under this condition, there can be no guarantee of achieving the desired results on the scale of the entire enterprise if the focus is on individual employees. Consequently, it will be necessary to verify the compliance of individual goals with the overall goal of the enterprise. In fact, you will need to do the same work twice.

Determining the overall goals of the enterprise when implementing KPIs

First of all, when planning to create KPIs, a company needs to answer the question “why?” Why does the company operate, for what purposes did it come to the market, why do consumers need it?

The answer to this question will determine the chosen direction of activity in the market - from its current position to the chosen final goal.

You need to determine your goal, which is set for the long term - for example, after 3 years. When formulating an answer, it is not recommended to focus your attention on financial aspects. After all, finance is a fairly relative component, as confirmed by the recent crisis.

It is better to formulate the goal in such a way that the financial desire follows from it, but is not clearly stated. Thanks to this, the stability of the system increases, despite changes in market parameters. The goal should not be related to a specific unit, but to the market - therefore, actions will be initially tuned to market changes.

You can formulate your goals as follows: to be among the top three leaders in the Russian yoghurt market, to break into the TOP 10 companies in the furniture market, to enter the market of terminal communications in Moscow and St. Petersburg, and to become a leader in certain regions.

From the formulation of goals in the form of a desire to achieve high or leading positions in a particular market, all financial aspects will follow. The goals for profit, turnover, cost share and growth dynamics of the enterprise will become clear.

After determining the overall goal of the company, it will need to be divided into subgoals by asking the question “What needs to be done to achieve the main goal?” What you should immediately pay attention to is not what needs to be done, but what “to do.” In the context of this formulation, “doing” means moving in a certain direction. And “to do” presupposes the implementation of a specific event. If the main goal of the organization is presented as a specific action plan, then there is a risk of not achieving it if one of the planned events turns out to be impossible. If the direction of your movement towards the goal is correctly set, there will be the possibility of maneuver - therefore, it is possible to choose plan A, plan B, etc.

KPI selection

In most cases, there are no problems when compiling a list of possible KPIs. Because managers are well aware of the parameters by which the performance of departments can be assessed. However, problems accompany the selection of key, most significant KPIs.

The presence of multiple key performance indicators, similar to the choice of only one indicator, leads to a deterioration in management capabilities. Because too many indicators complicate the calculation procedure. When choosing only one key performance indicator (KPI), two options arise - to confirm its achievement or non-achievement. But there is no room for maneuver by making changes to the work process in situations where the results do not meet expectations.

Consequently, only a set of several top-level KPIs – preferably two or three – allows for flexibility. They can be selected based on assessing the significance of each KPI by analyzing their weight.

For each indicator, an expert weight is assigned so that the combined sum of the weights of all KPIs is unity. You don’t have to limit yourself to the number of KPIs. Weight must be determined taking into account the principle of necessity - what indicators need to be met to achieve the goal (which ones are not just desirable, but necessary, without which it is simply impossible to achieve the goal). These indicators are characterized by the greatest weight. Then we remove indicators with a weight below 0.1, and again distribute the weights between those KPIs that remain. The output will be no more than 3-5 indicators. Indicators with very small weights can then be taken into account for the motivation scheme as conditions for reducing or increasing the size of the bonus.

The placement of scales is usually done by the CEO and a team of top managers, taking into account the priority of the company’s tasks. Based on the weight of the indicator, you can understand what actions the company should place its main emphasis on in the foreseeable future (see. table 4).

Selection of “leading” and “lagging” KPIs

Leading indicators – allowing, in case of noticed deviations from the path to the goal, to intervene in a timely manner and make the necessary corrections to the situation. They support the management of movement towards the goal. An example of such an indicator is the level of inventory in a warehouse. This parameter can be controlled in the low or high season by making sure that there is a sufficient amount of raw materials in the warehouse to produce a certain amount of products, or you will need to purchase it additionally. Or there may be an excess of raw materials in the warehouse; they are old and must be sold to free up space for new ones. By taking into account the “raw material stock level” indicator, it is possible to make management decisions aimed at improving production efficiency.

There are not only leading, but also lagging KPIs. According to these indicators, achievement or non-achievement of one’s goal can be stated, but without the possibility of making adjustments while moving towards one’s goal. Therefore, if the goal is not achieved, lagging indicators simply indicate damage to the enterprise. Consequently, lagging indicators play the role of stop factors within bonus schemes. In fact, if this indicator is not achieved, the bonus will not be paid in full or it will be significantly reduced. An example of such an indicator is staff turnover. After all, this indicator can be stated only based on the fact - how many employees the company lost over a certain period. The adoption of management actions can only apply to the next period. But it will not be possible to influence current losses - they can only be recorded for the future.

Therefore, when calculating the bonus scheme, the formula includes in the formula not only the weight and percentage of completion of a certain KPI, but also the number of leading and lagging indicators.

In addition to calculations, it should be recalled that the seller’s remuneration should not be tied solely to one indicator (for example, revenue or turnover), without taking into account market characteristics and seasonality. Because otherwise, a business may face the trap of satiety - material factors lose their motivating power. Consequently, the return for every ruble invested in employees brings gradually less and less return. And over time, the amount of investment in employees begins to exceed the return. A similar danger arises when providing an employee with an income that exceeds the level he needs for his usual lifestyle (as a rule, it is achieved with 2 incomes of a specialist in his region in a given specialty). The only way to cure the “satiation trap” is to fire an employee who has ceased to produce results - it will no longer be possible to achieve the desired effect by changing the payment scheme.

Formula for calculating a bonus based on KPI for the head of the commercial department

Bonus = (BF KPI 1 × A + BF KPI 2 × B + BF KPI 3 × C) × D, Where:

BF KPI 1, 2, 3– max bonus fund, which is multiplied by the weight of KPI 1, 2, 3.

A– an adjustment factor to KPI 1 with a threshold value of 70% (if the plan is achieved less than 70%, no bonus will be accrued for this indicator (A = 0); if the sales plan is fulfilled by more than 70%, the corresponding bonus will be accrued in proportion to the implementation).

B– correction factor to KPI 2, the threshold value of which is 85%. When this indicator is fulfilled less than 85%, it is B = 0. When the 85% level is reached or exceeded, the bonus will be accrued in proportion to the fulfillment. The coefficient is blocking - if the threshold value of KPI 2 is not met, the bonus will not be paid, regardless of the results for KPI 1 and KPI 3.

C– correction factor to KPI 3 (threshold value 60%). If the indicator is fulfilled by less than 60%, then C will be equal to 0; if the indicator is fulfilled by 61-100%, the accrual is proportional to the fulfillment.

D– a stop factor, which is a general blocking correction factor, with the bonus payment being reset to zero if the minimum threshold values ​​for any KPI have not been achieved.

According to the proposed scheme, the seller's attention falls on the size of receivables along with the cost of the sales process and the level of sales, and is not limited to only achieving growth in turnover at any cost. Thanks to this, the company is able to achieve timely receipt of money by refusing interest-free lending to staff or clients.

When will a KPI work and when will it not?

The KPI system will be effective under the following conditions:

• with proper weighing and placement of all KPI indicators;
• correct creation of a tree of company goals;
• The accounting system will allow you to calculate all KPI calculation formulas;
• correct distribution of responsibility for goals (and processes) between performers;
• entering data into the accounting system by trained, uninterested people - not those who carried out the KPI data. In this case, it is necessary to enter reliable information;
• linking KPIs to the staff motivation system. The motivation system should be built with the priority of the enterprise's goals over the goals of employees, but with their mandatory consideration.

When the KPI system doesn't work:

• The company's management did not participate in the creation of the goal tree.
• It is impossible to calculate KPIs due to the lack of data in the accounting system, subjectivity or unreliability of their assessment.
• Incorrect development of KPIs - without taking into account relevant indicators of achieving the set goals.
• There is no link between KPIs and the motivation system.
• The implementation of KPIs is not for all departments. In this case, the control system will be skewed.
• KPIs are tied to the current motivation system, but without taking into account the personal motivation of employees for whom KPIs are introduced.
• The achievement of KPIs and the payment of a bonus for them are divided for a period of more than 3 months. In this case, employees simply get tired of waiting, ceasing to connect the correctness of actions and reward. For long-term projects in a company, you need to tie KPIs and a bonus for achieving goals not only to the final results of the project, but also to intermediate stages.

How to overcome staff resistance when implementing a KPI system

1. Employees need to be explained that what is being implemented is related to what they already did the day before. Thanks to this, there will be no expectation and fear of dramatic changes every Monday with the cancellation of past results.

2. KPI is a rather complex tool. Therefore, it is necessary to explain this methodology to all users in advance - to receive feedback in test mode, debate, discuss issues that have arisen, etc.

3. A critical success factor is participation in the project of setting up KPI motivation for the General Director and the top management team. If management has doubts about the overall success of this project, such undertakings do not make much sense at all.

4. Top managers should also involve middle managers in the KPI development work process - that is, employees who will be forced to evaluate and plan their own actions according to the new approved system. They must jointly create a step-by-step plan for implementing a new project - usually the commercial departments are the first to test the system, and at the very end - the back office.

5. It is necessary to encourage the activity of employees when implementing changes - you need to celebrate any, even the smallest victories.

6. Ensure your workflow is compliant with changes. Therefore, it is necessary to separately plan the transition from the current system of regulations to the new one - this will not happen instantly, so it is necessary to separately take into account and control the time of this transition.

7. It is necessary to adhere to continuous changes in the company. However, in order to ensure continuity and consistency, the optimal situation is when all changes flow from the main goal of the organization.

• Motivation, Incentives and Remuneration

To stay afloat and make a profit, a business must operate with maximum efficiency. Literally two decades ago, no one thought about how efficiently a particular enterprise, leader, manager or mechanic worked. The main thing is that it makes a profit. But now the approach has changed. You've probably heard about key performance indicators KPI. What it is and why is such a system needed? Let's look at this in this article.

KPI - what is it?

The performance assessment system appeared in Russia literally five years ago and is still rarely used anywhere. It is mainly used in IT and other modern industries. Let's consider, what is KPI and why this assessment system is needed.

KPI is a key indicator of personnel or enterprise performance

KPI stands for Key Performance Indicator, which translated into Russian means key performance indicator. This system is a set of several indicators that evaluate the performance of each employee at the enterprise. Knowing the KPIs for different groups, you can develop average productivity indicators and introduce a system of active motivation for productive employees.

Note:efficiency is a relative indicator. It can be calculated both for a specific employee and for a department, workshop, or enterprise. Effectiveness can be expressed in quantitative results.

It is believed that the optimal key performance indicator for an employee should be no higher than 5. The KPI indicator can be divided into several types:

1. By cost item (how much resources were spent in monetary terms).
2. According to the productivity item (what percentage of capacity was loaded).
3. According to the article of efficiency or ratio of indicators (for example, the ratio of the amount of revenue to the amount of costs).
4. According to the final article (general quantitative indicator of productivity).

KPIs must be expressed in specific numbers. They shouldn't take a lot of time or resources. It is best to tie indicators to the overall performance of the company.

In practice, it often happens that most of the indicators are intertwined with each other. This allows for collaboration and assessment of a group of specialists or departments, motivating them and constantly achieving better results. Managers and supervisors at all levels must monitor the results, coordinating their actions for maximum efficiency.

KPI is divided into strategic and current

Types of KPIs

Enterprise performance indicators there are two types:

1. Strategic. Thanks to this data, you can find out how efficiently the enterprise operated over a certain period (the longer the time period, the more accurate the result). Thanks to strategic indicators, you can build action plans for the next period of time. Basically, strategic KPI shows the passage of cash flows, on the basis of which the profitability of production and sales can be calculated.
2. Operational. This data shows the real current situation in the company, division, department. Thanks to these values, it is possible to adapt the tasks or goals of the enterprise to dynamic conditions. Using this KPI indicator, you can evaluate the efficiency of logistics, production organization, sales of manufactured goods, etc.

Why is all this needed?

Using the KPI system, you can realistically evaluate and measure the rate of achievement of goals and tasks assigned to a specialist. By calculating all the values ​​and indicators, you can evaluate the effectiveness of your work based on the results achieved and compare them with the planned ones. You can also calculate whether the planned indicators for a specialist/department/enterprise were calculated and compiled correctly. Numerical values ​​help to correctly build strategy and tactics for the future, assessing the real result, not the imaginary one.

Note:the key indicator is tied solely to the result. If some parameters do not affect it in any way, then they can be freely discarded.

KPI was developed based on two ideologies:

1. Target management of an organization or department (movement from goal to goal).
2. Full control over the goals set and their revision under certain conditions.

Thanks to KPI calculations, you can properly motivate your staff

The very idea of ​​KPI allows not so much to evaluate personnel, but to draw up real plans and anticipate the results of the enterprise. It is beneficial for everyone: ordinary employees are engaged in routine, while striving to complete the tasks assigned to them, and not scatter themselves and delay the result. Criteria for assessing the performance of other personnel allow him to be motivated: the more tasks are completed, the higher the salary or bonus. Managers benefit when tasks are resolved on time and not scattered among employees. the enterprise benefits because it makes a profit and can make realistic plans for the future based on numerical values ​​rather than empirical ones.

At the moment, the KPI system is considered the most accurate and profitable. It allows you to motivate and stimulate staff and evaluate the activities of managers at any level.

KPIs in production

1. Consumption of raw materials per day.
2. Volume of raw materials in warehouses and in unfinished form.
3. Real labor productivity.
4. Costs of storing finished products.
5. Amount of other expenses.
6. Required amounts for repairs and maintenance of equipment.

KPIs in trade

To calculate key performance indicators in sales you need to know:

1. Revenue volume.
2. Real cost of production.
3. Total profit from sale.
4. Possible defect rate.
5. The total cost of products in stock.
6. The total amount of current assets.

Be sure to use KPI for planning and strategy development

KPI Examples

In order to understand, let's give examples of key performance indicators KPIs for various categories of employees.

KPI (Key Performance Indicator) is a key performance indicator. Simply put, this is an indicator of achieving results in a particular activity, which can be digitized and measured.

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

Key parameters can be divided into two types:

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

The following types of KPIs are distinguished:

• Cost KPIs - illustrate the amount of costs;
• Efficiency KPIs - characterize the ratio of the results obtained to the costs;
• Functioning KPIs - evaluate the compliance of a process with a given algorithm;
• Performance KPIs - assess the ratio of the result to the time spent on achieving it;
• Result KPIs - show what results were obtained.

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

What is KPI in salary

When developing and implementing performance parameters for remuneration, it is necessary to clearly understand what goals the company is pursuing. These goals must have specific attributes, and verbs and numbers must be used to set goals.

For example:

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

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

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

The implementation of the KPI system provides for:

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

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

It is important that the development of the KPI system is not carried out only by employees of one department, for example, the personnel department. This should be a team effort by the heads of all departments so as not to make mistakes in determining the key parameters. Within the department, it is necessary to develop a system from top to bottom, that is, first to the manager, and then to his subordinates, so that the goals and objectives within the department are uniform. But wouldn’t it turn out that, for example, the head of a department should increase the sale of low-profit positions, and managers receive a percentage from the sale of high-profit positions. With such indicators, managers are not at all interested in selling positions with low returns, and the manager’s tasks will be difficult to fulfill.

In a properly constructed system, each KPI coefficient is clearly thought out and defined values.

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

Development of KPIs, rules and principles of implementation:

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

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

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

How to evaluate performance

Assessing the completion of assigned tasks is an important element of the work of this motivational system. The standards of ordinary employees should be transparent in assessment, so that a person himself can understand during the accounting period whether he fulfills them or not, and not find out about this after the end of the period. Managers may have indicators that may take time to determine if they are realized, such as % of the company's return on sales. But within a month, the employee must understand in which direction he is moving and be able to evaluate his current work using other indicators.

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

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

The following calculation formula is usually used:

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

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

To determine the feasibility of bonuses and calculate the bonus component of wages, the overall performance coefficient is used, which is the sum of all indices.

If it is greater than one, then this indicates that the set plan has been exceeded, which means that the employee can be awarded a bonus.

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

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

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

Pros and cons of the KPI system

Pros (and, as a result, achieving goals):

• the employee’s ability to influence his salary;
• employee responsibility for their area of ​​work and transparency of tasks;
• employee participation in achieving the overall goal of the company;
• the ability to adjust goals by the manager in the process of work;
• interaction between a manager and a subordinate in a more intimate manner.

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

• the unattainability of meeting the set parameters;
• a small share of each indicator in the total bonus due to their large number;
• labor costs of system implementation;
• uneven solution of problems due to incorrect determination of the cost of standards.

KPI examples for different positions

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

Let's look at examples of indicators for achieving the goal of “increasing profitability (delta between revenue and expenditure parts) of sales” in a company that sells candy.

What is the KPI matrix

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

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

An example of a KPI matrix for the above-mentioned employees of a company that sells candy, within the framework of the indicators defined for them.

Special opinion

There are 2 main mistakes when developing KPIs. The first is the confusion of the concepts of KPI and money. KPI is not a description of the bonus system. Yes, bonuses can be paid for achieving targets. But in general, KPI is a reflection of the effectiveness of an employee, department, direction, department. For example, in production there should be a client assessment of the quality of work. Most large companies do not include it in the bonus system, but record it only as a KPI - if an employee is in critical areas, he is brought up to the required level or parted with them, but he is not paid a bonus if 90% of clients are satisfied with his work.

The second is KPI for the sake of KPI. KPI is always a decomposed goal of the company. For example, in a salon, the arrival of an administrator at 9 am can be included in the KPI (otherwise the shopping center will fine the company for a closed salon), but in production such an indicator is meaningless (an employee can arrive at 9 am and leave at 6 pm, but the amount of work will not change, namely, the volume of work affects profit).

Boris Teklin

Head of Customs Department in Russia DHL Worldwide Express

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

KPIs should be as clear as possible to those who set the task and those who complete it. Their main task is to contribute to the achievement of planned indicators and motivate to achieve new ones. Based on our experience, we identify several mistakes.

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

2. KPIs are not integrated into the motivation system. Indicators have been developed, but employees have no incentive to fulfill them.

3. KPI indicators are only financial. A properly developed KPI system contains a large number of not financial, but leading indicators by which we monitor business activity and the achievement of the necessary results.

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

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

In our opinion, KPI is not effective in creative professions and in unstable markets. Today we see the following alternatives to traditional KPI: a) The employee makes decisions independently (the principle of working according to the “Turquoise Management Model”); b) Planning based on results.

Olga Pavlenko

HR manager Soyuzkhimtrans-Avto

The article presents in sufficient detail the important aspects when developing a KPI system. I would like to add an important, in my opinion, nuance that there should not be many key indicators. Of course, there are positions in which it is very important to take into account many different factors and components. But the more parameters there are to record an employee’s performance, the more difficult it is to keep them all in mind and the harder it is to concentrate. After all, developing a KPI system is only half the battle; the system must work. And for this we must not forget the basics of psychology, namely the characteristics of attention and memory. 3-5 indicators are exactly what is optimal for a working KPI system.

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

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

1. An employee must influence KPIs.

2. Achievability of KPIs. An ambitious goal is good, but you need to keep in mind that it is impossible to build a house in 2 days.

3. Relevance to functionality. KPI is an indicator for which this position exists to achieve/increase (marketing - attracting customers; salesperson - sales).

4. KPI weight depending on position. For example, a sales manager's KPI can be up to 80% of the salary level. For a back office employee it cannot be more than 50%, because the presence of its activities already creates value, and KPIs provide additional motivation.

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

KPI is not effective in the following cases:

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

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

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

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

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