What does the term kpi mean. Key Performance Indicators KPIs - what they are and how to use them. How to calculate KPI in Excel: examples and formulas

Kipiai, or key performance indicators, is a unique system that has recently come into Russian business. To date, there is no more reliable method by which to evaluate the efficiency of the enterprise, so the use of this system is practiced not only in Russia, but throughout the world.

The concept of KPI

To begin with, let's fully reveal the question of what it is - KPI, or key performance indicators.

Ki Pi Eye is a unique system with which you can calculate the performance of each individual employee of the organization. Thanks to such a system, one can not only understand how effective the activities of employees are, but also motivate them to improve their working skills. The most optimal performance indicators for everyone individual worker must not exceed 5.

To understand how to operate this system correctly, it is necessary to more carefully and deeply study the types of performance indicators, as well as consider examples of KPIs.

Varieties and groups of KPI

Kipiai indicators are usually divided into several subgroups, based on the results obtained in the calculation of the results of a certain area of ​​activity.

1. Financial expenses.
2. The performance of the company, implying the calculation of kpi as a percentage. This percentage shows how high the capacity utilization of an enterprise is.
3. The productivity of the firm. This subgroup of KPI performance indicators is based on a comparison of certain data (for example, cost items and revenue for a certain period of time).
4. Final calculations, which are based on the quantitative expression of the results related to the activities of the company's employees.

A key performance indicator is built on several principles. If you do not take them into account, then the data obtained will be unreliable. These are the principles:

1. All indicators must be measured in quantity.
2. The data obtained should be directly related to the activities of the company.
3. Results should not be costly, both in terms of time and resources.

Earlier, we considered the question of what is KPI, dividing it into 3 small subgroups. However, the gradation does not end there, because this system also has its own varieties. There are two of them in total. These are operational and strategic KPIs. Let's first understand what kind of operational KPI system it is.

Operational KPIs are indicators by which you can evaluate the effectiveness of the company's activities at the moment. Simply put, the data obtained when calculating kpi reflects how well the company's employees work in the current period of time.

In addition, kipiai operational systems help to compare the tasks performed by employees with the conditions that were created for this. Based on the results obtained, the management of the enterprise can evaluate the quality of the manufactured product, the conditions for its delivery and further distribution.

What is a strategic KPI? Such indicators reflect the performance of the company for a certain period of time. With their help, you can find shortcomings in the work of personnel and adjust its activities for the next period of time (for example, for the next month, quarter, six months, etc.).

In addition to the quality of work of employees, financial data can also be processed. Based on the results of the KPI calculation, cash flows are characterized, which help to understand how profitable the organization itself is, and how much the products produced by it are in demand.

Scopes of KPI and its calculation

Since with what is kpi, or, speaking in simple words, key performance indicators, we figured out, it is necessary to move on to the next, no less important, question: where and why are they used? And also consider the formula by which they are calculated.

A performance indicator is a numerical measurement of the set (and achieved) goals and objectives that play an important role in the successful promotion of a business. Thanks to the prepared report, where all the necessary indicators are taken as a basis (they were discussed above), the management of the organization has the opportunity to fully assess how the developed plan was carried out, as well as what was achieved over a certain period.

KPIs are used in various business areas. Each of them has its own list of indicators that are being processed, and on the basis of which an indicator is calculated that reflects the efficiency of the enterprise.

Sales area

To multiply your fortune, you need to understand what KPIs are in sales and what an important role they play. These indicators can be calculated based on:

• received for a certain period of financial profit;
• proceeds from sales carried out by the firm;
• the cost of manufactured goods;
• the percentage of low-quality goods;
• amounts of current assets;
• the total value of all the company's inventory.

KPI indicators in retail are based on 5 main principles:

• percentage of sales for 1 hour or day of the outlet;
• the average amount of money paid by the buyer for the goods (this amount is calculated at the expense of punched checks);
• the number of products sold for 1 time;
• the ratio of employees' salaries to the proceeds from the sale of goods;
• sales conversions.

Thus, having received all the necessary calculations, you can quickly adjust the work of the staff, significantly increasing the number of transactions, which, in turn, helps to increase the store's income.

Manufacturing industry

What is a key indicator in production, and on what basis is it calculated? First of all, when calculating the efficiency coefficient, they take as a basis:

• indicators of the average daily consumption of raw materials from which products are made;
• volumes of raw materials used and remaining in stock;
• volumes of work in progress;
• work efficiency of employees;
• various production costs;
• equipment repair costs;
• conditions, terms and cost of storage finished products.

To get the right data, you need to know how to calculate KPIs. There is a special formula for this:

(qf/ qpl)×100%

Now let's decipher the indicators:

• qf - the actual volume of all sales carried out by the company;
• qpl - sales volume, which is only planned to be carried out.

The data obtained through this form is the so-called performance criterion.

Examples of KPIs

To fully understand what kipiai is, let's look at some examples of key performance indicators. For a better understanding of the essence, each of the professions that are taken into account in the calculation will be considered separately. The table below shows not only the type of activity, but also the indicator on the basis of which the efficiency criterion is calculated.

Number	Job title	Indicator for calculation	Formula for calculation
1	Head of Marketing Department	The total percentage of the previously developed plan.	General formula calculation described above.
2	Marketer	Overall percentage of all brands on the market	Calculated based on data from all third-party marketing firms.
3	chief accountant	Timeliness of filing tax service company income statements.	Data obtained from the tax authority.
4	Accountant	Total percentage of completed financial transactions	This profession has its own formula for calculating kipiai: (qpsr/qtot) × 100%, where the first indicator in brackets means the number of financial transactions that were completed on time, and the second - the overall results regarding all payment transactions.
5	Head of the legal department	The total number of lawsuits won is taken as a basis.	The ratio of the number of cases won to the total number of trials. The result is multiplied by 100%.
6	Lawyer	The amount of money that was collected from other enterprises in favor of the organization where the person works. The amount of money that was saved by the company is also taken into account.	All data from reports prepared by the legal department are taken into account.

Taking the example again kpi manager on sales, then with the help of the data obtained after the calculation, the head of the management department will be able to identify not only positive, but also negative aspects in the activities of his subordinates. So, he will know exactly how many calls and meetings the sales manager made, whether they were effective, how many people became regular customers etc.

If the data obtained do not correspond to the developed plan, then this means that the person involved in this type of activity lacks either knowledge and skills, or perseverance and desire to work.

All the above examples of KPIs, or key performance indicators, fully reflect the essence of this concept. Of course, it is difficult to immediately understand all these subtleties (especially for a novice businessman). However, it is better to spend a little time studying this in depth. important topic rather than incur financial losses that can seriously harm the development and successful promotion of the business.

In the article, we will look at examples of KPIs, the features of calculating a key identifier for various specialists, as well as best examples its implementation by domestic enterprises.

You will learn:

• How KPI is calculated for different employees.
• How to develop a KPI statement.
• How to calculate KPI step by step.
• How to calculate marketing KPI.
• What can be the KPI of the chief accountant.
• What KPIs can be applied to senior managers.
• How KPI can be calculated in Excel.
• Which companies have successfully implemented KPIs.

Instructions for calculating KPI for different employees

The methodology for developing a KPI ID includes several sequential steps:

1. Preparatory activities: creation of a working group, analysis.
2. Formation of assessment methods and methods: development of a model of a system of performance indicators, the sequence of its construction, creation and testing of KPI identifiers, preparation of modernized management methods.
3. Implementation: merging the KPI accounting system with the existing one software familiarization of employees with the methodology for calculating performance indicators.
4. The stage of using the KPI calculation system: monitoring performance, adjusting indicators.

Two main methods are used to develop KPIs: process and functional. How to calculate the premium for each of them, you will learn from the table published below.

The process method is based on the alignment of identifiers, taking into account the main business processes of the enterprise. The functional method is based on the analysis of the structure of the company and the service goals of its divisions.

An example of KPI for managers that will make them go all out

If a salesperson is reluctant to meet their KPIs, then those performance metrics should be abandoned. The editors of the "Commercial Director" proposes to set KPIs that motivate managers to sell and make a profit.

Table. KPI - calculation examples using process and functional methods

process	Functional
Sales process. Goals: increase in the number of buyers (KPI - the number of attracted buyers); increase in repeat purchases among existing customers (KPI - the number of repeat purchases).	The enterprise level is a plan, a strategic development model. Examples of KPIs: income, profitability; increase in net assets.
Inventory process. Purpose: increase in inventory turnover (KPI - increase in inventory turnover of raw materials and finished products compared to the previous period).	Department level - provisions on the structural unit, regulations. Examples of KPIs: customer satisfaction level; sales volumes.
Customer Satisfaction Process. Goals: decrease in the number of returns (KPI - the percentage of the decrease in the number of purchase returns); reduction of the time interval for customer service (KPI - time spent on service).	Professionalism of specialists - job descriptions. Examples of KPIs: the number of newly attracted buyers; time to complete a transaction with one buyer.
Personnel process. Purpose: to increase the quality level of recruitment (KPI - percentage of closed vacancies).

Table. KPI for sales specialist: examples (KPI matrix)

Index		Base	Norm	Target	Fact	Runlevel	KPI index
Sales volume (c.u.)
Average income from one buyer (c.u.)
Number of marks "I liked the service" (pcs.)
Share of overdue receivables (%)
Final KPI

Based on the data presented in the table, we can conclude that the sales specialist exceeded the target by 6.1%, and therefore, he should receive a bonus.

The table below provides an example of a methodology for calculating "Average Revenue Per Customer". In the summary from the previous example, this indicator is also included in the KPI calculation form for the sales specialist.

Table. Average revenue per customer for a sales professional

The calculation of performance indicators for supporting departments is a rather complicated procedure. Consider below examples for some supporting positions.

Table. Examples of KPIs for other positions

How to calculate KPI: step by step instructions

Stage 1. Definition of three employee KPIs:

• the number of users attracted to the Internet portal;
• the number of repeat purchases from existing customers;
• the number of recommendations and positive reviews that were published after the transaction on the site or on the pages social networks companies.

Stage 2. Calculation of the weight of each identifier (the total weight is 1, the calculation of the proportions of indicators is carried out depending on their priority). In this example, we get:

• the number of new buyers - 0.5;
• the number of repeated purchases - 0.25;
• consumer reviews - 0.25.

Stage 3. Analysis of statistics for each key indicator for the past six months and the formation of a plan:

		Baseline (monthly average)	Planned indicator
	Increase in new customers	160 new clients	20% increase, i.e. 192 new customers
	Percentage of buyers who made a repeat purchase	30 repeat purchases	20% increase, i.e. 42 repeat purchases
	Percentage of buyers who left a positive review or recommendation on the site		20% increase or 42 positive reviews

Stage 4. An example of KPI calculation is presented in the table:

Formula for calculating key indicators:

KPI Index = KPI Weight * Fact / Goal

The goal is the KPI value planned by the marketing specialist. Fact is actual data.

In the above example, it can be seen that the employee did not achieve his goals. At the same time, based on the overall KPI value (113.7%), we can talk about a high result achieved.

Stage 5. Payroll.

The salary fund of the marketer in this example is $800. In this amount, $560 is the fixed part and $240 is the variable part. Full salary is paid in case of achievement of a result with an index of 1 or 100%. Since in our example a KPI of 113.7% was scored, which is an overfulfillment of the plan, the marketing specialist will receive a salary with a bonus.

Result:

560 $ + 240 $ + 32,88 $ = 832,88 $.

At the same time, if the KPI value is less than 1 or 99%, then the size of the bonus is reduced.

A table with an example of KPI demonstrates the problematic points in the work of a marketing specialist. Insufficiently high indicators may be the result of an incorrectly chosen strategy to increase customer loyalty to the company. Such data allows you to control the work of a specialist. If the state of affairs does not change in the following periods, then it is necessary to revise the system of requirements for KPI.

By constantly following such a policy, you can get a complete picture of KPI for sales, production process etc. This will allow you to understand the procedure for calculating and implementing key performance indicators.

KPI calculation may vary depending on the planned indicators. It is permissible to supplement the regulation with new identifiers: data on the number of solved / unsolved tasks, a system of penalties for low performance on key points in the plan.

For example, if the plan is fulfilled by less than 70%, the employee may be deprived of bonuses.

Here is an example of calculating the bonus component of the salary for an employee who has fulfilled the sales plan:

KPI calculation for a marketer: an example

Before you start calculating a key performance identifier for an Internet marketing specialist, you need to clearly define the scope of his responsibilities, and then set the employee's KPI. The KPI formula can only be used in cases where it is acceptable to express in a numerical display the indicators of results for which the marketer is specifically responsible.

For example, let's imagine 5 KPI indicators of a specialist:

• increase in the target consumer group;
• attracting new customers, increasing the number of customers;
• increasing the level of customer loyalty (taking into account the number of reviews, recommendations, etc.);
• increase in the number of repeat purchases;
• increasing company awareness and increasing customer loyalty.

To achieve the target indicators, the marketer uses the material and labor resources of the company (interacts with software and design developers, with analysts and copywriters). A mandatory procedure in this process is budget control. Accurate cost accounting will help to establish the ratio of the results obtained by the specialist and the material resources used by him.

Actions required to implement a system of key performance indicators:

• determine the main goal of the company and the indicators that need to be obtained for a given period of time;
• assign tasks to marketing specialists;
• divide the marketer's salary into fixed and variable components (for example, 75% is a fixed component, and 25% is a bonus for achieving certain targets in the KPI map);
• identify key performance identifiers to evaluate the work of a specialist;
• form a plan and determine the optimal KPI indicators (we will analyze how to do this using examples in the next part of the article).

If necessary, you can use the functionality of the Excel office program or implement a CMS that will ensure the competent organization of the procedure for setting goals, quick data entry and effective monitoring of KPI implementation.

Practitioner tells

Examples of KPIs that made ordinary staff look for the best way to get the job done

Maria Ponomarenko,

director of the Moscow firm Smart Personal

For some time I worked in a team that managed an enterprise in the field of black metal rolling. The clients of our firm were construction and manufacturing companies who needed timely delivery of goods. To meet the needs of customers, we formed a fleet of vehicles that could transport rolled products up to 12 meters long. If a large number of applications were received and our cars were not enough, we attracted cars from third-party contractors. We had to solve two problems: to provide fast delivery products at a convenient time for the customer and achieve maximum loading of each car.

What was done. To motivate dispatchers, we have developed a system of bonuses depending on two KPIs (for each of the indicated logistics tasks).

1. The indicator of the transfer of delivery to other days. If our capabilities did not allow delivery on time, with the consent of the customer, it was postponed to another time approved by the customer. The maximum number of transfers of deliveries per dispatcher should not exceed 3%. With an increase in this indicator, the size of the employee's bonus decreased. And vice versa, if the dispatcher could avoid transfers, the amount of his bonus increased (see data in Table 1).
2. Average number of deliveries per vehicle(the total number of deliveries that were made in 1 day divided by the number of cars used). On average, one car made 1.8 trips per day. It was decided to increase this figure to 2 flights. It also provided for an increase and decrease in the indicator (see table 2).

Bonuses were calculated according to the formula: S x K1 x K2, where S - fixed amount(for example, 10,000 rubles), K1 is the delivery transfer coefficient, K2 is an indicator of the efficiency of using vehicles. Depending on the figures achieved, the dispatcher could earn from 12 to 180% of bonuses, which ranged from 1,200 to 18,000 rubles.

KPI indicators turned out to be mutually exclusive. For example, it was possible to increase the number of deliveries by one car, but as a result it would be inconvenient for the buyer to accept the products. In order to achieve an increase in both indicators, the dispatcher had to take into account a number of factors (customer requests for delivery time, delivery region, vehicle capacity, compatibility of delivery of various types of rolled products on one vehicle).

In parallel with the introduction of the KPI system for dispatchers, it was necessary to ensure more efficient operation of related departments (for example, a warehouse complex).

Result. The KPI system was launched in March, and already in October, the average daily delivery efficiency ID rose from 1.8 to 2.3. Thus, in just 7 months of work using the KPI system, the efficiency indicator for the operation of the fleet increased by 28%. At the same time, we managed to reduce the allowable number of delivery transfers by 6 (!) times - from 3% to 0.5%.

In the general part of the provision on KPI follows:

• clarify the target orientation of the regulation (an example of the wording: “the KPI regulation determines the procedure for the formation of performance indicators, their monitoring in the course of carrying out activities and control based on the results of reporting periods”);
• identify employees for whom the KPI regulation is mandatory;
• set the goals of the KPI matrix (example: reducing the long-term plans of the enterprise and the annual tasks of its specialists to one denominator);
• provide a list of key terms with their definitions;
• present the principles on which the KPI system is based (example: decomposition, balance, compliance with SMART rules).

In the main part of the provision on KPI, it is also necessary to describe the procedure for the formation and coordination of performance indicators. It is necessary to disclose the criteria that they must meet (example: measurable, achievable, specific, etc.). Our example, available for download below, will help you create such a document for your company.

KPI of individual specialists is better to issue a special document called a scorecard. It is coordinated with the CEO, senior managers of personnel and financial department and signed by a specific employee.

In the regulation on KPI, it is also necessary to determine the validity period of the card (example: calendar year) and attach an agreed form to it.

Table. KPI map for financial service specialists

№ p/n	Type of KPI	KPI performance levels			KPI weight, %	KPI performance level
		Lower level	Target level	Upper level
	Speed ​​of turnover of receivables and payables	Growth in the turnover ratio from 0 to 1% compared to the base year	Growth in the turnover ratio from 1 to 3% compared to the base year	Growth of the turnover ratio over 3% compared to the base year
	Percentage deviation of actual indicators from planned ones that were not warned using the data monitoring system, %
	Decrease in operating expenses per function by industry relative to the previous year, %
	Free financial flow, million rubles

The regulation on KPI should contain requirements for the procedure for developing and approving maps of key identifiers. It is necessary to indicate those responsible for the formation of KPI maps, their approval and acceptance. It is necessary to describe the unified requirements for the coefficients and format of such a map. For example, it should include identifiers for calculating the performance of indicators (continuous, discrete, cutoff) and recommendations on the measurement methodology (quantitative and qualitative). In the provision for each KPI identifier, it is important to indicate its target value, weight, type, as well as the upper and lower levels. In addition, you need to take into account that the total weight of all indicators in the KPI map should be 100%.

The cut-off KPI is indicated only as a last resort, as it resets the rest of the data. For example, a cut-off indicator for the chief engineer may indicate any case of an accident at work that occurred in the reporting period.

The KPI regulation should describe the procedure for monitoring the performance of indicators, which will help to quickly identify and eliminate the causes of significant deviations of KPI identifiers from target values.

In the provision on key performance indicators, the frequency of implementation of control activities (for example, once a quarter) and the employees responsible for their implementation should also be noted.

For possible (internal or external) changes in the conditions for the implementation of economic and economic activities, the procedure for adjusting KPI should be described. The reason for their application, for example, may be changes in the employee's duties. Here you also need to write down a list of persons who can initiate the use of adjustments, as well as the parameters by which such adjustments can be carried out (for example, changing the number and composition of identifiers, targets, the level of their achievement, etc.).

The KPI regulation also includes the stages by which the achievement of key indicators will be assessed (for example, self-assessment by the owner of the KPI card, the data of which must be agreed with the management, the personnel department and the financial service).

The provision on key indicators should also describe the methodology for their calculation. The level of the premium specialist and his motivation to achieve the target standards depend on her choice. For example, in a KPI schedule, you can specify that the weighted map execution ID is obtained by multiplying the indicator value by its weight.

KPI of the chief accountant: an example of assessing the workload of the department

The management of the enterprise often considers accounting to be a costly unit. Chief accountants regularly complain about the high workload of the department and ask to increase its staff. How can a manager find out if the accountants are really overwhelmed by the current work or if the problem lies in the low efficiency of the work organization? How to define KPI for accountants?

A qualified chief accountant must have the tools to objectively assess the level of workload of specialists in his department. There may be situations when some employees need to increase the range of responsibilities, while others, on the contrary, need to narrow the scope of tasks. Such measures will help ensure more uniform distribution load on specialists and increase labor productivity. Despite the fact that the accounting department is considered as an auxiliary one, its specialists often contribute not only to the preservation, but also to the increase in the volume of financial resources.

KPI identifiers are used to evaluate the work of one accountant or an entire department. They include a number of indicators:

• timely submission of reports to regulatory authorities and error-free filling of declarations;
• timely payment of company invoices by customers;
• absence of errors in accounting;
• saved financial resources(for example, on contracts with suppliers or contractors, etc.);
• the total amount of fines paid to the tax authorities (due to the fault of accountants);
• accounting salary costs;
• presence/absence of complaints from external and internal clients of the enterprise about the work of accountants.

If we consider KPI for an accountant, there are various examples, but it must be taken into account that it is this department that is able to influence the efficiency of all the main business processes of an enterprise by increasing profits and optimizing costs.

In economic processes, the key performance indicators of the accounting department are:

• interchangeability of employees;
• the number of accounting specialists;
• the minimum amount of overdue documents in the process of work;
• the number of company employees per accountant.

In addition, one should take into account the level of qualification of accountants and their motivation to work to obtain the desired result. The manager must control the workload of employees, the comfort of working in the field and, if necessary, provide accountants with timely advanced training at specialized courses.

Depending on the tasks set and the deadlines for their implementation, the manager evaluates the work of an employee. Depending on the results obtained, a decision is made to expand / reduce staff.

The most effective tool for determining the optimal number of company employees is rationing. Here is an example of such for the accounting department, where the work includes such components as:

• primary documentation (incoming);
• norms accounting and the Tax Code;
• results of work (reporting).

For calculation required amount employees of the accounting department need to know the approximate amount of primary documentation received for a certain period of time (day, month), and have an understanding of how many employees and in what time will be able to process such a volume of materials.

To, for example, determine the KPI of an accounting officer responsible for payroll, the following criteria are used:

• the number of employees of the enterprise served by him;
• payroll according to the number of employees (pay slips);
• withholding tax and other obligatory payments according to the number of employees;
• the number of intercalculations.

Based on such criteria, the norm for an accounting employee is determined, based on which the number of accountants is calculated, necessary for the enterprise. For example, if you take 1,600 payslips monthly for the KPI norm of a payroll specialist, then an organization with more than 5,000 employees will need 3 payroll accountants.

Each firm has unique KPI identifiers. They are formed on the basis of the goals and objectives of the enterprise.

KPI identifiers are set by management (the chief accountant or director of the company) and may contain more or less indicators than in the examples presented in this review. The main motivation of employees lies in the accurate and objective calculation of bonuses for achieving KPI indicators. Thanks to this, conscientious and responsible employees receive a higher wages. Such incentives motivate employees to increase productivity.

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Key Performance Indicators: Examples for a Senior Manager

In the process of building a KPI system, the heads of structural units of the enterprise must observe the following principles presented in the table.

The main guidelines of the company are always determined based on the strategic goal. For example: “What results does management want to achieve in a given time period?”. A key indicator can be considered a leading position in the market or a prospective sale of the company. In the first option, attention is paid to increasing sales volumes and increasing the customer base, in the second - to increasing the capital of the enterprise to obtain the most high cost when selling.

To do this, first determine the main goal and justify it in detail in writing. Then they break it down into several small goals, which are specific tasks with which it will be possible to achieve the main idea. Visually, this can be displayed in the form of a “tree of goals” drawn on paper with reference to the organizational structure of the enterprise.

Human psychology is such that many, out of fear of showing their incompetence on some issues, agree to perform the task at random, without even understanding its essence. Based on the results of monitoring the setting of tasks in one well-known holding, it turned out that at a meeting with the top management, many employees agreed with what was said, but, leaving the office, asked their colleagues what the boss had in mind.

Each item of the KPI system should be clearly spelled out. To this end, the company's management (general director, board of directors and board) draw up and approve the regulation on KPI. It would be nice if the document gives examples and calculations with formulas, and ties all the terminology to accounting. If the regulations take into account the accounting rules of the Russian Federation, then in the future you need to rely on them. When using several systems of reporting documentation, it is necessary to indicate by which method each indicator should be calculated.

To better understand the provision on KPI, several general meetings. Each manager must independently calculate their bonuses, referring to the indicators of the previous reporting period. A certain number of working days are allocated to complete the task, after which everyone gathers to identify errors. At such meetings, the need to make adjustments to the KPI regulations is often revealed.

The final approval of the document is carried out with the maximum number of indicators set for all managers. Each manager is able to simultaneously control no more than five to seven indicators.

You should not be guided by the principle of achieving the maximum result, since many top managers, given a task of high complexity, simply stop making great efforts to complete it.

The KPI is calculated once a year. This is the most optimal period for evaluating the achievements of a specialist. What if the lead manager was hired during the current year? As an example, consider the metropolitan group of companies Insol. Here, the bonus part of the salary is calculated as follows:

• the work plan includes data compiled on the basis of an analysis of the previous achievements of the manager in terms of similar indicators with an increase of 20%. This is the planned interest rate set by the head of the company;
• if the lead manager was recently hired, the performance of his predecessors is considered (20% should be added to the average).

The amount of bonuses depends on the level of planned indicators achieved. Consider this situation with an example:

• 50% bonus if the actual figure exceeded the planned one;
• 30% if the plan is fulfilled;
• 10% if the result is lower than planned;
• the variable component of the salary is not paid in the event of an unacceptably low result.

When calculating KPI, it is better to take into account general and personal indicators. The first includes the results of the activities of the department, which is managed by the top manager of the company. Overall results motivate employees to teamwork and serve as a manifestation of the specialist's interest in the end. The specifics of the enterprise and the position of the head are the main factors that determine the ratio of general and personal results for the formation of KPI. A high official position implies a reduction in the weight of personal results. For a leading manager, the percentage of personal indicators can range from 10 to 20% (or they may not be taken into account at all). For the head of the company, a personal KPI is the receipt of qualification certificates for a specialist in the financial sector, which is mandatory for some firms, as well as the preparation of a successor.

KPI is expressed in specific numerical values. For example, for a head of personnel, such a criterion as “attracting highly qualified personnel” is unacceptable. In this case, there are no such indicators as terms, composition and number of personnel. In addition, the evaluation category "highly qualified personnel" cannot be used. The CEO of the company and the head of the HR department may not agree on the understanding of such evaluation criteria as “skilled” and “highly qualified specialist”.

It is important to establish how the indicator will be determined. It is not advisable to use expensive data for this, spend a lot of personal time and involve other companies. For example, if the head of the marketing department needs to determine the level of recognition trademark, then to evaluate KPI, you will have to use quite expensive methods.

For each indicator, it is necessary to form achievement levels:

• threshold (indicators below which bonuses are not accrued);
• target (according to this indicator, a specially provided remuneration is paid);
• maximum (increased bonuses are paid).

On some general indicators, the influence may be indirect, but in personal indicators, the relationship between work efficiency and the result obtained should be direct. For example, for the director of the financial department, it is impossible to apply KPI “the presence of cash gaps”, if all decisions regarding the timing of payments to counterparties and the provision of commodity loans are made only by the general director.

If the percentage of the bonus is insignificant compared to the employee's total income, then he will not spend his time setting strategic goals, but will instead focus on more important current issues. The share of the bonus for a senior manager must be at least 100% of his fixed rate, and for an ordinary employee - up to 20%.

For an employee of the company, the indicators are considered fair if they differ by no more than 30% from the average figures in this industry. In this case, when developing key performance indicators, the experience of colleagues will be useful.

A very important aspect is the fair procedure for calculating KPI. If a certain amount of profit was set for a top manager in relation to KPI, but according to the results of the reporting period, the indicators barely reach 50%, then according to the KPI provision, the manager is not rewarded. At first glance, everything seems fair, but if we take into account the crisis situation of the past year and the bankruptcy of more than 50% of companies in the industry, where all the rest went to zero, then according to the results it turns out that this company received 50% of the main indicator. In this case, the manager deserves a bonus. This suggests that it is possible to avoid such a situation if we link the main indicators to industry-wide ones.

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Practitioner tells

KPI leader by example

Tatyana Kostenkova,

legal and business development advisor, Finstar Financial Group, Moscow

Case study 1. KPI for a store manager

Let's consider an example from the practice of Trade House "Narodny" (Bishkek, Kyrgyzstan). For store managers trading house the following key performance indicators have been developed:

KPI 1. Implementation of the sales plan. It is calculated based on the ratio of the actual volume of sales to the planned one. The store revenue plan for a certain period is approved by the CEO in agreement with the financial and commercial directors. This KPI identifier is evaluated by an analytics specialist (Table 2).

KPI 2. Compliance with reporting and performance discipline. This indicator demonstrates the timeliness of the preparation of reporting documentation, transfer of utility bills for payment, sending documents to the archive, execution of orders CEO implementation of the inventory regulations, as well as the accuracy of following corporate standards and compliance with reporting and performance discipline. Evaluates KPI Commercial Director firms. For each violation 1 point is counted.

KPI 3. Work of subordinate employees. Evaluation of employees in accordance with the approved parameters is carried out by the curator. Violations are converted into points. For example, parking near a store and its entrance must comply with engineering and sanitary standards. Violation of these requirements is worth two points.

Case study 2. KPI for the head of the Russian branch of a large holding company

Initially, key performance indicators at the enterprise were tied to the analytical indicator EBITDA. When the business moved to a new stage, it became difficult to comply with corporate standards.

Four tasks were set for the heads of departments:

• cost minimization;
• preservation of indicators achieved in previous periods;
• compliance with the methodology for developing decisions according to the standards of the parent holding company;
• loss reduction.

To stimulate the director to solve the tasks set, 4 key performance indicators were developed. If the plan was fulfilled, the remuneration was 150% of the annual salary.

KPI 1. At least one of the stores opened more than a year ago has been operating at a loss for more than three months. Compliance is assessed by the board of directors based on audit data prepared on the basis of the operating income statement. The weight of the indicator in the bonus is 0.3.

KPI 2. Failure to meet EBITDA. The identifier is evaluated by the board of directors or an audit committee based on income statement data. The weight of key indicator 2 is 0.3.

KPI 3. Violation of internal regulations on the rules for making decisions. The presence/absence of failures is determined by the board of directors. The weight of key indicator 3 is 0.2.

KPI 4. Failure to comply with the decisions of the board of directors. The presence of such facts is determined by the board of directors. The weight of indicator 4 in the bonus is 0.2.

How to calculate KPI in Excel: examples and formulas

Financial bonuses in the KPI motivational system are stimulating. The amount of payments depends on the personal results of the work of a specialist in the reporting period. The amount can be fixed or calculated as a percentage of salary.

Any company determines KPI and the weight of each indicator individually (depending on the objectives of the enterprise). For example:

1. The goal is to fulfill the implementation plan in the amount of 500 thousand rubles. monthly. The key identifier is the sales plan. Measurement system: actual sales amount/planned sales amount.
2. The goal is to increase the shipping amount by 20%. KPI - average shipment volume. Measuring system: actual average shipment volume / average shipment plan.
3. The goal is to increase the number of customers by 15%. KPI - the number of customers in the company's database. Measuring system: actual number of buyers / planned number of buyers.

The spread of KPI (scales) is determined by the company independently. For example:

1. Implementation of the plan by less than 80% is an unacceptable result.
2. Implementation of the plan 100% - coefficient 0.45.
3. Implementation of the plan in the range of 100-115% - a coefficient of 0.005 for every 5%.
4. No errors - coefficient 0.15.
5. There were no comments in the reporting period - coefficient 0.15.

This is just one of possible examples determination of motivational KPI indicators.

The main point in determining key indicators is the calculation of the ratio of the actual result to the planned one. Almost always, an employee's salary includes a salary (fixed part) and bonuses (variable part). Motivational KPI affects the calculation of the variable part of the salary.

Let's take the ratio of the fixed / variable parts in wages 50: 50. According to KPI, examples of indicators and the weight of the variable and constant parts are as follows:

We accept the following values ​​of the coefficients (the same for indicator 1 and indicator 2):

KPI table in Excel:

Explanations:

1. Salary - (constant component of salary) is calculated based on the number of hours worked. In our example, the constant and variable parts have the same weight.
2. The percentage indicator of the implementation of the implementation plan and the work plan is calculated as the ratio of the indicators obtained to the targets.
3. To calculate bonus payments, coefficients are used. In our example, the impact of indicator 1 and indicator 2 on the amount of the premium is equivalent. The coefficients are also the same. Therefore, the same formulas are used to calculate measures 1 and 2 (only cell references change).

4. Formula for calculating bonuses: =C3*(F3+G3). We multiply the planned bonus by the sum of indicators 1 and 2 for each employee.

5. Salary: salary + bonuses.

This is a sample summary (Excel KPI example). Each company forms its own table, taking into account the characteristics of its activities and the bonus system used.

• How to find and motivate a seller with a high customer focus

KPI Matrix Example in Excel

In order to evaluate employees on key indicators, it is necessary to form a matrix or agreement on goals. According to the general form by which KPI is calculated in Excel, the examples are as follows:

1. Key identifiers are the criteria by which the company's employees are evaluated. Different positions use different criteria.
2. The weight of the indicator is indicated in numbers from 0 to 1 so that the sum of all indicators is 1. The weight number indicates the priority of this KPI, taking into account the tasks of the enterprise in the reporting period.
3. The base value of the KPI indicator is the acceptable minimum. The level, the value of which is less than the “base”, is the absence of a result.
4. Norm (planned figure of the indicator) - a mandatory level. If the "norm" is not implemented, it means that the employee is not coping with his job responsibilities.
5. Goal (above the norm, which makes it possible to improve results) - the value to which it is necessary to strive.
6. Fact - actually achieved performance indicators.
7. The key performance indicator index shows the level of the result in relation to the norm.

KPI calculation formula:

KPI index = ((Fact - Base) / (Norm - Base)) * 100%.

An example of filling out a matrix for an office manager:

The performance ratio is calculated by summing the products of indices and weights. Employee performance evaluation is visually demonstrated using conditional formatting.

Where was the successful implementation KPI: company examples

The KPI system is being actively implemented at domestic enterprises.

1. Sberbank: employee motivation through KPI.

An example of an enterprise that has successfully implemented a KPI system is Sberbank. A few years ago, the branches of this bank were filled with long queues and were remembered for not very polite service. After the KPI system was introduced for Sberbank employees in 2010, noticeable changes took place in the work of the enterprise. For ordinary personnel, group indicators were developed, called "5+":

• personal efficiency;
• improving your knowledge;
• customer focus;
• optimization of working time;
• teamwork.

The motivation system developed for Sberbank employees is not limited solely to financial incentives. As non-material motivating factors, such moments as the provision of benefits, free graphics, discounts, tour packages, etc.

2. "Magnat" - a new control system.

The system of key indicators of the company "Magnat" was called KPI-Drive. Its creators set goals to solve the following problems:

• Improve Tier 1 Key Performance Indicators by the second year after implementation.
• Improve the movement of variable costs by increasing the dynamics of the payroll.
• Increase business transparency and manageability.
• Strengthen team interactions.
• Recoup the cost of implementing the system.

The results of the implementation of the KPI methodology can be an example of how quickly the goals were achieved. Of course, as a result, the system of key performance indicators has become an integral part of the company's business processes.

Implementation results:

• The management model has become more technological and understandable.
• The motivational system has become more technologically advanced and flexible.
• Level 1 KPIs of the enterprise are constantly improving.
• GC "Magnat" is an example of successful implementation and use of target management technology.
• Since the introduction of the KPI system, the Magnat group of companies has increased its business volume by more than 5 times.

Examples of how effective the implementation of a KPI system is can be found in many largest companies operating in the domestic market.

The system of key performance indicators has been used for many years for the management of large, small and medium-sized companies around the world. This is a large-scale and multi-level management system that allows you to make an accurate assessment of the efficiency and effectiveness of the enterprise. The implementation of KPI is not an easy task that requires temporary resources and serious efforts, but the effect of the implementation of the system is worth it.

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

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

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

What does KPI mean?

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

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

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

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

Benefits of a KPI system

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

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

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

Types of KPIs

KPIs are divided into several types:

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

In turn, efficiency KPIs are divided into:

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

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

Leading indicators if necessary, they are involved in analyzing the work of the enterprise at the current time, giving an objective assessment of the quality of current activities, the degree of customer satisfaction, how satisfied they are with cooperation, identifying the possibility of increasing cash flows for the future, evaluating product quality.

What to keep in mind when developing KPIs

When developing indicators, the following rules should be observed:

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

KPI development algorithm

This work is carried out in several stages.

• Pre-project work. This stage consists of:

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

• Development of KPI methodology. At this stage, perform:

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

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

1. development terms of reference to set up the information system and its settings;
2. user training;
3. performing trial operation.

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

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

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

Characteristics of effective KPIs

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

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

General principles and rules for implementing KPI

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

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

Variability in KPI selection options

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

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

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

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

How the KPI system is built

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

• volume of sales;
• service percentage client base;
• quantity of goods sold x and y;
• markup.

Mistakes when creating KPIs

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

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

• purchasing department necessary materials;
• production department;
• sales department;
• financial division.

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

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

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

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

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

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

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

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

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

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

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

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

How to evaluate the performance of an employee

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

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

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

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

How to develop KPI for a specific department, examples

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

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

Today, among the leaders of companies, there are practically no those who have never used KPI performance indicators. The abbreviation that everyone hears stands for "Key Performance Indicators", which means "key performance indicators". In the Russian environment, KPI is interpreted a little differently, measuring the effectiveness of an enterprise, which in essence is no different from the original interpretation.

The main questions of the article:

• What is a KPI?
• Key KPIs
• Applying KPIs in practice
• Examples of KPIs

What is a KPI?

KPI is a set of indicators by which the performance of a company, department or individual is evaluated. Such indicators, comparing the tasks set with the result obtained, assess how certain goals were achieved.

The main characteristics evaluated by KPI indicators:

• a productive result is what the activity of the enterprise is aimed at, i.e. received net profit, volumes products sold, sales revenue, production volumes, market share occupied by the enterprise, the number of customers acquired, their positive feedback, image, etc.;
• indirect effect - results, the receipt of which is unfavorable for the company: debts, excessive staff turnover, etc.;
• resource costs - all costs incurred by production;
• time costs - the amount of time spent on completing tasks;
• an objective assessment of the productive effect (useful) is the main KPI indicator that characterizes efficiency, all other indicators evaluate performance. This indicator is calculated by the ratio of the productive result (beneficial effect) to the sum of all costs (resource and time).

Related video: how to determine the right KPI

Key KPIs

Most often, KPIs are used by large retail chains who own huge amount branches. It is easier for the head office management team to evaluate the performance of the company in one plane, using a set of specific indicators. On the basis of which it is easy to track a particular trend. In medium and small businesses, the use of a KPI scorecard is more complex in terms of evaluation, but nevertheless it is used quite often.

Each manager has the right to choose the required number of KPI indicators independently. The main criterion in the choice is the simplicity of calculating the values. It is also important to remember that the selected indicator should fully analyze the outcome of the activity.

Among the indicators used for performance analysis, the most commonly used are:

• sales volume indicator - cash receipts from goods sold are analyzed;
• the staff turnover rate is the percentage ratio of the number of hired and fired employees for a certain period;
• service standards indicator - % expression of the secret assessment of the quality of service.

Depending on the goals of the analysis, the scope of activity, the specifics of the company's work, the indicators may be different.

Applying KPIs in practice

There are several basic methods for using the most optimal list of KPI indicators. However, long-term practice has deduced the main rule "10/80/10", where:

• 10 is the number of key indicators for evaluating the result obtained;
• 80 is the number of indicators evaluating production activities(operating room);
• 10 is the number of indicators by which performance is assessed.

It should be understood that the main principle of using a KPI system is the ability to manage and control the receipt of the necessary results, i.e. the company, department or individual employee who is entrusted with the implementation of KPI analysis should have all the authority to influence the progress of obtaining the indicators necessary for further KPI analysis.

There are also a few more principles that greatly facilitate the process of KPI analysis:

• the principle of partnership - you need to understand that in order to get the most positive result any activity requires the cohesive work of the entire company, from management to service personnel;
• the principle of improvement - the essence of this principle is that the company's management needs to be ready to train the team, conduct a program to improve the skills of some employees, etc. to achieve the desired result;
• the principle of increasing responsibility - this principle implies that with the help of the introduction of KPI analysis, it is possible to increase the independence of employees regarding the adoption of managerial decisions;
• the principle of matching the analysis strategy and the indicators obtained - the purpose of the principle is to obtain optimal results of the KPI analysis that meet the basic requirements of the strategy for analyzing performance indicators.

Examples of KPIs

When implementing a system for analyzing KPI performance indicators, management often wonders how exactly KPI is calculated. You can come up with a whole list of indicators, but you need to remember that each indicator must identify a specific purpose of the analysis. To develop an effective system of KPI-analysis of employees, it is necessary first of all to build on the tasks and functions that are their official duties. For example, the performance of a Sales Manager can be assessed by the number of closed deals, customer feedback on the manager's work, and so on.

There are several conditions for conducting a KPI analysis (applies to any business structure):

1. A certain number of performance evaluation criteria (no more than 10 parameters, the most optimal - 5).
2. Logic. None of the criteria should contradict and level the other.
3. Monitoring the implementation of KPI-analysis tasks.

KPI of company management and subordinates

By and large, the KPI system of management and subordinate personnel is the same. The main thing is that the selected indicators meet the following requirements:

• measurability;
• specifics;
• realism;
• consistency;
• certainty in time.

The main "pros" and "cons" of using KPI indicators in enterprise practice

Conducting an analysis of KPI performance indicators in a company has both positive and negative sides.

The benefits of KPI analysis include:

• the result of the KPI, as a rule, is a greater motivation of employees to conscientiously fulfill their production tasks and functions;
• each employee of the company receives specific list required results;
• employees can visually evaluate their contribution to achieving the goals set by the company;
• management always has up-to-date information about the work of each employee, which increases the quality control of the employee's performance of official duties.

The main disadvantages include:

• sometimes it happens that the low productivity of the department leaves a negative imprint on the high productivity of a particular employee, as a result, the employee may quit without receiving a proper assessment of his work;
• Not all employees receive financial incentives as a result of achieving their goals. For example, administrative staff will remain out of work, if the purpose of the analysis was to increase net profit, they simply will not have the opportunity to prove themselves;
• sometimes, the result of a KPI analysis is the so-called reverse motivation. Those. instead of being rewarded for achieving results, employees receive nothing, while those who do not improve on the task are penalized or punished.

KPIs are Key Performance Indicators. The indicators are different. The key ones are those that affect the profit. The indicator itself can change quite a bit, but the profit can be noticeable.

For example, the owner of a barbershop calculated that if he increased the average bill of a barber by 100 rubles, the annual revenue would increase by 300,000 rubles. If costs remain the same, profits will also increase. Average check barber for a barbershop is a key indicator.

Why KPIs are needed

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

When KPIs are not useful, the point is that the company is not working with them correctly. This is exactly what happened to the co-owners of the 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 which indicators affect and who should be responsible for each, in three months they made the business profitable from unprofitable.

How to work with KPIs

We implement KPI

The authors of management books portray the implementation of KPI as a multi-step procedure: write organizational structure companies, financial structure, business processes. With this approach, the process threatens to drag on for at least six months. Big business this is possibly feasible. But small businesses cannot afford to stagnate for so long.

But there is a simpler fast way. You will need to determine which metrics have the biggest impact on profits and who in the company influences those metrics. There is no universal set of indicators. For each business they are individual. For sales via the Internet, the key indicators are the cost per click and the conversion of the site. For a call center - the duration of the agent's conversations.

We singled out an indicator that affects profit, understood who it depends on, and appointed a responsible person.

We motivate staff

The next step is to create a personnel motivation system. A popular option when an employee's bonus is tied to overall result company or division is performing poorly. The employee is responsible for his own result. But how will it affect the results of colleagues? Therefore, you need to know what a particular subordinate influences and is responsible for, and tie the bonuses of each to his individual result.

It must be taken into account whether the employee directly or indirectly affects the financial result. Our team includes an editorial team that produces content for the site. Content works to increase demand, but indirectly. Revision is the cost center. Therefore, it makes no sense to tie the motivation of the editor-in-chief 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 sees in the middle of the month how much has already been done and what needs to be done to get as much as he wants.

Drawing conclusions based on KPI

Employees don't always reach their targets. And not always their own fault. When you see that something is going wrong, do not rush to shoot the staff in the corridor. First, figure out what is the reason. If the employee is not guilty, then it is necessary to help him and create conditions under which he can achieve the target indicators.

If an employee does not fulfill the plan from month to month and the point is precisely in him, all that remains is to replace him with someone who will cope. Neither charm nor a good attitude of management will save here. Against indicators, these factors are powerless.

We audit the KPI system

Implementing and setting up a KPI system is not all. You need to understand: the system that you have implemented is not once and for all. In business, things are constantly changing. With each change, the KPI system may need to be adjusted. You have to be ready 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. Correcting a system is easier than building one from scratch.

The motivation system also needs to be adjusted. It is best to do this with the involvement of employees. Each 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 is worth 75 thousand, but he can earn 150 if he is a successful professional.

Remember

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