KPI, or Key Performance Indicators, is a performance measurement system that evaluates the efficiency and success of personnel's work. The system allows tracking the achievement of set goals and controlling employees. KPI is expressed in numerical form and is tied to real metrics.
Depending on the direction of work, KPI may vary. For example, for the sales department, KPI may depend on the number of sales or the average check, and for the marketing department - on the volume of traffic attracted and the number of leads. Management independently determines which metrics to base KPI on and sets the values that need to be achieved. Evaluating KPI based on the reporting period results, management draws conclusions about how successfully employees coped with their tasks.
The KPI system is not popular among ordinary employees because it creates additional pressure on them. KPI can lead to overwork and stressful situations when an employee fails to achieve the set value. To avoid such problems, the implementation of KPI should be as justified as possible. This system is best suited for companies with a large staff of employees who are difficult to control.
Before implementing KPI, company management should determine whether they really need it. For example, they need to understand whether all work processes can be measured in numerical format. After that, they need to explain to employees why this system is needed and how it will affect the company's work. To motivate staff, KPI is often linked to financial rewards, where salary or bonuses depend on achieved indicators.
KPI should be flexible — this means that it can and should be adjusted based on the results of the reporting period. It is very difficult to accurately assess the team's capabilities and set realistic goals right away. Some circumstances that affect KPI may simply be overlooked, or they may arise during the work process. It is also necessary to automate KPI tracking so that employees do not waste time on reporting and management can monitor progress independently. If done correctly, KPI will have a positive effect on the company's work:
- work becomes more orderly;
- staff will know what goal they are working for;
- planning work becomes easier;
- staff receive a fair assessment of their work;
- employees have additional motivation.