Payroll by kpi example. We evaluate the results of the department's work. How to overcome staff resistance when implementing a KPI system

Now we will list a number of rules that must be taken into account when creating your own system for assessing the effectiveness of work on KPIs.

Firstly, it is worth noting that the calculation of indicators by KPI cannot be super complicated and protracted, so that any manager is not distracted from his direct duties, and is not forced to devote all his working time to this business.
Second, the metrics should be transparent and as measurable as possible so that they can be understood by all employees in the enterprise in the same way.
Thirdly, and most importantly, these indicators should not only be obtained and ignored, but on their basis a picture of the work of each employee was drawn. On the fulfillment of the plan, a bonus or incentive is paid, if the plan is not fulfilled, on the contrary, a fine is imposed.

Positive and negative aspects of KPIs

The positive aspects include:

Motivation for employees to fulfill the plan.
Honesty, transparency and adequacy in wages. You can see which employee does the best and how much he gets.
Making adjustments to the work of a lagging employee.
The staff is involved in achieving the goals of the company.
Controlling the quality of work and the fulfillment of their duties.

The disadvantages of the indicator include the fact that it is not ideal. KPIs can not be effectively and rationally applied in all areas, since it is not always possible to quantify a particular job. This means that in order to find it or bring the system to the desired indicators, the manager will have to spend a significant amount of time, nerves and budget.

KPI motivation

It sounds ominous, but it's actually very simple. There are 3 main steps in the system: minimum (at which the employee is not fired), normal (when the employee shows a satisfactory result) and maximum (where the staff should strive). If each employee of the company clearly evaluates what indicators he has and where he needs to grow in order to receive a raise in salary, a bonus or new position, he begins to work with renewed vigor.

KPI calculation example

There are no formulas for calculating this indicator, because each enterprise is unique and has its own specifications, but we will take a fictitious company, let it be the store "Your milkman" and our employee - manager:

The rate is equal to 10 thousand rubles.
Receives 5% from each of its sales (turnover is 500 thousand rubles).
Receives a bonus of 2 thousand rubles if he finds the required number of new clients.
It is not difficult to calculate that he will earn 37 thousand rubles.

As you can see, the calculation is made transparently and understandably for any employee, which means that this increases the motivation of company managers to sell and attract new customers.

How to implement KPI

To implement the system in an enterprise where none of the employees have encountered such a system can become a real problem, it can even reach the point of refusal to enter the workplace.

That is why, first of all, you need to carefully analyze all the moments, find key indicators and give them for temporary testing. This moment will help to reveal all weak sides your system and improve it, bringing it to a good result.

The most important factor in a successfully implemented KPI system, is its automaticity of all processes.

Summarizing

From the article, we learned that KPI is a key performance indicator, we analyzed its positive and negative sides, learned how to calculate this indicator, figured out how it can affect employees and how to properly implement the system in production.

You will learn:

What are the pros and cons of the KPI system.
Which employees shouldn't implement KPIs.
What KPIs to set for the leader.
What to do if employees sabotage KPI implementation.
How to revise the KPI system.

What is a KPI system

KPI represents special system indicators, using which employers can evaluate the performance of subordinates. At the same time, KPIs - key indicators of each employee - are tied to general business indicators (level of profitability, profitability, capitalization).

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Different KPI goals are distinguished, but the main one is to create a situation in the company in which employees from different departments could act together, without contradicting their business actions to each other. The activities of one specialist should not interfere with the work of another or slow it down. All employees should strive for a common goal and work effectively, receiving bonuses for this.

It is believed that KPIs are directly related to the BSC (Balanced Scorecard), but this is not the case. The BSC creators did not use the term KPIs. They used the concept of "measure", "gauge", or measure.

KPIs and BSCs are indirectly related. BSC is endowed with a business process perspective where there are associated goals. To measure the extent to which these goals have been achieved, specialists use KPI indicators of business processes.

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So what is a KPI in simple words? These are certain indicators that make it much easier to understand what actions should be taken to improve efficiency. At the same time, efficiency is not only the number of manipulations carried out over a certain time period, but also the benefit that the company has received from the work of a single specialist.

Company KPIs are generic. However, in subdivisions they are divided into small ones, called personal. There cannot be many of them. 3-5 clearly marked and understandable indicators are enough. The main requirement is the ability to easily and quickly measure them.

Here are some examples of KPIs . Possible KPIs for a sales manager are as follows: "The volume of sales is not lower than ...", "The number of new customers is not less than ...", "The amount of the average contract for a client is approximately ...", "The degree of proficiency in English is not lower ...".

Another KPI example. You are the owner of a large point of sale household appliances... 12 managers work for you. How effectively each of them works during the month is assessed based on the following indicators:

how many people with whom the manager spoke bought the equipment (in percentage);
average check amount;
how much the sales plan is fulfilled (for example, the amount of the minimum level per month is 350 thousand rubles; the level of overfulfillment of the plan in percentage will affect the manager's salary).

For example, you need to sell mixers of a specific brand and manufacturer. In this case, it would be reasonable to set a plan for each manager with a minimum number of mixers equal to 5. If the manager sells more equipment than the planned amount, then he receives 3% of the cost from each “extra” mixer. For specialists, this is an excellent motivation, KPI of this type allows you to successfully sell products. Experience shows that the optimal number of KPI criteria for one specialist is from 5 to 8.

3 interesting facts about KPI

Key Performance Indicators have been used in the West for over 40 years. In the CIS countries and Russia, it has been used for about 15 years.

In a number of countries (Korea, Singapore, Hong Kong, Japan, Malaysia, Germany and the USA), the Key Performance Indicators system is national idea... KPI there is not just a concept, but the basis of the work of all companies.

Russian President Vladimir Putin proposed creating a Key Performance Indicators system to assess how officials work.

How to avoid mistakes when implementing KPIs

The editorial board of the magazine "General Director" reviewed 6 popular mistakes in the KPI system and gave advice on how to avoid them.

Where does KPI development begin?

KPIs should be created “from top to bottom”, starting with the ambitious goals of the company to the tasks facing an individual worker... To fully solve problems, it is necessary that all personnel are involved in the preparation of the KPI system. We are talking about employees working in economic planning, financial, organization management specialists labor activity, the team of personnel departments, sales, technology department.

First, the organization needs to figure out which KPI is in priority. To do this, the company clarifies and verifies strategic and operational goals. The formulation of the goal should ideally be such that it does not clearly indicate the financial component as the main indicator. It is better if the financial indicator flows from the main task. With this approach, the company will be able to feel confident in a crisis period.

The goal is to link with the market environment, changes in the market. For example, a company may set itself the goal of becoming one of the TOP-3 in the market for its products or take leadership positions in a certain territory. After the main goal is formulated, subgoals are highlighted.

After setting goals, you should analyze how efficiently the company is now working and how it solves current problems. At the same time, it is necessary to determine how employees' salaries will be calculated.

When creating KPIs in an enterprise, it is important to budget for personnel costs. In this case, it is divided by type of payment. In addition, it is required to take into account the indexation of salaries and career growth specialists.

At the final stage of development, regulations are created, KPI maps are prepared, the methodology for calculating each key indicator is prescribed, and the system is coordinated with the management of all independent units in the company.

The KPI statement should include information about the goals and objectives of the system:

Improving results and increasing the efficiency of specialists. Development and implementation of employee motivation.
Increasing the company's profitability. Development of goals and performance indicators for each position in the departments and divisions of the company.
Creation of an information base that will allow making the right management decisions. Ensuring the prompt collection of information and control over the functioning of the system.

Key performance indicators and their types

Key KPIs are:

lagging, reflecting the results of work at the end of the term. We are talking about financial KPIs that indicate the potential of the company. However, such ratios cannot show how effectively departments and the organization as a whole are working;
operational (leading), which allow you to manage the state of affairs during the reporting period in order to achieve the goals set after its completion. Operational performance indicators help to understand how things are now at the enterprise, and, at the same time, demonstrate financial results further. On the basis of operational KPIs, one can also judge how well the processes are proceeding, whether the manufactured products are good, how satisfied customers (consumers) are with them.

Basic conditions - indicators should contribute to the implementation of intermediate and final goals and all indicators can be quickly and easily calculated. The coefficients are different - qualitative (in the form of a rating or points) and quantitative (in the form of time, money, production volume, number of people, etc.).

KPI examples

KPI for an employee technical support... A specialist of this profile should advise those who are real buyers and help potential clients. The set of KPIs in this case is small. The work of an employee is assessed on the basis of how well he provides consultations, in what quantity, whether customers are satisfied with the service.

Key performance indicators for the sales manager. The number of new buyers should not be below a certain mark, the volume of sales is not less than the established limit, the size of the average contract for a client within the indicated boundaries, ownership english language at one level or another.

The KPI system consists of a number of indicators, but the universal ones are:

Process, indicating what result the process brought, how requests from consumers are processed, how new products are created and introduced into the market environment.
Clients: how satisfied are the clients, how the interaction with the sales markets is carried out, how many buyers were attracted.
Financial allow us to judge the foreign economic situation of the enterprise. Here we are talking about the level of profitability, turnover, market value products, financial flow.
Development criteria show how dynamically the company is developing. These are the degree of productivity of specialists, the level of staff turnover, the costs for each of the employees, the motivation of employees.
Indicators external environment: how the price fluctuates, what is the level of competition, what is the price policy in the market. These indicators must be taken into account when creating a KPI.

How to calculate KPI

Stage 1.Selection of three key indicators of the effective activity of a specialist:

the number of users who were attracted to the site;
number of repeat orders from existing customers;
the number of recommendations and positive reviews that appeared after purchasing a product or ordering a service on the website and in the social networks of the trade organization.

Stage 2.Determination of the weight of each indicator. The total weight is 1. The largest share belongs to the priority indicator. As a result:

the number of new customers is assigned to 0.5;
the number of repeat orders - 0.25;
reviews - 0.25.

Stage 3.Analysis of statistical data for the past six months for each KPI and development of a plan:

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

KPI calculation formula: KPI Index \u003d KPI Weight * Actual / Goal

In this case, the goal is the planned indicator of the marketer. The fact is the real result.

It becomes clear that the specialist has not achieved his goals completely. However, based on a total of 113.7%, it is safe to say that the real result is quite good.

Stage 5.Payment wages.

In total, the marketer is owed $ 800, of which $ 560 is a fixed portion, and $ 240 is a variable. The full salary of a specialist is paid for an index equal to 1 (or 100%). Thus, the figure of 113.7% indicates that the plan has been overfulfilled, which means that the marketer is given a salary with an additional bonus.

Result:

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

If the KPI is less than 99%, the amount of the bonus is reduced.

Such a table allows you to see the problems in the work of the marketer, the difficulties that he cannot cope with. It is likely that poor performance can be caused by the wrong strategy for increasing customer loyalty. At the same time, it is possible that initially the plan itself was drawn up illiterately. In any case, the situation needs to be controlled. If things don't improve in the future, review the performance requirements.

If you adhere to this policy, you will learn what the KPIs are in the production process, sales, etc. You will better understand what the calculation of indicators and the process of their implementation should be.

The calculation can be modified taking into account the planned results, supplemented with new values: an indicator of the number of solved and unsolved problems, a system of penalties for poor performance on the main points in the plan.

So, for the fulfillment of the plan less than 70%, the employee may not receive a bonus at all.

There is also the following scheme for calculating the bonus part of the salary for a specialist who has fulfilled the sales plan:

KPI implementation in the company

Both employees and third-party consultants can be responsible for the process of implementing the KPI system created in the company. At the same time, one should take into account what is the specificity of the enterprise, how business processes take place in it, what goals and objectives the company sets for itself. It is necessary that the rank-and-file personnel are aware of how the wage formation system will change. Communicate to employees that their level of performance will be the main metric. When introducing a KPI system, specialists should be trained. Staff should understand that the changes are primarily beneficial to them. The implementation of the system implies the development of special documentation: labor contracts, staffing, collective agreement and other papers related to the payment of employees' activities.

Before introducing a KPI system, test it through a pilot project. Take one or two departments and test new processes and wage formation in them in a pilot mode. The ratio of the fixed and premium components of payment can be adjusted in real time, taking into account target indicators for specific groups of personnel.

When new order tested in the company and completely corrected, you can enter it into other departments. Remember, it's best not to implement a KPI system without testing. As part of the pilot project, it will be possible to clearly understand what difficulties the system causes for the personnel, learn about possible deficiencies and quickly eliminate them. All specialists of the enterprise must work to achieve common goal... Otherwise, the employees will only have discomfort, and all actions and aspirations will be in vain.

In the process of introducing KPIs in the company, make sure that the indicators can be adjusted if the need arises. Thanks to constant monitoring of indicators, it will be possible to timely adjust to changes in the market environment and edit the working strategy. In addition, the premium generation model should be improved every year, that is, it should be optimized. As part of the optimization, the estimated indicators are changed to other, more relevant for certain employees and departments.

What KPIs to set for a manager

Personnel and management KPIs should be related to the main objectives of the enterprise. You need to know exactly what you want to achieve after a certain period of time. You can strive to stay ahead of the competition and become a leader in your industry. Another option - the head of the company wants to sell the business on favorable price... The KPI for the first case is an increase in the customer base and sales volumes, for the second, an increase in the company's capital and the achievement of the maximum selling value.

The main goal must be written down and formalized, and then broken down into subgoals. When specialists successfully complete subgoals, they are getting closer to solving the main task of the enterprise.

If we are talking about a large organization or holding, a director's KPI is required for each division and branch. If the owner of a large enterprise plans to compare the performance indicators of General Directors, geographically distant from each other, the development of unified system estimates. It should be remembered that those KPIs that are easy to achieve in large regions are not always easy to achieve in small ones. In this regard, the system can be formulated in approximately the same way, but the indicator numbers should be different for managers in different regions.

When preparing KPIs, try to set indicators in the optimal quantity so that the employee can easily track performance. It is better if there are five KPIs. When installing more indicators, the director may be inattentive to the main ones and focus on minor ones.

When creating a management KPI system, a combination of general and personal metrics is optimal. General indicators are called the results of the department's activities under the authority of a specialist. Based on general indicators, it becomes clear how the team works, how much the leader is interested in solving the assigned tasks. Personal indicators are defined as individually achieved goals and performance.

If the KPI system is created well, the coefficients show how each of the leaders works, and this information is useful for the company.

KPI achievement calculation is the heart of the payment system. The mechanism for calculating and calculating the bonus depends on it, and, therefore, the effect of the entire motivation system. However, from what I see in most organizations, today's managers still have no idea how to do this simply and effectively. As a result, cumbersome, complex and mostly inoperable schemes are invented to pay staff. Or even worse - they make a commission scheme for the salespeople, and for everyone else "according to the results of the company's work." We will talk about the dangers of these approaches separately.

In fact, the secret of calculating KPIs is quite simple and consists in one single and rather trivial formula. But instead of it, in practice, for some reason, several extremely ineffective schemes have become widespread, which usually greatly interfere with the implementation of KPIs in organizations. And the worst thing is that even in the specialized literature nothing sensible has been written about this.

So, let's try to figure out how the degree of KPI fulfillment is usually calculated, why this should not be done, and how it should be done to get the result you need.

1. Plan-fact

This is the simplest and most obvious way, because any key performance indicator (KPI, KPI) reflects the goal, and the goal should be measurable - a plan. Without a plan, a KPI cannot exist. Accordingly, the first thing that comes to mind is to divide the fact into a plan. For example, the sales plan is 1.5 million rubles, and the fact is 1.35 million. Accordingly, the degree of implementation will be 1.35 / 1.5 \u003d 90%. For a plan-fact analysis, such a formula is absolutely justified, however, we are talking about calculating the KPI fulfillment for further bonus accrual. We do not take into account the commission scheme in this case.

So what to do in the above example? Pay an employee 90% of the planned bonus? It seems logical if the plan is 90% fulfilled. But what if the plan is 50% fulfilled - pay half of the bonus? But if the sales plan is only half fulfilled, then the company is most likely already in a very difficult situation. The product has a cost, the organization has indirect costs that must be covered from the margin. Today it is no longer the 90s, and if the sales plan is half fulfilled, then the organization is likely to incur losses, which means that it will have to optimize costs, reduce staff, or something worse. Paying a premium (even half) in such a situation is tantamount to suicide.

In one organization, a special condition was introduced for this case: if the degree of KPI fulfillment (calculated using the fact / plan formula) is less than 50%, the bonus is not charged. Well done, they insured themselves from the payment of premiums in the event of bankruptcy, but in such a situation, half of the bonus fund is not used in a targeted manner. In fact, in that organization, all plans were guaranteed to be 70-80% fulfilled - the business has a certain inertia. The struggle was going on for the last 20-30%. It really took some effort to get them. But with the fact / plan execution formula, this is the targeted use of the bonus fund only by 20-30%, the rest of the payments are guaranteed to all employees. And why bother for a 20% bonus, which is about 30% of the total salary, because this is only about 6% of the total earnings (0.2 x 0.3 \u003d 0.06). Such a bonus system simply does not work.

The first important rule follows from this:

Every KPI other than the plan must be critical

This truth has long been evident in Western companies, which have been saturated with quality management systems, performance management technologies, etc. over the past decades.

Critical value for simple direct indicators (the more, the better), this is the minimum below which the fact according to KPI should in no case fall. For example, the plan is to process 97% of customer requests within the scheduled time frame, the critical value is 92% of requests. Below this threshold, contractual penalties begin, and customers change service providers. For inverse indicators, the critical value is the acceptable maximum. For example, the plan for the scrap rate is no more than 1.5% of the output volume, the critical value is 5% (in this case, we stop the line).

Tolerance Is the difference between target and critical value. In the first example, 5% (97-92), in the second - -3.5% (1.5-5). In real life, the struggle for the actual KPI values \u200b\u200bis carried out precisely within the limits of permissible deviations. And it is within this framework that the degree of fulfillment should be considered and the bonus calculated. But the simplest fact / plan formula does not take this into account.

2. Tables of values

Many managers intuitively understand this problem, but without knowing professional tools her decisions, do what they have seen somewhere. So, in practice, lookup tables have become widespread, in which certain intervals of indicator values \u200b\u200bare indicated and an index of the degree of fulfillment corresponding to each of the intervals. Surely each of you at least once in your life has come across similar things:

P / p No.	Intervals of deviations of KPI fulfillment from planned values	Percentage of adjusting the planned amount of remuneration
1	from 97% and more	100%
2	from 90% to 96.9%	75%
3	from 85% to 89.9%	50%
4	from 80% to 84.9%	25%
5	below 80%	0%

At first glance, it seems that the problem has been solved: the degree of fulfillment now takes into account the critical value of the indicator, the degree of fulfillment is more sensitive to changes in the indicator, which is what we wanted to achieve. Apparently, due to the seeming simplicity of the solution, the tables of values \u200b\u200bare so widespread. In practice, they have a number of very significant disadvantages:

When using this kind of tables the premium becomes discrete, insensitive to small changes in the indicator... For example, in the above example, the premium will be the same at 91% and 96% of the indicator execution. And for the company, such a fluctuation can cost half or a quarter of the profit. But the difference between 89.9% and 90% is a quarter of the premium, and the company may not notice such a fluctuation or it may be caused by a measurement error. This is not fair and makes the accrual of the premium random.
Such tables are relatively convenient to use when all indicators in the company are straightforward (the more, the better) and have the same tolerance. For example, 20% of the plan, as in our example. And if some of the indicators are the opposite (budget savings, decrease in rejects), and the permissible deviations for them differ? For example, the permissible deviation for the scrap rate is 5%, for revenue - 20%, and for overdue accounts receivable - 50% of the plan. In this case, it is necessary to develop a separate table for each indicator. What if the tolerances vary depending on the season? For example, in our peak season, the permissible deviation in revenue is 25%, and in the low season - 50%. As a result, for each indicator for each calendar period, you will have to create a separate lookup table, which complicates the calculation of the premium... Or it is necessary to exclude from the list of KPIs everything that does not fit into the scheme "a simple direct indicator with a permissible deviation of 20%." But then the payment system will again become flat and will not reflect the real results of the employee's work.
An additional calculation step is added, which also complicates the procedure for calculating the premium. After all, you must first calculate your indicator in its physical terms (in rubles, pieces, tons, hours or even in%), then calculate the degree of its fulfillment by dividing the fact into the plan, and only then get the adjusted degree of fulfillment by substituting the resulting plan-fact into the value table. There are situations of using tables of values \u200b\u200bimmediately in kind. For example, 2 violations of the rules - 0% bonus, one violation - 50%, zero - 100%. But for indicators with changing plans and tolerances, this scheme is not suitable.

In general, you cannot create an effective bonus system on such an engine.

3. Formula with standard

In fact, the solution is quite simple and has been known for a long time. To calculate the degree of performance of the indicator, you can and should use a formula that correlates the fact not only with the plan, but also with the critical value of the indicator. It looks like this:
The meaning of the formula is that the numerator is the difference between the fact and the critical value, because you have to pay only for exceeding it. Further, this difference is correlated with the permissible deviation. That is, a fact equal to the plan is taken as 100%. It `s naturally. If the fact is compared with the critical value, the degree of fulfillment will be 0% - there is no need to pay a premium for such a result. Intermediate values \u200b\u200bare calculated linearly and continuously. The calculation logic is shown schematically in the picture:

Comparison of the formula with the standard and the classic methods for calculating KPIs described above is shown in the following picture:

As a result of using the formula with the standard, all the main tasks are solved:

You do not pay for the actual KPI value above / below the tolerances.
The premium becomes as sensitive as possible to any changes in the fact of the KPI within the limits of the tolerance.
The formula is absolutely universal and is suitable for any type of indicators - for direct, inverse and even corridor, for each KPI for each period, you can set the required permissible deviation, the formula does not care.

Simple, convenient, versatile and effective. There remains one difficulty - for each indicator, in addition to the plan, it is now necessary to develop a permissible deviation. But this is already inevitable if you want to create a working KPI system in your company. How to correctly determine this permissible deviation, we will talk separately.

It is noteworthy that most automation tools for calculating KPIs are not familiar with this formula (and automation for managing KPIs is useful, we wrote about this earlier). Undoubtedly, such a formula is "hardwired" into HighPer, because we developed it with the understanding that it is impossible without it. KPI-Drive from A. Lityagin has

a universal mechanism for setting the degree of fulfillment of the indicator, where you can set up a formula with a standard, but only if the standard for KPI does not change from month to month in% of the plan. If the permissible deviation "jumps", the desired setting can no longer be performed. Others simply stupidly divide the fact into a plan or offer tables of values. Imagine, you buy a program that should make your life easier for several hundred or even millions of rubles, and it does not even allow you to enter a tolerance for the indicator - the corresponding field is not provided in the program. This clearly shows the degree of understanding of the KPI methodology by the developers of the corresponding software products.

In fairness, we can add that in theory, there are also other ways to calculate the degree of KPI fulfillment:

Non-linear (parabolic), when the degree of fulfillment function is given by a power equation.
Progressive / regressive, when the degree of fulfillment function changes its slope depending on the interval in which the actual value falls.
Competitive, when the best / worst employees receive / do not receive the award.

[Povarich B.G. Labor motivation: management aspect. Novosibirsk, 2008, pp. 90-92].

However, in practice we have not seen such wage schemes - they are too complicated.

Good luck with your employee motivation!

Any company is interested in improving the efficiency of its business and staff performance. The achievement of these goals is largely facilitated by the introduction of quantitatively measurable and reliable performance indicators - KPIs (Key performance indicators).

The main advantage of a system based on key indicators is its versatility. It is also aimed at increasing the interest of personnel in the results of the company's activities. When developing KPIs, the specifics of the organization's activities are taken into account. You can apply KPIs both to assess the work of the entire company, its individual divisions and specific workers... In addition, the KPI system allows you to compare homogeneous processes that occur in different conditions. It also makes it possible to compare indicators for several divisions for the same period.

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

Calculating and applying KPIs

The most effective use of KPIs in large companies retailers who have branched network... In this business, everyone outlet generates the same business processes. This enables the top management of the head office, through the development of simple indicators, to see differences in the performance of branches and to predict difficulties. Moreover, on the basis of these indicators, it is quite possible to build a personnel motivation system. In addition, by constantly comparing and analyzing the performance of each of the divisions with a high degree of probability, it is possible to predict trends in the development of the business as a whole.

The simplicity of calculating financial indicators is ensured by a transparent form of financial or management reporting. All the required data is contained in the balance sheet and income statement. Management can obtain information for any period as quickly as the used accounting system allows. In practice, this time ranges from three to five days to 20. This period is quite acceptable in order to timely implement management impact.

The internal business analyst should be responsible for developing and comparing the metrics because of the need to provide accurate data. He must clearly understand all the pros and cons of each of them. After all, the indicators applicable to assess the top manager and the business as a whole, often cannot be used to assess any department. This is due to the specifics of the work of each structural unit. For example, to assess the head of a responsibility center, the indicator of profit remaining at the disposal of the organization before taxes and interest (EBIT - earnings before interest and tax) is suitable. However, this metric is completely inapplicable for assessing the performance of the account manager. The point is that EBIT is purely a financial indicator. It characterizes the efficiency of doing business, that is, it directly depends on the income and expenses of the company. The account manager does not directly affect these numbers. Another, non-financial indicator should serve as an assessment of his work. For example, the number of customer claims resolved or the percentage of this amount to the total number of claims.

Basic requirements for KPIs

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

allow you to evaluate the work of each employee or group;
contribute to motivating staff for results;
increase the responsibility of each employee for their area of \u200b\u200bwork;
provide an opportunity to develop and improve the most promising business areas;
provide a basis for management to find "weak" spots in business
in an accessible and visual form show the influence of a process on the result;
give meaning to every management decision.

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

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

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

Each of the indicators should be in the area of \u200b\u200bresponsibility of those people who are being evaluated.

Indicators should contribute to the motivation and growth of personnel efficiency, and this is directly related to the setting of goals. So, when the sales department fulfills the plan to attract new customers (KPI - the number of new customers attracted over the period), the department can count on additional bonus... On the contrary, if the plan is not fulfilled, the bonus is not paid.

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

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

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

Examples of using indicators

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

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

Examples of indicators to measure performance

Index	What does	Who is evaluated	Possible frequency of calculation	What can be used for
EBIT, profit remaining after tax, interest and dividend payments	Profit remaining after taxes, which is affected by the levels of income, expenses, investments (depreciation)	General Director, directors of branches responsible for the revenue and expenditure side of their budget		Calculation of bonuses, self-financing reserve, obtaining loans, evaluating the return on investment, etc.
Gross Margin, the level of profitability (usually as a percentage)	The ratio of gross profit to revenue (total sales)	Heads of departments, lines of business, developing a product or service	Annually, monthly, and also up to the product or technologically completed process	To assess the prospects for product development, the impact of demand on a product or service, the impact of competition
Turnover ratio, frame rotation	The ratio of the total number of dismissed for the period to average headcount working in the same period	HR Director, managers structural units companies with a separate staffing table	monthly, quarterly annually	To assess the impact of employee turnover on business results, forecast the periods of the most active search personnel, determining the loyalty of each category of employees, to identify hidden reserves of savings, assessing the effectiveness of the personnel apparatus
Average sales	Sales volume (in pieces, monetary units) that each seller brings	Sales department, sales manager	Daily, weekly, monthly, quarterly, annually	Planning the revenue side of the unit's budget, measuring the performance of each person or department and, as a result, distribution bonus fund, identifying seasonality
The ratio of the periods of turnover of receivables and payables (as well as each of the periods separately)	The ratio of the average payment term of buyers to the average term of payment to suppliers	Customer service department, finance department, sales department, sales department	Monthly, quarterly, annually	Planning cash flows and cash gaps, obtaining loans, calculating deferred payments under contracts, setting discounts for early payment, identifying internal sources of funding

Employee motivation based on work results

Using key indicators, you can evaluate the effectiveness of each employee - from the cleaning lady to the top manager - and in accordance with this calculate the bonus for them. This contributes to the development of motivation among employees, because they understand that the size of the bonus depends on their efforts. However, when implementing KPIs, or rather, when determining key performance indicators, you can face some difficulties. It is not easy to single out the parameter of success "in its purest form", and the higher the position of the employee, the more difficult it is to separate the factors that depend only on him. Then, each parameter needs to be monitored.

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