Key indicators of the final assessment of the effectiveness of the project. How to implement a KPI system in your company

In this article, you will learn:

• Why do we need KPIs for managers
• What are the benefits of KPIs for managers
• What KPI criteria for sales managers to use
• How to calculate KPIs for sales managers

The harmonious concept of KPI for managers, which appeared abroad in the last decade of the last century, has come down to us only in the 2000s. In the first place, this system was recognized as a strong incentive regulator of business activities. In this post, we'll focus on the key managerial performance metrics that can be used productively for your organization.

Why do you need KPIs for managers

The Balanced Scorecard (BSC) judgment has gained notoriety among executives due to the work of two authors - R.S. Kaplan and D.P. Norton. One of the significant components of this concept are the models of motivational indicators, which eventually became known as KPIs (Key Performance Indicators). Due to the problematic nature and translation errors, KPIs in Russian were called KPIs (Key Performance Indicators) or KPIs (Key Performance Indicators). The second option gained great popularity, having established itself among managers.
KPI models embodied in real business are an integral part of the harmonious concept of indicators. At the same time, they themselves are a system integrated into a significant number of functional control units, of which the leading positions are occupied by strategic management, sales and personnel management.

Which managers are KPIs applicable to:

KPI for HR manager.

Today, KPIs are often used to motivate employees by linking performance and pay. However, the main omission of a significant part of organizations is that they take into account either the wrong indicators, or the largest number of them. So the main objective when forming a KPI concept for a HR manager, it is to identify the correct indicators for each employee. Then the team will develop a stable understanding of what tasks each of them faces, what kind of encouragement awaits him in the effective achievement of the set goals.

KPI for a project manager.

A high KPI of a project manager is not the most common indicator for free staff. The point is that a good manager in this area is very valuable and usually in no hurry to change jobs. Naturally, a high KPI of a project manager is a strong argument for a decent wage. Even in a crisis period, they are in-demand and well-paid specialists. Project work being a component of the entire work of the company, it is also considered an agent of change. The exclusivity of high performance implies reforms in the settings of the entire management concept. It is necessary to make a good probe as part of the repeatable, cyclical activity of the company, that is, to integrate the results of the project into the processes of the organization.

KPIs for top managers.

The main indicators should be focused on the tasks set for the organization, on what you want to achieve in a specific period of time. For example, the goal may be to gain a high place in the market or to obtain good income from the sale of a business. For the first option, the KPI manager will include sales volumes, an increase in the client base, and for the second, an increase in the organization's capitalization, sale at the highest possible price. The goal must be formalized, therefore, it is necessary to fix it in writing and divide it into less significant parts, the totality of the implementation of which will help to arrive at the main goal.

KPI for an office manager.

The main KPI indicators of efficiency of office managers are also areas of regulation. The following KPIs are meant:

• performance of work on time;
• actions within the budget, saving resources and choosing a competent supplier;
• a positive assessment by the staff and management of the organization of the level of administrative support;
• indicators interrelated with the management of personnel of subordinate structures (staff turnover, compliance with positions held, the number of layoffs during probationary period, high appreciation of colleagues from other departments in interaction with the administrative team).

KPI for a quality manager.

For example, in OJSC KAMAZ, several indicators are used as an assessment of production efficiency, each of which is significant and effective in a certain position. You can call this a hierarchy of production or operational KPIs. At the head are two KPIs: assessment of the quality level of products from the point of view of the consumer - ARA - Audit Past Assemble; the number of hours actually worked by employees per unit of production - HPU - Hours Per Unit. These KPIs define production processes organizations in general. There are three more KPIs below: the full time period of the production cycle - TPT - Through put Time; the share of products that have not been revised or fixed - FTT- First TimeThrough; compliance with the work schedule for the delivery of final products - OTD - On Time Delivery.

KPI for development manager.

Usually in classical approach professionals recommend using 10 to 20 high-level KPIs for management. However, you can go deeper into internal processes by increasing the number of those KPIs that are relevant to local action within the organization through monitoring. These KPIs relate to four main segments - finance, customers, processes, personnel. This approach contributes to the regulation of activities on all fronts.

KPI for a sales manager.

The management of the organization decides to introduce KPIs for sales managers in order to have a forecast of the receipt of finances and the growth of the company. There are good reasons for this, because an elementary request to a manager to provide a sales forecast for the next 2-3 months with a 75% probability of implementation can cause serious difficulties. All activities of an employee without a KPI cannot be predicted, and the main goal that an organization needs to achieve is to come to a planned economy. We consider it necessary to take a closer look at the KPIs for the sales manager, examples of which can be found below.

5 Benefits of Using KPIs for a Sales Manager

1. Result orientation- the employee earns material incentives corresponding to his effectiveness.
2. Controllability- helps the manager to regulate the efforts of employees depending on fluctuations in the market situation or the objectives of the organization.
3. Justice- adequate assessment of the employee's contribution to the success of the organization and fair distribution of risks in case of failure.
4. Comprehensibility and transparency- employees understand what they receive remuneration for, and they have the right to independently calculate the main indicators of their activities.
5. Stability- when target indicators change in some periods, the concept of motivation remains the same, which forms a trusting relationship.

What are the KPI indicators

KPIs are considered to be part of general concept goal-setting, which, in addition to personnel performance indicators, contains strategic target indicators, a system of tactical and operational design and regulation. If the KPI concept is not related to long-term goals and the main parameters of the organization's functioning, then it will remain only formal. In other words, the concept of KPIs for the manager will simply be ineffective.

Decomposition of goals by levels of leadership:
Strategic business goals → Company goals → Goals of divisions, departments → Employee goals

Focusing on existing tasks, specifics of activities, powers and level official, KPIs for managers are identified. Speaking of KPIs, one can consider economic indicators, contributing to the assessment of commercial performance, as well as indicators of key processes and the consumption of key resources.

Step-by-step development of KPIs for managers

To develop a matrix of tasks and KPIs, you need to complete six steps:
Step 1. Make sure that the tasks set out really lend themselves to accomplishment. Manager's unrealistic demands can frustrate employees and significantly reduce their performance.
Step 2. Divide tasks optimally by divisions, departments and employees. The goals of the organization should not be located in the manager matrix.
Step 3. After a competent separation of goals, formulate personal goals and KPIs for managers. Two KPIs can correspond to one task. Note full compliance KPI goals organizations. Each task has its own weight, which directly depends on its importance, and their total amount is 100%. In addition, they can differ in the difficulty of reaching them, which should also be considered by the manager.
Step 4. Form the planned indicators, for this you need to study the information about the previous period. If this data is analyzed for the first time, then it is necessary to research the market situation, especially for organizations with seasonal activities. Also consider existing resources. Only after collecting all the data can you put forward targets. Remember that too high KPIs will lead to a decrease in performance, and too low - to unreasonably high financial incentives for employees.
Step 5. Begin forming the performance criteria. Refer to the calculation formula:

Performancei = Actuali / Plan i, where fulfillment i = fulfillment of the i-th goal

Step 6. Correlate the results with the performance of the manager. For any purpose, you need to highlight a satisfactory result. All the data obtained are added up, and a grand total is obtained, which directly affects the amount of the employee's remuneration.
In the future, you can use a complex construction of the goals matrix, where all indicators are divided into three groups:

• unacceptable;
• planned;
• leadership.

The amount of remuneration for managers is determined in accordance with the listed groups. For example, if an employee's bottom line is in an invalid group, then they will not receive a bonus.


A competent KPI concept for sales managers provides high-quality management accounting and helps to regulate personnel policy... The employee should not pursue quantity, but quality. You need to understand that a sales manager is a completely creative specialty, and you need your own approach to the employee, since restrictions and tightening often reduce motivation and efficiency.

How to calculate KPI for a sales manager

There is a kpi formula for a sales manager. We provide an example of calculating the quantitative KPI ratio below:
FC (variable part) = Planned sum of variable part * (KPI1 weight * KPI1 coefficient + KPI2 weight * KPI2 coefficient).

Table 6. Control of all suggested options wages for all possible KPI values ​​(with detailed decoding for many values)

KPI1 / KPI2	<50%	51-89%	90-100%	>100%
<50%	5000 (option 4)	18 750	22 500	26 250
51-89%	18 750	22,500 (option 3)	26 250	30 000
90-100%	22 500	26 250	30,000 (option 1)	33 750
	26 250	30 000	33 750	37,500 (option 2)

Option 1
Sales plan execution is 90-100% (value of the coefficient KPI1 = 1). Execution of the activity plan 90-100% (value of the coefficient KPI2 = 1). The variable part (VF) is 50% and is equal to 15,000 rubles.
PCh = 15,000 rubles * (1 × 50% + 1 * 50%) = 15,000 rubles.
Monthly wages = 15,000 (fixed part) + 15,000 (variable part) = 30,000 rubles.
Conclusion: the employee has a planned salary established according to the standard payroll.
Option 2
Fulfillment of the sales plan is more than 100% (value of the KPI1 coefficient = 1.5).
Execution of the activity plan is more than 100% (value of the KPI2 coefficient = 1.5).
PCh = 15,000 rubles * (1.5 * 50% + 1.5 * 50%) = 22,500 rubles.
Monthly wages = 15,000 (fixed part) + 22,500 (variable part) = 37,500 rubles.
Conclusion: the employee has more than the planned salary by 7,500 rubles, but the fulfillment of the plan for each of the indicators exceeds 100%.
Option 3
Fulfillment of the sales plan 51-89% (value of the coefficient KPI1 = 0.5). Implementation of the activity plan 51-89% (value of the coefficient KPI2 = 0.5).
PCh = 15,000 rubles * (0.5 * 50% + 0.5 * 50%) = 7,500 rubles.
Monthly wages = 15,000 (fixed part) + 7,500 (variable part) = 22,500 rubles.
Conclusion: the employee has less than the planned salary by 7,500 rubles.
Option 4
Fulfillment of the sales plan is less than 50% (value of the coefficient KPI1 = 0). Implementation of the activity plan is less than 50% (value of the coefficient KPI2 = 0).
PCh = 15,000 rubles * (0 * 50% + 0 * 50%) = 0 rubles.
Monthly wages = 15,000 (fixed part) + 0 (variable part) = 15,000 rubles.
Conclusion: the employee has less than 15,000 rubles, because the variable component is equal to 0 due to the fulfillment of the plan for each indicator less than 50%.

In what case the KPI for the manager will not work

• The management of the organization did not participate in the formation of the goal tree.
• There is no way to calculate the KPI for managers due to the lack of information in the accounting system, subjectivity or falsehood of their assessment.
• The wrong formation of KPIs for managers happens when the necessary indicators of the achievement of certain goals are ignored.
• There is no direct relationship between KPIs for managers and the concept of motivation.
• The use of KPIs for managers by absolutely all departments. Then the management system may have errors and distortions.
• There is a connection between KPIs for managers and the concept of motivation, but there is no accounting for the individual motivation of employees for whom the KPI system was introduced.
• If the KPI system for managers does not imply payment for current achievements in long-term projects, but focuses only on the final result. In such situations, employees lose the relationship between effective performance and reward.

How to motivate managers to work with KPIs

1. It is necessary to convey to employees that the introduced KPI system is not something unknown and scary. It should be explained that KPIs will not make drastic changes or nullify their past achievements.
2. KPIs can be defined as a very difficult tool. That is why it is worthwhile to introduce and explain this technology to users in advance. To study feedback, conduct discussions, discussions of emerging issues, etc.
3. An indicator of the future success of KPI implementation is considered to be active participation in the activities to set motivation for KPIs of the CEO and top managers of the organization. If the management team is not confident in the effectiveness of this project, such implementations will not succeed, which means that there is no point in them.
4. Top managers are required to involve middle managers in the formation of KPIs. These are the workers who will evaluate and plan their actions in accordance with the new concept. The managers will have to work together and form a phased plan for the introduction of the proposed project. More often than not, the initial trial of the concept is entrusted to the commercial departments, and the latter connect the back office to the KPI system for managers.
5. It is necessary to stimulate the activity of employees when introducing KPIs and it is necessary to encourage all efforts and merits.
6. Document circulation must necessarily correspond to the innovations being introduced. To do this, you should separately plan the transition from the existing concept to KPIs, and this will not happen quickly. The transition period will take some time, so this process must be controlled.
7. Changes and innovations can be very beneficial to the organization, but care must be taken to ensure that they are in line with the main purpose of the company and work for it.

How to easily implement KPIs for sales managers in your company

When forming and introducing a KPI system for managers, it is worth making sure that the calculation algorithm remains easy and does not require constant explanations. Complex and incomprehensible systems do not inspire confidence, but bring dissonance to the work of the team. Can go to the point of giving up work duties. Managers need to clearly articulate the meaning of the introduction of KPIs, staff should not have any questions about this. When explaining, you need to draw the attention of employees to the benefits of this concept. It is advisable to introduce KPIs for managers in test mode and eliminate all the shortcomings identified by practice, so that mistakes in calculating salaries can be avoided.
Automation of the process is recognized as an important factor in the effectiveness of the introduction of KPIs for managers; for this, various CRM systems are used.
You can develop a KPI system on your own, but it is quite difficult and leads to certain mistakes. Serious organizations entrust the formation of the KPI system to specialists who have extensive experience in this area.

Who can help develop KPIs for managers

To evaluate the work of a manager, a system such as a KPI can be implemented in a company. It has already proven itself well in the West and has been successfully used in Russia for several years now. The system can be used in small, medium and large businesses. With its help, you can identify weak links in the company's work and build a long-term development strategy. The work of top managers is one of the most important components of success, and we will look at how a manager's KPI is measured.

Some features

It is important that the tasks assigned to the manager can be actually completed. If the requirements are too high, then the manager can just give up right away. To accurately assess the achievements of a leader, you need to take a time span equal to one year. This is the optimal period for which an employee can show himself and achieve improvements in performance. It is most correct to combine personal indicators with general ones, so the picture will be much more objective. The general indicators mean the data that the department shows. And, the higher the level of the manager, the more important is the general indicators for assessing his work.

KPIs are always specific values ​​expressed in numbers. But taking many indicators at once is not worth it, otherwise the result will be blurry. It is best to focus on 5 indicators - this number is optimal, according to experts.

Achievement levels

Certain achievement levels are set for the top echelon:

1. The minimum threshold below which the accrual of bonuses no longer goes.
2. Target - the bar for paying bonus money.
3. Exceeding. If the manager exceeds the target threshold, then he is awarded an increased bonus as a reward.

For the head of the department, the indicators can be, for example, the following:

• How the plan is being implemented.
• How document reporting is respected and discipline is maintained in the department.
• How effective are employees.

Moreover, for the heads of different departments, their own performance indicators should be established, which correspond to the direction of the department's work. For example, some managers deal with personnel and others with sales. For these people, naturally, the indicators will differ.

Eventually

The well-being of the entire company depends on the performance of top managers. Therefore, it is beneficial for the owner to introduce a KPI system in order to monitor the work of their managers and identify all their shortcomings. From this we conclude that the KPI of the project manager is a very important thing.

1.1. The regulation on key performance indicators of the [name of the manager's position] (hereinafter - the Regulation) was developed in accordance with the legislation of the Russian Federation and [name of the constituent document of the organization].

1.2. Terms used in the Regulation:

Performance efficiency - an assessment of the employee's achievement of the set goals and objectives.

Motivation system - forms of material and non-material incentives, carried out by the organization in relation to the head according to the results of performance.

Key performance indicators (KPI - Key Performance Indicator) - quantitative indicators that allow you to assess the effectiveness of the employee.

Manager's remuneration - manager's remuneration, consisting of constant and variation parts.

A permanent part of the manager's remuneration is remuneration that does not depend on the performance of the manager and the organization as a whole.

The variation part of the manager's remuneration is a remuneration that depends on the performance of the manager and the organization as a whole.

1.3. Key performance indicators are developed based on an analysis of the strategic goals and objectives of the organization.

1.4. An employee's achievement of key performance indicators is assessed at the end of each reporting period. The reporting period is equal to [month, quarter, etc.].

1.5. Regular revision and updating of the system of key performance indicators is carried out at least once every 2 years. Control over the timeliness of updating the key performance indicators is carried out by [job title].

2. Goals and principles of the motivation system

2.1. The purpose of the motivation system is to increase the efficiency of the manager's activity, and as a result, the organization as a whole.

2.2. This goal is achieved through the creation and implementation of the principles of motivation:

2.2.1. The principle of complexity

The motivation system is a set of forms and methods of employee incentives (material and non-material forms of encouragement and punishment).

2.2.2. Compliance principle

The motivation system applied in accordance with these Regulations directly depends on the performance results of the head of the organization for the reporting period.

2.2.3. The principle of openness

The motivation system is open and understandable to the employee, there is a clearly traced relationship between the employee's performance and the system of rewards and punishments.

2.2.4. Regularity principle

The performance of the head of the organization is assessed on a regular basis, at the end of each reporting period.

2.2.5. The principle of justice

When assessing the effectiveness of the head, all circumstances and factors that have taken place in the reporting period are taken into account.

2.2.6. Balance principle

Maintaining a balance between tangible and intangible forms of encouragement.

3. Motivation system

3.1. The system of non-material incentives includes:

Announcement of gratitude;

Rewarding letters of thanks, certificates of honor, distinctions;

Congratulations on holidays, significant events on behalf of the organization;

Awarded the title of the best in the profession;

Presentation of valuable gifts;

Other forms of non-material incentives.

The decision on non-material incentives is taken by [name of position or management body].

3.2. The system of material incentives includes constant and variable parts of the remuneration of the manager.

3.2.1. The permanent part of the remuneration includes the official salary and additional payments and allowances:

The official salary is established by the employment contract and does not depend on the degree to which the manager has achieved the set goals and objectives;

Additional payments and allowances are paid in accordance with the current legislation of the Russian Federation. In addition to those established by regulatory enactments, the head is paid the following additional allowances: [enter what is needed, for example, for continuous work experience in the organization].

3.2.2. The additional allowances established by this Regulation are calculated: [enter the required one, for example, as a percentage of the official salary. 5 to 10 years of continuous work - 10%; from 10 to 20 years old - 15%; over 20 years - 20% of the official salary of the head].

3.3. The variation part of the manager's salary consists of a bonus.

3.3.1. The size of the executive's bonus depends on the degree to which the actual KPI values ​​correspond to those planned for a specific billing period.

3.3.2. When calculating the bonus, the following indicators are taken into account: [enter the required one, for example, KPI1 - net profit of the organization, KPI2 - profitability of sales, KPI3 - labor productivity, KPI4 - sales proceeds].

3.3.3. Manager's KPI is calculated using the following formulas:

KPI1 = NPfact - NPplan / 100%, where

CP fact - the organization's net profit for the billing period,

NPplan - the net profit of the organization planned for the billing period.

KPI2 = RPfact - RPplan / 100%, where

RPfact - profitability for the billing period,

RPplan - planned sales profitability for the billing period.

KPI3 = PTfact - PTplan / 100%, where

PTfact - labor productivity for the billing period,

PTplan - planned for the billing period labor productivity in the organization.

KPI4 = VP fact - VPplan / 100%, where

VP fact - sales revenue for the billing period,

VPplan - sales proceeds planned for the billing period.

KPI = KPI1 + KPI2 + KPI3 + KPI4 / 4

3.3.4. The executive's bonus is calculated as a percentage of KPIs to the official salary:

4. Final provisions

4.1. This regulation comes into effect from the moment of approval of [name of position or management body].

4.2. Changes and additions to this agreement are accepted in cases of changes in the organizational and legal structure of the organization, development strategy or business plan of the organization and are effective from the moment of approval of [name of position or management body].

Agreed:

[position, initials, surname, signature]

[day month Year]

I am familiar with the regulation: [initials, surname, signature]

[day month Year]

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 is a special system of indicators, using which employers can evaluate the performance of their 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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There are different KPI goals, 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.

KPI and BSC 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 terms? 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 period of time, but also the benefit that the company 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 measure them simply and quickly.

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

Another example of KPIs. You are the owner of a large outlet for the sale of 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 as a percentage will affect the manager's salary).

For example, you need to sell mixers of a certain 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 KPIs

• The Key Performance Indicators system has 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 a 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 "General Director" magazine 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 the top down, starting from the ambitious goals of the company to the tasks facing the individual employee. 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 the planning and economic, financial, specialists in managing the organization of labor activities, the team of personnel departments, sales, technology department.

To get started, the organization needs to figure out which KPI is in priority. To do this, the company clarifies and verifies the goals of a strategic and operational nature. The formulation of the goal, ideally, should be such that it does not have a clear designation of 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 has been 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 the career growth of 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 must include information about the goals and objectives of the system:

• Improving results and increasing the efficiency of specialists. Development and implementation of employee motivation.
• Increase in 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 testify to the potential of the company. However, such ratios cannot show how effectively the departments and the organization as a whole are working;
• operational (leading), which allow you to manage the state of affairs during the reporting period to achieve the goals set upon its completion. Operational performance indicators help to understand how things are now at the enterprise, and, at the same time, demonstrate financial results in the future. On the basis of operational KPIs, it is also possible to judge how well the processes are proceeding, whether the products are good, how satisfied the 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.).

Examples of KPIs

KPI for a technical support worker. A specialist of such a 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, and whether customers are satisfied with the service.

Key performance indicators for the sales manager. The number of new buyers should not be lower than 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, and proficiency in English 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.
• Client-side: 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 of 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 of the 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 KPIs.

How to calculate KPI

Stage 1. Selection of three key indicators of the specialist's effective performance:

• 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 = Weight KPI * Actual / Goal

In this case, the target is the planned metric of the marketer. The fact is the real result.

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

Stage 5. Payroll preparation.

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 a 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 do not improve further, review the performance requirements.

If you adhere to this policy, you will learn what KPIs are in the process of production, 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:

Implementation of KPIs 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 the main metric will be their level of performance. 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 payment for 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 fixed and bonus components of payment can be adjusted in real time, taking into account the target indicators for specific groups of personnel.

When the new order in the company has been tested and completely revised, it can be introduced 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 towards a 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 the constant monitoring of indicators, it will be possible to timely adjust to changes in the market environment and edit the working strategy. In addition, every year the premium generation model should be improved, 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 at a bargain 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 cost of sale.

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 who are geographically distant from each other, it is necessary to develop a unified assessment system. 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 the indicators in the optimal quantity so that the employee can easily track performance. 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. On the basis of 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 results.

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

At the 2010 Symposium ITXPO, Gartner presented a study on project offices. It showed that over the past 7 years, 50% of all project offices have failed. This means that every second project office was not successful. Sounds intimidating, right?

One of the biggest contributors to their failures was that company management felt that their project offices were not bringing enough value to the organization.

However, at the same time, a Gartner study showed that world-class companies have an indicator of the level of successful projects exceeding the standard three times. This metric is definitely related to successful project management practices and successful project offices.

So what's the contradiction? Often, project offices bring value to their companies, but they don't measure or articulate it. Therefore, it is often assumed that project offices do not bring value to the company.

To change this perspective, it is important to define a set of metrics - KPIs of the project office, to show how the project office increases the productivity of projects, facilitates change and supports the goals and objectives of the company.

Definition: KPI of a project office

Key performance indicators are one of the types of performance indicators (metrics) that an organization uses to measure the success of a particular activity. The project office must define and agree with stakeholders on a specific set of metrics to show how it brings value to the organization. This is the only way a project office can be successful. Otherwise, the project office will fight for its existence.

Examples of metrics for a project office

The table below shows the possible metrics for a project office. You will have to adjust these to suit your portfolio and your organization. But these metrics are a good starting point and will give you an idea of ​​what to measure:

Subject of discussion	Region	Examples of metrics
Strategic contribution	Implementation of strategic projects	Increase in the percentage of successfully implemented strategic projects in comparison with the total number of strategic projects
		Reduced time to market a product = Time from concept development to project start (time required to start a project)
	Reduced time to market	Reduced time to market = Time from concept to completion (time required to complete the project)
	Reduced time to market	Reducing the difference between the planned and actual project implementation time = (comparison of the planned and actual project implementation time) (accuracy of project timing)
Management processes	Improving management processes	Compliance with methodology (required project results versus actual results)
Project portfolio management	Overall level of successfully completed projects in the portfolio	% of completed projects in the portfolio / total number of projects
	Working with changes	% of projects whose status has not changed during the reporting period
Project management		Increase in the number of successful projects = (number of successful projects / total number of projects over a certain period of time)
	Improving the project management process	Increasing the qualifications of project participants
	Improving forecasts and project cost estimates	Reducing the difference between planned and actual project costs = comparison of planned and real project costs
Resource management		Improved resource utilization during project implementation (e.g., business analyst> 31.5 hours per week = overtime)
	Improving resource allocation across projects	Better resource allocation across projects = billable time / total time
Stakeholder management	Increased customer or user satisfaction	Average customer or user satisfaction from the survey (must be above the previous quarter% or annual average)
	Increased customer satisfaction	Implementing additional options within budget
ROI	Receiving a profit	Post-project ROI assessment to determine if project ROI has been obtained
	Receiving a profit	Received profit in comparison with the planned profit for the year
	Annual ROI	Total ROI for all projects implemented by the project office
Employees		Average participant satisfaction from the survey (must be higher than% of the previous quarter or average for the year)
	Improving employee motivation	Facilitating career development for project participants

Aim your project office for success: KPIs for your project office

Analyze the above metrics and highlight those that might work for your project office. Then discuss and agree on them with your stakeholders (as a rule, it will be your leader or company management). Also agree on how often you will report them. This step is important as it will help clarify the purpose of your project office.

Once you've agreed on the metrics, write a baseline document that will serve as your starting point. You need a starting point to demonstrate future improvements. Data from projects already completed can help you define baseline metrics.

Collect, justify, and evaluate the data you need to create your report. Track performance. If performance declines from the previous reporting period, take corrective action early to correct the situation.

Finally, make sure everyone knows about your success. To do this, you can use your intranet, corporate publication or prepare a booklet (success story) about the achievements of the project office, projects and programs. All of these activities will help you promote the value and success of your project office.