Development of a KPI system example. Examples of KPIs: study, evaluate, apply. What key performance indicators exist?

14.01.2024

Key performance indicators allow you to evaluate the effectiveness of the actions performed. They can be used to evaluate the performance of the entire company, its individual divisions, and specific employees. Using the KPI system, you can not only monitor and evaluate the effectiveness of the actions performed, but also build an effective remuneration system. The condition for the indicator to work is the ability to measure it.

Often, a company's work contains many words and few numbers. Moreover, sometimes there are no numbers at all - they are replaced by emotions, personal opinions and subjective assessments. If the company does not have a system of motivation for results, conversations with managers will have the nature of persuasion. If this meets the company's goals, you can continue working in this format.

If the goal is to obtain a specific result, it is recommended to develop tools to achieve the required indicators and implement them in everyday practice, as well as develop and implement a staff motivation system “tied” to specific numbers and indicators.

KPI(key performance indicator) is a key performance indicator. They allow you to evaluate the effectiveness of the actions performed. KPIs can be used to evaluate the performance of the entire company, its individual divisions, and specific employees. Using the KPI system, you can not only monitor and evaluate the effectiveness of the actions performed, but also build an effective remuneration system. The condition for the indicator to work is the ability to measure it ( table 1).

Table 1. The most common KPIs and their measurement/calculation system

Key Performance Indicators	Measurement/calculation system
Commercial indicators
Revenue	Plan/actual (ratio of actual revenue to revenue plan)
Profit	Plan/actual (ratio of actual profit to profit plan)
Accounts receivable (RE)	Plan/fact (relationship of the fact of the remote control to the plan of the remote control)
Other indicators	Plan fact
Non-commercial (qualitative) indicators
Timely submission of reports	Plan/actual (the ratio of the actual deadline for submitting the report to the planned deadline for submitting the report)
Implementation of the client visit plan	Plan/fact (ratio of the fact of customer visits to the plan of customer visits)
Staff turnover	Plan/actual (the ratio of the actual percentage of turnover to the planned percentage of turnover)
Number of new clients attracted	Plan/actual (ratio of the actual number of attracted clients to the planned number of attracted clients)
Other indicators	Plan fact

Requirements to the KPI system:

each indicator must be clearly defined;
indicators and standards must be achievable: the goal must be realistic, but at the same time be an incentive;
the indicator should be the responsibility of those people being assessed;
the indicator must be meaningful;
indicators can be general for the entire company, i.e., “tied” to the company’s goals, and specific for each division, i.e., “tied” to the goals of the division.

I. Payroll system as part of the motivation system

The personnel management system has the risk of being high-cost and low-effective if the personnel do not feel loyalty to the company. To build employee loyalty, it is useful to have an idea of what motivates them to perform their duties most effectively, that is, their motivation. There are many definitions of motivation, but in our case, by motivation we will understand the process of stimulating employees to achieve their goals and complete tasks.

It is desirable that the staff motivation system includes material and non-material motivation. Below, the main attention is paid to the material component - this is the payroll system (motivational scheme), to which employees of any organization are most sensitive.

KPI-based remuneration system allows:

ensure control over the current and long-term performance of the organization;
assess the personal effectiveness of each employee, department and organization as a whole;
direct staff to achieve the required results;
manage the payroll budget and reduce the time for its calculation.

II. Methodology for forming a remuneration system

1. Determine the list of positions (positions) in the company structure for which the following motivational scheme will be formed (the principle of correspondence of key performance indicators to the level of the organizational structure):

Level “General Director” (business owner) - Achieving the first level goal (plan/actual)
“Management” level (heads of departments) - Achieving second level goals + indicators of organizing planned work (plan/actual)
Level “ordinary personnel” - Achieving set goals + fulfilling current tasks (plan/actual)

2. Determine the key performance indicators (KPIs) for the position and the weight of each, based on the goals set for this level of the organizational structure.

3. Determine the procedure for calculating indicators ( table 2):

Table 2. Linking goals to key performance indicators

№ p/p	Company goals	Possible key performance indicators and calculation procedure (measurement)
1	The commercial goal is to fulfill the monthly sales plan for product A in the amount of 350,000 rubles. per month in territory B from 01/01/11 to 31/12/11	1. Key performance indicator - sales plan. Measurement system: (actual sales) / (sales plan). 2. Key performance indicator - 20% growth. Measurement system: (actual growth) / (planned growth).
2	Commercial goal to increase the average shipment amount by 15%	The key performance indicator is the average shipment amount. Measurement system: (actual average shipment amount) / (planned average shipment amount as of date).
3	Qualitative goal to increase the number of clients by 10% in the period from 01/01/11 to 07/01/11 in territory B	A key performance indicator is the number of clients in the company's database. Measurement system: (actual number of clients in the database) / (planned number of clients in the database).
4	The qualitative goal is to develop and conduct an event for 50 clients (30% key and 70% potential) in the period from 02/01/11 to 03/01/11	1. Key performance indicator - customer attendance at the event. Measurement system: (actual number of visitors) / (planned number of visitors). 2. Key performance indicator - event budget. Measurement system: (actual budget) / (planned budget).

4. Determine the spread of the percentage of indicator completion, the value of the indicator coefficient and the meaning of its value ( table 3):

Table 3. Percentage of indicator completion and coefficient (example)(*)

	Coefficient	The meaning of the coefficient
Plan fulfillment less than 50%		Unacceptable
Plan fulfillment 51–89%	0,5	Low level
Implementation of the plan by 90–100%	1	Achieving the target value (fulfilling the plan)
Plan fulfillment 101–120%	1,2	Leadership
Plan fulfillment more than 120%	1.5, 2 or 1(**)	Aggressive Leadership or Planning Precision Management**
() This table is a sample. The coefficients are given as a possible option. (*) The coefficient is set depending on what policy the company has regarding exceeding the plan. A coefficient of 1.5 or 2 means that the employee is motivated to significantly exceed the plan. If there is no such task, then the value of the coefficient = 1 will serve as a limitation for the employee - he will not underestimate the plan in order to then overfulfill it, since in this case he will receive a coefficient corresponding to the implementation of the plan at 100%, and no more.

5. Create a motivational formula that will be used to calculate wages. Determine the ratio of “fixed part”, “variable part” and “bonus” in wages.

6. Determine the formula for calculating the variable part of wages.

7. Perform a check: calculate all possible salary options for all possible KPI values.

8. Draw up a document “employee motivation scheme”.

As can be seen from point 1, key performance indicators (KPIs) vary depending on the level of position in the organizational structure and correspond to the goals of this level. This connection, using the example of second-level goals, was discussed above in table 2.

Key moment in the measurement of an indicator - the ratio of the actual result obtained to the planned one.

Example of calculating the indicator “Monthly sales plan”

Planned value of the indicator per month: RUB 350,000.
The actual value of the indicator at the end of the month: RUB 330,000.
Calculation of the percentage of plan completion = 330,000: 350,000 x 100% = 94.3%.

***
Once the percentage of plan completion is established, you need to determine what meaning the result has for the company. In other words, is meeting your monthly sales target by 94.3% good or bad? This meaning is reflected by the value of the coefficient and directly affects the employee’s salary.

The spread of the percentage of plan fulfillment and the value of the coefficients (meaning) is determined by the company independently (they are influenced by: the size of salaries for a given position, the result to be obtained, the specifics of the market and the company’s product, goals, mathematical calculations of payroll standards).

In a motivational scheme, it is optimal to use 3–5 KPIs.

III. Principles of forming a motivational formula

The standard motivational formula looks like:

Salary = Fixed part (salary) + Variable (changeable) part.

If payment of bonuses is provided, then:

Salary = Fixed part + Variable part + Bonus.

The ratio between the fixed and variable parts will vary depending on the goals, the situation in the company and the specifics of the market in which the company operates. For example, if you are just introducing a product to the market, you need an aggressive scheme in which the fixed part can be 30% of the planned income, and the variable part, respectively, 70%.

Example

Let’s assume that the average salary in the market for the position “sales manager” is 30,000 rubles. per month. It can develop in different ways. For example, 30% of the fixed part, i.e. 9,000 rubles, and 70% of the variable part, i.e. - 21,000 rubles. Total: 30,000 = 9,000 (fixed part) + 21,000 (planned amount of the variable part). This is an aggressive scheme that can be used, for example, when introducing a product to the market.

If the company already occupies the desired market share and the task is to maintain it, the situation in the company and on the market is stable, then the fixed part can be equal to 70%, and the variable part 30%. In this case, 30,000 = 21,000 (fixed part) + 9000 (planned amount of the variable part).

This is a rare case when changing the places of the terms does not change the sum, since the total amount of the variable part can have different values.

For further examples, let’s take the ratio of the fixed and variable parts in wages “50 to 50”, i.e. 30,000 = 15,000 (fixed part) + 15,000 (planned amount of the variable part).

IV. The impact of key performance indicators (KPIs) on the variable part of wages

We will determine key performance indicators for the required position, for example:

KPI1 - percentage of sales plan fulfillment;
KPI2 - percentage of completion of the work plan.

To establish to what extent each of the selected KPIs will influence the variable part, we determine the contribution (weight) for each of them ( table 4):

Table 4. The influence of the indicator on the variable part of wages (example)

As can be seen from table 4, both indicators influence the variable part of the salary equally. This means that achieving each of them is equally important.

Table 5. Indicator coefficients depending on the percentage of plan completion

To simplify further calculations, we will set the same coefficient values for KPI1 “fulfillment of the sales plan” and KPI2 “fulfillment of the work plan” ( table 5 will be suitable for calculating each of the indicators).

V. Possible scheme for calculating the variable part (PV) of wages

IF = Planned amount of variable part x (Weight KPI1 x Coefficient KPI1 + Weight KPI2 x Coefficient KPI2)

Table 6. Checking all possible salary options for all possible KPI values
(with detailed explanation of some meanings)

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

Fulfillment of sales plan 90–100% (KPI1 coefficient value = 1). Fulfillment of the work plan 90–100% (KPI2 coefficient value = 1). The variable part (PV) is 50% and equal to 15,000 rubles.

IF = 15,000 rub. x (1 x 50% + 1 x 50%) = 15,000 rub.

Monthly salary = 15,000 (fixed part) + 15,000 (variable part) = 30,000 rubles.

Conclusion : the employee receives a planned salary established according to the payroll standard.

Option 2

Fulfillment of the sales plan more than 100% (KPI1 coefficient value = 1.5).

Fulfillment of the work plan more than 100% (KPI2 coefficient value = 1.5).

IF = 15,000 rub. x (1.5 x 50% + 1.5 x 50%) = 22,500 rub.

Monthly salary = 15,000 (fixed part) + 22,500 (variable part) = 37,500 rubles.

Conclusion : the employee receives 7,500 rubles more. the planned salary, but also the implementation of the plan for each of the indicators is more than 100%.

Option 3

Fulfillment of sales plan 51–89% (KPI1 coefficient value = 0.5). Fulfillment of the work plan 51–89% (KPI2 coefficient value = 0.5).

IF = 15,000 rub. x (0.5 x 50% + 0.5 x 50%) = 7,500 rub.

Monthly salary = 15,000 (fixed part) + 7,500 (variable part) = 22,500 rubles.

Conclusion : the employee receives RUB 7,500 less. planned salary.

Option 4

Fulfillment of the sales plan is less than 50% (KPI1 coefficient value = 0). Fulfillment of the work plan is less than 50% (KPI2 coefficient value = 0).

IF = 15,000 rub. x (0 x 50% + 0 x 50%) = 0 rub.

Monthly salary = 15,000 (fixed part) + 0 (variable part) = 15,000 rubles.

Conclusion : the employee receives less by 15,000 rubles, since the variable part is equal to 0 due to the implementation of the plan for each indicator is less than 50%.

Calculate how much wages will be accrued if the sales plan is fulfilled at 101%, and the work plan is fulfilled at 49% (the correct answer is RUB 26,250)

Table 7. Completed form illustrating the methodology for creating a motivational scheme

№ p/p	Methodical procedure	Actual value
	Determine your position within the company structure	Sales Manager (Sales Department)
	Determine the key performance indicators (KPIs) for the position and the weight of each, based on the goals set for this level of the organizational structure	KPI1 - fulfillment of the sales plan. Weight - 50% KPI2 - implementation of the work plan. Weight - 50%
	Determine the procedure for calculating indicators	Fact: plan x 100%
	Determine the spread of the percentage of indicator completion, the value of the indicator coefficient and the meaning of its value	*Indicator completion percentage*	*Coefficient*




	Create a motivational formula that will be used to calculate wages. Determine the ratio of “fixed part”, “variable part” and “bonus” in wages	30 000 = 15 000 + 15 000
	Determine the formula for calculating the variable part of wages	IF = planned amount of the variable part x (weight KPI1 x coefficient KPI1 + weight KPI2 x coefficient KPI2)
	Perform a check: calculate all possible salary options for all possible KPI values	See above “Checking all possible salary options for all possible KPI values (with a detailed explanation of some values)” ( table 6)
	Complete the document “employee motivation scheme”

Motivation, Incentives and Remuneration

Keywords:

1 -1

KPIs are key performance indicators that can be used to evaluate the performance of employees in various departments of the company. On their basis, employees are promoted up the career ladder or paid bonuses.

Relatively recently, company managers began to actively introduce such a concept as KPI into their work. Now the most valuable thing for which employees work is tied to it - wages. Moreover, the KPI indicator becomes important not only for administration, managers or office employees - line managers, but also for representatives of blue-collar professions.

The main idea of KPI (Key Performance Indicator - usually translated as “key performance indicator”) is that with its help you can clearly and objectively evaluate the work and effectiveness of any employee, group of people, department, project and company as a whole. The indicator will reflect the whole picture of the processes occurring in the company using numbers.

The most important thing is to develop the right KPI for each position and introduce real indicators. For an employee who encounters this concept after getting a job in a company, it is very important to immediately understand and understand what exactly is included in his personal set of KPIs (criteria for evaluating his work). The list of indicators will allow a newcomer to quickly understand what exactly the employer wants to get and what results he expects from the employee. The KPI range will immediately show how much effort needs to be made to achieve the desired salary level, whether this work will be within the applicant’s capabilities, or, conversely, his abilities will allow him to significantly increase the requirements and, accordingly, wages.

Scorecard

The KPI system gives specialists clear work goals and transparent bonuses. But the indicators may be unattainable, and the transition to such a system may be painful.

In large foreign companies, where everything is spelled out and detailed to the maximum, working according to the KPI system is an excellent option for an employee. He understands how much, for what and when he will receive extra salary. He has personal tasks and deadlines for their completion, and the company, through assessment, can regularly monitor his work.

In many organizations, in addition to the monthly report, it is the KPI results of all employees that serve as the basis for the annual assessment of the performance of the company’s personnel. After the annual assessment, the HR Directorate compiles lists of the most promising specialists to include them in the company's personnel reserve and promote them to positions.

But if in foreign companies the head office helps in developing goals and indicators, then Russian employers act somewhat differently. Some invite consultants, others manage on their own: KPIs are prescribed by the HR directorate. Since neither one nor the other thoroughly knows the specifics of the work of each specific specialist, it happens that the indicators are formulated inaccurately. It even happens in our country that the most advanced, in quotes, organizations involve managers and employees of the units being assessed to develop KPIs.

Types of indicators

We can highlight some key performance indicators in the KPI assessment system: financial, client, process and development criteria.

Financial indicators include, for example, market value, return on investment - ROI, turnover, cash flow, internal rate of return - IRR, share price, total assets and many others. These indicators reflect the foreign economic situation of the company as a whole.

Client indicators characterize individual employees who deal with clients and create the external image of the company in the market. Such criteria include market share, number of new markets, customer satisfaction, quality, image indicators and much more.

Process indicators include indicators that grow with the speed of execution of various processes in the company: time to develop and launch new products on the market, process customer requests; time spent on logistics and delivery of goods, etc.

Development criteria are KPI indicators that characterize the degree and level of development of the company itself (external development processes of the company in the market and internal processes of human resource development): personnel productivity, profit or administrative costs per employee, level of personnel satisfaction and “turnover”.

The employee works as a consultant in the sales department, answering questions from potential buyers by phone. The following key performance indicators (KPIs) are defined for it: customer satisfaction and the number of purchases that people made after consulting an employee over the phone.

Advantages and disadvantages

The KPI system is good for employees whose work results affect the financial and economic performance of the enterprise. In trading companies these are, first of all, top managers and sales managers, in recruiting companies - recruitment consultants.

In some companies, an employee's achievement of KPIs also affects the individual size of the annual salary review: the higher the score, the higher the percentage of salary growth. For example, a manager's annual bonus may consist of two variables that depend on individual performance goals and company performance. This approach encourages better performance of functional duties.

For employees from different departments, the size of the bonus, which is influenced by KPI, can range from 20 to 100 percent of the salary. At the same time, the formula for calculating the bonus itself is quite complex: it takes into account the number of KPIs, the completion rate of each of them, as well as its “weight”, called the influence coefficient.

If the KPI scale is not compiled correctly, it will be of little use. If there are too many KPI indicators, the impact of each on the size of the overall bonus will be small. For example, initially there were about 20 percent KPIs, but after a year they were reduced to five. Most of the indicators accounted for a small portion of the bonus, and a loss of 5 percent in it is not particularly significant. A 20% KPI weight motivates much more effectively.

One of the main disadvantages of the KPI system is the dependence of the quality of work of an individual employee and the performance of the entire department. If a department does a poor job or does not perform well, without fulfilling the overall plan, then all employees of the department may lose their salaries at once. After all, personal KPIs are linked to key indicators of the entire department. If targets are systematically not met, the employee may be demoted or fired. Therefore, KPI forces you to always “be in shape and tone.” Those who cannot withstand this rhythm leave on their own.

Another drawback is that not all employees can directly influence the company’s strategic KPI indicators. When the bonus depends on net profit and sales, the secretary or economist will not be able to influence it.

From experience, we can say that very often in Russian companies the KPI motivation system is one-sided: everything that an employee exceeds is simply a job well done, for which he receives a salary, and for under-fulfillment he is deprived of some part of the salary.

Many managers of international companies believe that it is easier to describe the work of technical specialists (accountants, engineers, programmers) with a job description than to prescribe KPIs for them. We must not forget that planning and calculating this system takes time. At the end of each month, heads of areas or departments spend time setting and calculating the KPIs of all their subordinates. Indicators have to be coordinated with the HR directorate, and the main work of managers fades into the background, but even managers have their own KPIs.

As a rule, the transition to a KPI system is usually accompanied by unrest in the team: some quietly sabotage, others do not completely accept it and leave the company. It is difficult to immediately change your habits, the order of performing functions, and get used to new conditions of remuneration. It’s easier for new employees if the HR manager clearly explains to them what the company pays bonuses for, and newcomers will most likely accept working according to such rules normally.

Opinion 1:

Lyudmila Shusterova, Deputy General Director of the outsourcing division of BDO

Original KPIs

KPIs are usually associated with either increasing a company's profitability and turnover, or increasing productivity and efficiency in the use of capital goods. Based on these conditions, it is unlikely that it will be possible to create any fundamentally new and original KPIs. Unless, of course, the work is related to something very non-standard. For example, for the head of a biological station, you can set the KPI to increase the koala population by n percent. But for an ordinary manager it is unlikely that he will be able to come up with something better than increasing revenue, margins, increasing customer satisfaction or reducing staff turnover. It is advisable to have several KPIs, but not too many. After all, in pursuit of business growth and profits, it is important that both clients and staff do not suffer - and this is a completely non-trivial task.

But the main task of indicators is not to be original, but to be effective.

Opinion 2:

Dmitry Pelakh, director of the Financial Consulting Agency company

KPI Regulations

In order to start using the KPI system in your company, you need to document it in internal documents. A KPI regulation should be developed, which will be approved by the head of the company. In this situation, it is advisable to provide formulas and calculations on the basis of which the system of indicators is built. It is also important to link the indicators with accounting data or with IFRS indicators if the company uses international standards.

The regulations on the KPI system should establish a cause-and-effect relationship between indicators and the main goals of the company and determine the level of responsibility for the values of indicators of employees to whom this system will be applied.

There is no standard form for KPI regulations, so a company can develop it independently or seek help from specialized consulting firms.

Opinion 3:

Ivan Shklovets, Deputy Head of the Federal Service for Labor and Employment

Dismissal for poor performance

Labor legislation does not contain such grounds for dismissal as a low performance indicator. Consequently, the employer does not have the right to dismiss an employee with such wording.

It is possible to dismiss an employee due to inadequacy of the position held only based on the results of the employee’s certification, which must be carried out in the manner established by the employer himself in the form of a local regulatory act. In this case, there must be a protocol of the certification commission. However, even in this case, before dismissal, the employer will be obliged to offer the employee other available vacant positions or work that he can perform taking into account his state of health.

Failure by an employee to comply with established labor standards or quantitative (qualitative) indicators may affect the amount of remuneration. For example, incentive payments may be reduced or cancelled. However, when working the established working hours, the employee will in any case have a guaranteed right to receive the salary (tariff rate) established for him. If the employer nevertheless dismisses the employee on the above grounds, he has the right to appeal such dismissal in court.

Pros and cons of using KPIs to evaluate employee performance

pros	Minuses
The size of an employee’s bonus directly depends on the achievement of his personal KPIs	Due to too many KPIs in the total bonus, the share of each of them is small
Each employee is assigned responsibility for a specific area of work	Too much weight for one of the indicators leads to distortions in work (the employee does not pay enough attention to the functionality that has the least weight in the KPI system)
The employee sees his contribution to achieving the overall goal of the company	Really unattainable KPIs demotivate employees

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Key Performance Indicators = KPI = Key Performance Indicators (KPIs) is a system for measuring set goals, which is based on the usual mathematics of calculating the “Plan/Act” of achieving a goal as a percentage. In a given situation, key performance indicators (KPIs) define milestones in the process of achieving multi-stage objectives.

Key Performance Indicators (KPI) can be translated into Russian in different sources in different ways, for example: “key performance indicators”, “key performance indicators”, “key performance indicators”.

It is commonly said that an indicator is a KPI if it measures the achievement of a goal. The technology of setting, monitoring and reviewing the work goals of employees and departments as a whole is the task of a modern management system. One of the popular KPI management concepts is called "Management by Objectives".

Automation of the calculation of Key Performance Indicators (KPI) is a task for level solutions Business Intelligence (BI)

Management by Objectives = MBO = Management by Objectives is a process of coordinating goals within an organization, in which the company’s management and employees, setting goals, as a rule, “from top to bottom,” understand the existence of a hierarchy of goals within the company.

Simply put, Management by Objectives (MBO) means that every manager, from top managers to line level, and every employee in the organization must have clear KPIs that ensure that the KPIs of managers at higher levels are met.

In this case KPI (Key Performance Indicators) are key performance indicators that measure employee achievement of goals at all levels in the organization.

Management by Objectives– this is primarily the task of the company’s management, which includes the work of:

by formulating goals
according to KPI definition
on communicating goals and KPIs to employees
to provide the goals with the necessary resources
to monitor the achievement of set goals

Ideally, the goal itself, which is measured using KPI, should answer SMART concepts, i.e. have:

S – specific/Specificity (to be specific, to have a specific result)
M – measurable/Measurability (to be measurable, to have a measurement of achievement, i.e. KPI)
A – achievable/Achievability (have the necessary resources to achieve)
R – relevant/Significance (to be relevant, this task must be completed now)
T – time-bound/Limited in time (have a deadline, certainty in time)

Application of the approach in the organization Management by Objectives (MBO) allows you to systematize the process of setting goals and assessing staff performance by setting personal KPI indicators by employees.

In practice everything Key Performance Indicators (KPI) employee are reflected in the so-called "MBO Matrix of Indicators", or other common names: "Performance Evaluation Sheet"— (ENT sheet) or simply "Employee's personal file".

The results of KPI implementation are used in corporate "Staff motivation system", for example, in calculating the bonus part (bonuses) of employees.

Methodology "Management by Objectives" is an effective tool for setting and monitoring the implementation of tasks at the tactical management level. At the same time, according to the requirements of quality management systems at the enterprise (ISO 9001), tasks at the tactical management level must be consistent (follow) from tasks defined at the strategic level, where the most effective management tool is "Balanced Scorecard" (BSS).

Balanced Scorecard = BSC = Balanced Scorecard (BSS) - one of the powerful tools of strategic management, which allows you to formalize the strategic goals of the company and further decompose them to the level of operational activities and main business processes. The following groups of indicators are usually identified as key levels of decomposition::

Finance (financial indicators)
Customers and Products (sales figures)
Business processes (process efficiency indicators)
Personnel (indicators of personnel training and development)

Control at all levels Balanced Scorecard (BSC) carried out through the so-called Key Performance Indicator (KPI)— Key performance indicators.

The relationship of all KPIs in groups is shown in "BSC Strategic Map".

It should be noted that in this case KPI are measures of the achievement of strategic goals, as well as characteristics of the effectiveness of business processes, and not the work of each individual employee.

In the context of employees KPI used in management models of tactical management, for example, in the concept "Management by Objectives", from which, as a rule, it follows "Staff motivation system", based on achieving personal KPIs.

Schematically, all this can be connected like this:

Relationship diagram BSC -> MBO -> KPI -> Business processes*
(Strategy -> Goals -> Plan/Act -> Actions*)

But this is all theory...

In practice, KPI calculation comes down to the following mathematical logic:

KPI composition

KPI consists of:

KPI plan (planned KPI value to be achieved)
Fact KPI (actual KPI value that was achieved)

Types of KPIs

KPIs are:

Absolute (numeric)
Relative (percentages/coefficients)

KPI calculation

KPI calculation formula:

Fact KPI/Plan KPI = Achievement of KPI (Fact/Plan = if the result is greater than the plan – good)
Plan KPI/Fact KPI = Fulfillment of KPI (Plan/Fact = if the result is greater than the plan - bad)

KPI Examples

I will give a number of examples of key performance indicators in areas of analytics that are provided by default in our ready-made Business Intelligence (BI) solutions .

Absolute KPIs (numeric)

Sales KPI:

Sales volume in rubles
Sales volume in units of measurement
Average sales price
Markup in rubles
Margin in rubles
Discount in rubles
Number of clients in sales
Number of brands in sales
Number of products in sales
Number of factories in sales
Number of suppliers in sales
Number of orders in sales

Procurement KPIs:

Volume of purchases in rubles
Volume of purchases in units of measurement
Average price in purchases
Number of brands in purchases
Number of goods in purchases
Number of plants in procurement
Number of suppliers in procurement
Number of orders in procurement

Inventory KPIs:

KPI for receivables:

As a rule, absolute KPIs are not used

KPI for the lender:

As a rule, absolute KPIs are not used

Payment KPIs:

As a rule, absolute KPIs are not used

Relative KPIs (percentages/ratios)

Sales KPI:

Sales growth in rubles
Sales growth in units of measurement
Markup in percentage
Margin in percent
Percentage discount

Procurement KPIs:

Increase in purchases in rubles
Increase in purchases in units of measurement

Inventory KPIs:

Remaining shelf life as a percentage

KPI for receivables:

Percentage of overdue accounts receivable (PDR/ODR,%)

KPI for the lender:

Percentage of overdue accounts payable (PKZ/OKZ,%)

Payment KPIs:

Document payment percentage
Payment distribution percentage
Margin as a percentage on payments
Margin as a percentage according to documents

This was an example natural KPIs, which are located inside analytical modules (OLAP cubes) and have full detail for all dimensions (directories) of the OLAP cube analytics.

Also in practice there are artificial KPIs, the calculation of the KPI Plan and the KPI Fact is more complex and often involves only a certain level of detail, for example, only for employees. Such KPIs, as a rule, are usually placed in a separate module, which contains analytics only for KPIs.

For such a case, we have a ready-made level module Business Intelligence (BI), which is called “KPI ANALYTICS”. This module allows you to automate the calculation of Plan/Actual KPI of any complexity.

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

You will learn:

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

Instructions for calculating KPIs for different employees

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

Preparatory activities: creation of a working group, analysis.
Formation of assessment methods and methodology: development of a model of a system of performance indicators, the sequence of its construction, creation and testing of KPI identifiers, preparation of modernized management methods.
Implementation: combining the KPI accounting system with existing software, familiarizing employees with the methodology for calculating performance indicators.
Stage of using the KPI calculation system: monitoring implementation, adjusting indicators.

To develop KPIs, two main methods are used: process and functional. How to calculate the premium for each of them can be found in the table below.

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

An example of a KPI for managers that will force them to give their all.

If the salesperson fulfills his KPIs reluctantly, then these performance indicators need to be abandoned. The editors of “Commercial Director” propose to set KPIs that motivate managers to sell and make a profit.

Table. KPI - examples of calculation using process and functional methods

Process

Functional

The Sales Process. Goals:

increase in the number of buyers (KPI - number of attracted buyers);

increase in repeat purchases among existing customers (KPI - number of repeat purchases).

Enterprise level - plan, strategic development model. Examples of KPIs:

income, profitability;
increase in net assets.

Process "Inventory".

Goal: increase in inventory turnover (KPI - increase in inventory turnover of raw materials and finished products compared to the previous period).

Department level - regulations on the structural unit, regulations. Examples of KPIs:

customer satisfaction level;
sales volumes.

Process "Customer Satisfaction". Goals:

reduction in the number of returns (KPI - percentage reduction in the number of returns of purchases);

reduction of the time interval for customer service (KPI - time spent on service).

Professionalism of specialists - job descriptions. Examples of KPIs:

number of newly attracted buyers;
time to complete a transaction with one buyer.

Process "Personnel". Goal: increasing the quality level of personnel selection (KPI - percentage indicator for closed vacancies).

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

Index	Base	Norm	Target	Fact	Execution level	KPI index
Sales volume (cu)
Average income per customer (cu)
Number of marks “I liked the service” (pcs.)
Share of overdue accounts receivable (%)
Final KPI

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

The table provides an example of the methodology for calculating “Average income per customer”. In the summary from the previous example, this indicator is also included in the KPI calculation form for the sales specialist.

Table. Average income per customer for a sales specialist

Calculating performance indicators for supporting departments is a rather complex procedure. Let's look at examples below for some supporting positions.

Table. Examples of KPIs for other positions

How to calculate KPI: step-by-step instructions

Stage 1. Definition of three employee KPI indicators:

the number of users attracted to the Internet portal;
the number of repeat purchases from existing consumers;
the number of recommendations and positive reviews that were published after the transaction on the company’s website or social media pages.

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

number of new buyers - 0.5;
number of repeat purchases - 0.25;
consumer reviews - 0.25.

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

	Initial indicator (average data for the month)	Planned indicator
Increase in new buyers	160 new clients	An increase of 20%, i.e. 192 new customers
Percentage of repeat purchasers	30 repeat purchases	Increase by 20%, i.e. 42 repeat purchases
Percentage of customers who left a positive review or recommendation on the site		Increase by 20%, or 42 positive reviews

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

Formula for calculating key indicators:

KPI Index = KPI Weight * Fact / Goal

The goal is the KPI value planned by the marketing specialist. A fact is actual data obtained.

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

Stage 5. Salary calculation.

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

Result:

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

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

The table with an example of KPI demonstrates the problematic aspects in the work of a marketing specialist. Insufficiently high indicators may be the result of an incorrectly selected strategy to increase customer loyalty to the company. Such data allows you to monitor the work of a specialist. If the situation does not change in the following periods, then it is necessary to reconsider the system of KPI requirements.

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

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

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

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

KPI calculation for a marketer: example

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

For example, let’s present 5 KPI indicators for a specialist:

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

To achieve target indicators, the marketer uses the company’s material and labor resources (interacts with program and design developers, analysts and copywriters). A mandatory procedure in this process is budget control. Accurate cost accounting will help establish the relationship between the results obtained by a specialist and the material resources he used.

Actions required to implement a system of key performance indicators:

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

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

The practitioner tells

Examples of KPIs that forced ordinary staff to look for a better way to do their jobs

Maria Ponomarenko,

Director of the Moscow company Smart Personal

For some time I worked in a team that managed an enterprise in the field of ferrous metal rolling. Our company's clients were construction and manufacturing companies that needed timely delivery of goods. To satisfy customer requests, we formed a fleet of vehicles that could transport rolled products up to 12 meters long. If a large number of applications were received and our cars were not enough, we hired cars from third-party contractors. We needed to solve two problems: ensure fast delivery of products at a time convenient for the customer and achieve maximum load on each vehicle.

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

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

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

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

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

Result. The KPI system started in March, and already in October the average daily delivery efficiency identifier rose from 1.8 to 2.3. Thus, in just 7 months of work using the KPI system, the efficiency of operating the transport fleet increased by 28%. At the same time, we managed to reduce the permissible number of delivery postponements by 6 (!) times - from 3% to 0.5%.

In the general part of the KPI regulation it follows:

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

The main part of the KPI regulation must also describe the procedure for generating and agreeing on performance indicators. It is necessary to disclose the criteria that they must meet (example: measurability, achievability, specificity, etc.). Our example, available for download below, will help you draw up such a document for your company.

It is better to document the KPIs of individual specialists in a special document called a scorecard. It is agreed upon with the general director, senior managers of the personnel and financial departments and signed by a specific employee.

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

Table. KPI map for finance specialists

№ p/p	KPI type	KPI performance levels			KPI weight, %	KPI performance level
№ p/p	KPI type	Lower level	Target level	Top level	KPI weight, %	KPI performance level
	Turnover speed of receivables and payables	Increase in turnover ratio from 0 to 1% compared to the base year	Increase in turnover ratio from 1 to 3% compared to the base year	Increase in turnover ratio over 3% compared to the base year
	Percentage deviation of actual indicators from planned ones that were not warned using the data monitoring system, %
	Reduction in operating expenses per function in the industry relative to the previous year, %
	Free financial flow, million rubles.

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

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

The KPI regulations should describe the procedure for monitoring the performance of indicators, which will facilitate the rapid identification and elimination of the causes of significant deviations of KPI identifiers from target values.

The regulation on key performance indicators should also note the frequency of control activities (for example, once a quarter) and the employees responsible for their implementation.

For possible (internal or external) changes in the conditions for carrying out business activities, the regulations for adjustments to KPIs should be described. The reason for their use, for example, may be changes in the employee’s job responsibilities. Here you also need to specify a list of persons who can initiate the use of adjustments, as well as the parameters by which such corrections can be carried out (for example, changing the number and composition of identifiers, target indicators, the level of their achievement, etc.).

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

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

KPI of the chief accountant: example of assessing department workload

Enterprise management often considers accounting to be a costly department. Chief accountants regularly complain that the workload of the department is too high and ask for more staff. How can a manager find out whether accountants are really overloaded with their current work or whether the problem lies in the low efficiency of work organization? How to determine KPIs for accounting employees?

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

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

timely submission of reports to regulatory authorities and error-free completion of declarations;
timely payment of company bills by clients;
no errors in accounting;
the amount of financial savings (for example, on contracts with suppliers or contractors, etc.);
the total amount of fines paid to the tax authorities (due to the fault of accountants);
accounting department salary expenses;
presence/absence of complaints from external and internal clients of the enterprise regarding the work of accountants.

If we consider KPIs for an accountant, various examples can be given, but it is necessary to take into account that this particular department is capable of influencing the efficiency of all the main business processes of the enterprise by increasing profits and optimizing costs.

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

interchangeability of employees;
number of accounting specialists;
minimum volume of overdue documents during the work process;
number of company employees per accountant.

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

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

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

primary documentation (incoming);
accounting standards and Tax Code;
work results (reporting).

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

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

the number of employees of the enterprise served by him;
payroll calculation based on the number of employees (payslips);
withholding tax and other mandatory payments based on the number of employees;
number of intersettlements.

Based on such criteria, the standard for an accounting employee is determined, based on which the number of accountants required by the enterprise is calculated. For example, if we take 1,600 monthly payroll sheets as the KPI norm for a payroll specialist, then for an organization with more than 5,000 employees, 3 payroll accountants will be needed.

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

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

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Key performance indicators: examples for senior managers

In the process of building a KPI system, managers of structural units of an enterprise must adhere to the following principles presented in the table.

The company's main guidelines are always determined based on the strategic goal. For example: “What results does management want to achieve in a given time period?” A key indicator may be a leading position in the market or a promising sale of the company. In the first option, attention is paid to increasing sales volumes and increasing the customer base, in the second, to increasing the enterprise’s capital to obtain the highest selling price.

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

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

Each point of the KPI system must be clearly stated. For this purpose, the company’s management (CEO, board of directors and management) draw up and approve the KPI regulations. It would be nice if the document provides examples and calculations with formulas, and all the terminology is tied to accounting. If the regulations take into account the accounting rules of the Russian Federation, then in the future you need to rely on them. When using several reporting documentation systems, it is necessary to indicate by what method each indicator should be calculated.

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

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

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

The key performance indicator is calculated once a year. This is the most optimal time to evaluate a specialist’s achievements. What to do if the lead manager was hired during the current year? As an example, consider the capital's Insol group of companies. Here the bonus part of the salary is calculated as follows:

The work plan includes data compiled on the basis of an analysis of the manager’s previous achievements on similar indicators with an increase of 20%. This is the target interest rate set by the head of the company;
if the leading manager was hired recently, the performance of his predecessors is considered (20% must be added to the average performance).

The amount of bonuses depends on the achieved level of planned indicators. Let's consider this situation using an example:

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

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

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

It is important to establish how the indicator will be determined. It is not advisable to use expensive data, spend a large amount of personal time and involve other companies for this purpose. For example, if the head of a marketing department needs to determine the level of brand awareness, then quite expensive methods will have to be used to assess KPI.

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

threshold (indicators below which bonuses are not awarded);
target (a specially provided remuneration is paid for this indicator);
maximum (increased bonuses are paid).

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

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

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

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

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The practitioner tells

Manager's KPIs as an example

Tatiana Kostenkova,

Legal and Business Development Advisor at Finstar Financial Group, Moscow

Case Study 1. KPI for Store Manager

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

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

KPI 2. Compliance with reporting and performance discipline. This indicator demonstrates the timeliness of preparation of reporting documentation, transfer of utility bills for payment, sending documents to the archive, execution of orders of the general director, implementation of inventory regulations, as well as accuracy of adherence to corporate standards and compliance with reporting and performance discipline. The KPI is assessed by the company's commercial director. For each violation, 1 point is counted.

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

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

Initially, key performance indicators at the enterprise were tied to the analytical indicator EBITDA. When the business moved to a new level, difficulties with complying with corporate standards emerged.

The heads of departments were given 4 tasks:

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

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

KPI 1. At least one of the stores opened more than a year ago has been operating at a loss for more than three months. The assessment of implementation is carried out by the board of directors based on the audit data compiled from the operating profit report. The weight of the indicator in the bonus is 0.3.

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

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

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

How to calculate KPIs in Excel: examples and formulas

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

Any company determines KPIs and the weight of each indicator individually (depending on the objectives of the enterprise). Eg:

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

The company determines the spread of KPIs (scales) independently. Eg:

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

This is just one possible example of defining motivational KPI indicators.

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

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

Let us accept the following coefficient values (the same for indicator 1 and indicator 2):

KPI table in Excel:

Explanations:

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

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

5. Salary: salary + bonuses.

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

How to find and motivate a salesperson with a high customer focus

KPI matrix example in Excel

To evaluate employees on key indicators, it is necessary to create a matrix or agreement on goals. Based on the general form used to calculate KPIs in Excel, the examples look like this:

Key identifiers are the criteria by which the company’s employees are assessed. Different criteria are used for different positions.
The weight of the indicator is indicated in numbers from 0 to 1 so that the sum of all indicators is equal to 1. The weight number indicates the priority of this KPI, taking into account the objectives of the enterprise in the reporting period.
The basic value of the KPI indicator is the acceptable minimum. A level whose value is less than the “base” is the absence of a result.
Norm (planned indicator figure) is a mandatory level to fulfill. If the “norm” is not implemented, it means that the employee is not coping with his job responsibilities.
A goal (an above-standard indicator that makes it possible to improve results) is a value to which one must strive.
Fact - actually achieved performance indicators.
The KPI index demonstrates the level of results in relation to the norm.

KPI calculation formula:

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

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

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

Where was the successful implementation KPI: examples of companies

The KPI system is being actively implemented at domestic enterprises.

1. Sberbank: motivating employees through KPIs.

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

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

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

2. "Tycoon" - a new management system.

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

Increase level 1 key performance indicators by the second year after implementation.
Improve the movement of variable costs by increasing the dynamics of the wage fund.
Increase business transparency and manageability.
Strengthen team interactions.
Recoup the costs of implementing the system.

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

Implementation results:

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

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

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

The implementation of a KPI system is an important step for a company towards increasing the efficiency of each employee and the enterprise as a whole.

Western companies have long been using a system of key indicators to motivate employees, but in our country only large organizations are beginning to gradually introduce a similar approach, and not always correctly.

A well-built KPI system allows you to best configure the work of the organization, all its departments and each individual employee. It allows:

find out the company’s goals and convey them to employees;
motivate the team to achieve goals and perform high-quality assigned duties;
ultimately increase the growth of the enterprise's performance.

But you shouldn’t take KPIs as a panacea. It is not enough to simply “set the bar” for each employee, tie wages to this bar, and watch employees jump over their heads in pursuit of a bonus. The implementation of KPIs is a complex and lengthy process that requires a lot of time and effort from both the manager and employees. The entire company should be involved in the process of developing a system of key indicators - this is the only way to avoid the effect of “rejection of novelty” and the most adequate perception of the new work scheme.

KPI is best introduce gradually. Observe the reaction of your employees - if they are negative about this idea, it is better not to rush, but first conduct extensive outreach and training. Only if the staff is favorable towards the changes and understands why they are needed will it bring good results.

Definition of key indicators

It is very important to develop such KPI , which will be consistent with the main goals of your company and will be realistically achievable. That is, those that can be influenced by the employee himself. There is no point in setting indicators that a person cannot influence in any way - for example, the number of calls from the website for the sales department (for tracking). ThisKPI for a marketer or SEO specialist.

Think about what role the employee plays in your company, and what you want him to do better. This could be an option KPI. Each employee in the company should have their own performance indicators.

For a sales employee these will be: the number of outgoing calls, the size of the average check, transactions concluded, the number of CP sent.

Lawyer KPI– the number of cases won and funds saved for the company.

Marketing job can be assessed by the market share that the enterprise occupies, by the number of attracted customers and by ROI.

ForSEO specialist Key indicators may be site positions, the number of applications from the site.

Developing KPI, it is very important to correctly write down the calculation formulas, explain them, and agree with each employee. It is important to achieve an understanding of what exactly and how the salary will be calculated for each employee. A person must understand what he can influence and how to earn more and improve the state of affairs in the company.

The implementation of the key indicator system takes place in several stages.

1. Development of KPIs in relation to the goals and overall strategy of the company.

At this stage, you must initially determine the overall goals of the company. This could be entering the top 10 companies in its niche in the region, a certain sales turnover, entering the international market, and others. Once you have identified your goals, you need to divide them into important (priority) and non-priority. Otherwise, you may direct your employees' efforts in the wrong direction.

Involve department heads and employees in creating the goal pyramid. The more people involved in the process, the better. The more information you collect, and if you listen to the opinions of the employees themselves, the more likely it is that the goals will be realistic and achievable.

Let's take the sales department in your company as an example. Discuss with the department head and employees how realistic it is to increase sales by X percent. To do this, each employee needs to increase the average bill by X, and the number of calls to clients. Determine specific numbers that are not divorced from reality - this can become a KPI for employees of this department.

2. Introduction to the process, explanation to employees.

The implementation of the system must begin with an explanation to employees why it is needed. If you simply implement key indicators, as directed from above, you may encounter misunderstanding and rejection of this system. If the opinions of employees are not taken into account and they are simply presented with a fait accompli, it will not be possible to create a strong team and achieve your goals.

When developing a strategy, you should already take into account the wishes of your employees. Now all that remains is to gradually introduce a new work scheme.

Each new employee, when hired, must be familiarized with the performance evaluation system and explained what stands behind each indicator.

3. Control.

Now the next question arises: you need to somehow determine the performance of employees, monitor and keep track of key indicators. This is the only way you can pay them fairly for their work. You will have to calculate and take into account specific key indicators: for example, the number of calls per day for the sales department, the number of units of production for the production department, etc. Therefore, it is necessary to think through and introduce a reporting system and automate the process of recording indicators.

If you have a good IT department, you can develop your own Excel-based reporting solution.

You can choose some good tracker for team work - there are a lot of them on the market.

The ideal solution should:

ensure control over the work of each employee;
collect data in a unified format and bring it into one database;
help calculate payroll.

4. Performance analysis and revision.

If you did everything correctly, then each employee will be able to track their indicators and the relationship between them and wages.

Analyze the effectiveness of subordinates. A correctly introduced system for assessing key indicators will allow you not only to summarize the results at the end of the month or quarter - you will be able to see inconsistencies even in the process of completing the work. Your task as a manager is to identify such problems in a timely manner and eliminate them.

If an employee shows poor results, this is not a reason to fire him or deprive him of a bonus. Consider the possibility of advanced training, training, and additional clarification of the work system in the company.

You will also need to periodically review key metrics for each employee. You can do this every month when calculating wages. Some of them may become irrelevant, some may lose weight, or the quantitative indicators will need to be revised. You can assign this task to a member of the HR department.

Be sure to give feedback. An employee must understand which actions lead to a positive result and which do not. It may be possible to develop a development system for each individual employee.

What will definitely emerge over time is that you will see who is ready for a promotion and who has no place at all in your company.

Payroll calculation taking into account KPI

The introduction of a KPI system must necessarily influence the procedure for calculating wages. The following scheme is usually used: wages are divided into salary and bonuses. The employee receives a salary in any case, no matter whether he has achieved key indicators or not. But the amount of money in the bonus part directly depends on the employee’s efforts, on how many indicators he has achieved or not achieved.

Common mistakes when introducing KPIs and changing payroll calculations:

When KPIs are introduced, salaries are cut. If an employee received 15,000 rubles, and after the introduction of a system of key indicators, his salary dropped to 10,000, and the rest still needs to be earned, this poorly motivates a person not only to work, but also to stay in your company in general. Therefore, before introducing a KPI system, you need to think about the budget - you should have additional funds allocated for bonuses to employees;
an insignificant bonus, or, conversely, a too small salary. In the first case, the employee has little financial motivation to work well enough, in the second, too, since if the indicators are not achieved, the person will be left with nothing. And this will discourage new potential employees from working for your company. The ideal ratio is 75% salary and 25% bonus.

You can use the formula for calculation:

And always keep your promises. If a person has earned a bonus, he should receive it in any case.

The implementation of a KPI system is a long and painstaking process. It requires not only time, but also resources - moral, material. But soon, after a certain period of adaptation, you will see qualitative and quantitative growth of your company. It will immediately become clear which employees are ballast, and those who do their jobs well will be rewarded as they deserve. And most importantly, everyone will understand the common goal of the company and contribute to its achievement.