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Hello! In this article, we will talk about the KPI system.

Today you will learn:

1. What is KPI.
2. How to calculate this indicator.
3. How to implement a KPI system in an enterprise.
4. About the pros and cons of this system.

What is KPI in simple words

KPI - this is a coefficient that determines the effectiveness of a particular enterprise: how well it functions, whether it achieves its goals.

The decoding of this abbreviation is as follows - Key Performance Indicators, which is usually translated into Russian as " key indicators efficiency."

If translated literally, the word “key” means “key”, “essential”, “indicators” - “indicators”, “indicators”, but with the word “performance” there are difficulties in translating, since it is difficult to interpret it unambiguously here. There is a standard that gives the most correct translation of this word, dividing it into two terms: efficiency and effectiveness. Efficiency shows how the money spent and results achieved, and effectiveness - to what extent the company managed to achieve the result that was planned.

Therefore, it is more correct to translate KPI as “a key performance indicator”. Speaking in simple terms, so to speak, for dummies, you can see that this system helps to figure out what measures need to be taken to improve efficiency. Efficiency covers all the actions performed for a set time period, as well as the benefits received by the enterprise from each individual employee.

KPI indicators are as follows:

• Performance KPIs- shows the ratio of the spent money and time resources with the achieved result;
• Cost KPIs- shows how many resources are involved;
• KPI result- illustrates the result obtained during the execution of tasks.

Because this system is not easy to implement, you should adhere to certain rules and principles that can become indispensable assistants when switching to KPI:

1. The 10/80/10 rule. It states that a company must define 10 key performance indicators, 80 performance indicators, and 10 performance indicators. It is not recommended to use many more KPI indicators, because this is fraught with overloading managers with unnecessary unnecessary work, and managers will certainly attend to finding out the reasons for not meeting indicators that have little effect on performance at all.
2. Coordination of production indicators and strategic plan. Indicators production activities have no meaning unless they are correlated with the current Critical Success Factors (CSFs) combined in balanced system indicators (BSC), and .
3. Manageability and controllability. Each division of the company responsible for its indicator must be provided with resources to manage it. The result must be controlled.
4. Integrate performance measurement, reporting, and performance improvement processes. It is necessary to introduce a procedure for evaluating indicators and reporting that will push employees to the required specific actions. For this purpose, reporting meetings should be held to consider the issue being resolved.
5. Partnership. In order to increase productivity successfully, it is worth building partnerships between all involved employees. Therefore, the implementation method new system need to be developed together. This will allow everyone to understand what the advantages of innovation are, as well as to be convinced of the need for change.
6. Transferring efforts to the main directions. In order to increase productivity, it is necessary to expand the powers of specialists: help in, offer to develop their own KPIs, provide training.

How to calculate KPI

Paragraph 1. To calculate KPI, you need to select from three to five performance indicators, which will be the criteria for evaluating a specialist. For example, for an Internet marketer, they might be as follows:

1. The number of visitors to the site attracted by the specialist.
2. A figure that shows how many purchases were made by customers who have previously contacted the company.
3. The number of commendable recommendations, customer responses in social networks or on the organization's website after purchasing a product or service.

1. new customers - 0.5;
2. buyers who made a second order - 0.25;
3. positive recommendations - 0.25.

Point 3. Now you need to analyze the data for all selected indicators for the last six months and draw up a plan:

Item 4. The next step is to calculate KPI indicators in Excell. It is necessary to use the KPI calculation formula: KPI index = KPI Weight * Fact / Goal.

Here, the goal is the indicator that the employee must achieve according to the plan, and the fact is what he has worked out in reality. The final figure is 113.70%, which is good result, however, if we look at the table in more detail, we can see that the marketer did not complete the planned standards.

Item 5. We calculate wages. We will be based on the fact that the total earnings of a marketer are $800, of which the fixed part (salary) is $560, and the variable (bonus) is $240. For a 100% index, the employee is entitled to a salary and a full bonus, but due to the fact that the plan is overfulfilled, the marketer will receive additional bonuses in the amount of 13.7% of the bonus part, that is, $ 32.88. As a result, the employee's salary will be $560 + $240 + $32.88 = $832.88.

But when an employee does not fulfill the plan, and his performance indicator is below 99%, then the size of the bonus is proportionally reduced.

With the help of such calculations and drawing up a table, you can see the problems and difficulties that an Internet marketer faces.

Poor performance may be due to the fact that the plan is drawn up incorrectly or the loyalty strategy itself is incorrect. The problem area needs to be controlled, and if things do not improve over time, then the right way out of the situation is to change the performance indicators.

Thanks to this approach, an understanding of the principle of operation of KPI is formed. Focusing on the goals, the calculation can be supplemented with new values. This can be a system of penalties, the number of solved and unsolved problems, and much more. For example, if the work according to the plan is less than 70% done, the employee will not receive a bonus at all.

There is more alternative way payroll in relation to the percentage of the plan:

KPI in practice

KPI-performance indicator is used by almost all companies that are engaged in direct sales. Consider some examples for a sales manager. Having adopted the approved key indicators, he will see a clear picture of his activities: it will become clear to him how much goods need to be sold in order to reach a certain income, which ones.

For an insurance consultant who is new to his profession, the optimal performance indicator would be 1/10: to sell one insurance policy, you need to meet with 10 potential buyers.

There is also a result KPI, for example, “the number of new customers is not less than n”, “sales volume is not less than n”, etc. These indicators are personal, and it is better when their number is less than 5, and most importantly, they should be easily measurable and clearly articulated.

In addition to motivating employees, company leaders use KPI as a tool to analyze the work of their subordinates.

This system allows you to clearly see the gaps in activities and at what stage they arose. For example, the boss keeps track of the manager's client base, how many calls and meetings the employee makes. If these indicators are met in sufficient volume, but there are few sales, it can be concluded that the employee lacks certain knowledge, skills or personal qualities for successful work.

KPI and enterprise planning

KPI indicators can be used in planning and monitoring activities. After the work has been done, the actual indicators are measured, and if they seriously deviate from the planned ones, better side, then the analysis and adjustment of further activities is carried out. Since all indicators are "dictated" by the real process, and not invented independently, such planning will contribute to the achievement of the necessary goals of the organization.

How to motivate staff to achieve KPIs

Thanks to the use of the KPI system, planned and actual indicators are fixed during remuneration. This gives the manager a clear understanding of how to motivate an employee and for what. At the same time, the employee also clearly sees the pros and cons of his work and is aware of what actions can bring him a reward, and for what a penalty is due.

For example, an insurance consultant sold more insurance policies than planned and expanded the client base with many new clients. Thus, he exceeded the plan and, in addition to his salary, he will receive a bonus in the form of a bonus. On the other hand, if the same manager sold much less policies than planned, he may lose the bonus altogether and receive a "bare" salary, because his personal performance will be low.

However, you can motivate employees not only with money.

You can be rewarded for meeting milestones interesting trainings, paid by the company, unscheduled days off, gifts and other "carrots" that will inspire the employee no worse than money. But in this case, the employee's salary is always fixed, and according to the KPI system, points are calculated that the employee can exchange for the desired bonuses.

To create a KPI for employees, you need to focus on a common goal for all employees and strong motivation. Working in a team of interested specialists, like clockwork, can lead the company to achieve all its goals in a short time.

When is KPI not needed?

In a young company that has just begun its existence, it is not advisable to introduce a KPI system. The management system has not yet been formed here, and successful development driven by work CEO. Most often, he also performs the functions of specialists in finance and personnel.

And also, you should not implement KPIs in those departments that, because of this, may adversely affect other departments of the company. For example, an IT service, whose representatives must solve the problems posed to them (repair of office equipment) as soon as possible. After all, it happens that one of the employees' computer failed, and the work stopped, and the entire department depends on the work of this employee.

If the salary of an IT specialist is calculated according to the KPI system, then he will not immediately go to work. First you need to make a request for the elimination of damage. This application must be approved by a senior specialist of the IT department, after which the task is queued for implementation and awaits consideration.

As a result, a task that takes 5 minutes to complete takes much longer, during which the work of the entire department, where one computer has broken, does not move at all.

That is why it is useful to implement a KPI system wisely, otherwise it can do much harm.

Mistakes when implementing KPIs

The most common mistake is introducing KPIs for statistics alone.

Ultimately, it turns out that the indicators of one division have no connection with the indicators of another.

For example, the supply service of one enterprise needed to cut costs. Therefore, in order to receive raw materials at a discount, employees purchased them in large volumes, and also purchased defective goods. This led to the overcrowding of warehouses, the freezing of finances in raw materials, which blocked all the advantages.

Meanwhile Production Department had its own priority indicator - load factor production equipment. To make efficient use of time, employees churned out certain products to save valuable minutes on machine tool conversions. But this inevitably affected the implementation of the sales plan by the commercial department, because there was no necessary assortment, and in a specific period of time the client could purchase only one type of product.

As a result, a situation has developed where everyone pulls the blanket over themselves, and no one reaches the goal. The result was reduced to zero, and all the work was done in vain.

Another common mistake is focusing solely on material indicators, which are the resulting ones: sales level, income, etc. However, only when key indicators are not financial, but proactive in nature, it is possible to achieve goals much more effectively.

For example, how many calls should a sales manager make, how many meetings should be held, how many contracts should be concluded in order to achieve the same resulting KPI? It is on the basis of such non-financial factors that the system of employee motivation should be built, and the heads of departments should be guided directly by financial factors.

And also a serious mistake will be the situation when the persons responsible for this or that indicator are not indicated. For example, the order of rewards does not imply bonus payments or their cutting by the head for the implementation or non-fulfillment of the plan. In this case, the boss cannot be responsible for the actions of subordinates, because he has no way to influence them.

Pros and cons of implementing a KPI system

Working on a KPI system has many advantages:

• It has been established that in companies with such a system, employees work 20-30% more efficiently.
• Specialists will clearly understand what tasks are priorities and how to accomplish them.
• With a well-implemented system of indicators, the control of the company's activities is greatly facilitated, due to which problems are detected already at the stage of their occurrence and are solved without having time to cause harm.
• When calculating wages the principle of justice applies: those who work diligently get more. This allows the organization to retain valuable staff.
• The wage fund becomes a means of motivating staff, and not the main source of expenses.

There is a KPI system and disadvantages. First of all, the disadvantage is that a lot of time and effort is spent on implementation, because all indicators need to be worked out in detail. Most likely, it will be necessary to retrain employees, explain to them information about changing working conditions and new tasks.

However, the main drawback is that the effectiveness in the end is not always evaluated correctly. This can be avoided if, at the stage of system development, the criteria by which the qipiai will be assessed are flawlessly formulated.

The performance of the financial director is of great importance in business; the financial health and well-being of the company depends on it. And the KPI system is the best way to evaluate the work. This effective and convenient method has proven itself and is successfully used in many companies.

The share of the banking and financial and accounting sector is 19% in the total order portfolio of Rekadro, which indicates a high demand on the labor market for qualified specialists in the financial sector:

Elena Nekrylova, Financial Director of Rekadro, Member of the Non-Profit Partnership Labor Market Experts:

I consider the KPI system to be an effective and transparent system for assessing the work of personnel. Our company is developing and investing in its development, so now I am responsible for attracting Money for business financing, as well as for ensuring the quality of receivables (both on the permissible share of delinquency in receivables, and on the exclusion of the facts of non-receipt of revenue). Also important indicator my activity is the profitability of the business. I use the same system to evaluate the work of my subordinates: the chief accountant, economist, accountants at the sites. Only at first glance, it seems that it is difficult to evaluate the work of an economist in specific terms. Our company works for results. And the main task financial services, as well as other departments - to turn the process into a result. With employees who are not motivated by the achievement of results, we are not on our way.

What performance indicators can be used to evaluate the work of a financial director depends on the company's strategy and development goals. The following are examples:

Coefficient financial stability;
profitability of production activities;
profitability (yield) of capital;
profitability of sales;
receivables turnover ratio;
credit debt ratio;
working capital turnover ratio;
profitability level;
the effectiveness of tax optimization proposals;
revenues from sales.

The Rekadro Research Center conducted an express survey on the use of KPI in the activities of a financial director. The respondents were 127 specialists occupying this position now or who occupied it no more than six months ago in companies with different headcounts:

It turned out that only 45% of respondents use KPI in performance evaluation:

When KPIs are not set

Among financial directors for whom the company does not have KPIs, only 27% would like to introduce this assessment system, both for themselves and for the company as a whole.

Opponents of the introduction of an assessment system through KPI argue their position with the complexity of assessment in overall result activities of the financial director, the danger of restrictions on the activities of the financial director, the small size of the company in which they work.

Professionals who would like to introduce KPI (27%) identified their main criteria. It follows from the diagram that in most cases not indicators are defined, but possible functional areas for evaluation. For example, the criterion Efficient Management accounting” should be determined by specific indicators demonstrating this efficiency.

Situation when KPIs are set

KPI among our respondents were divided into financial and managerial with a clear advantage financial indicators.

From the KPIs used by the respondents, we can single out the top 5 financial indicators for assessing the work of financial directors. These are: return on equity (63%), return on costs (55%), accounts payable ratio (50%), accounts receivable turnover ratio (42%), and return on sales (38%).

Among the main management indicators, the leading indicators are the number of errors in management reporting, the number of non-invoiced deliveries, and the speed of providing primary documentation.

The main KPI deadline is determined by the year. Additionally, 33% of companies perform monthly and quarterly assessments. In 11% there is also a semi-annual assessment of professional activity.

To the question “Are there any bonuses when KPIs are met?” 75% of respondents answered that this is the meaning of KPI indicators.

Evaluation of the activities of subordinates

Performance evaluation of subordinates using the KPI method is used 10% more often than the performance evaluation of financial directors themselves using this system (see the previous diagram). Many respondents believe that the results of the activities of subordinates are easier to evaluate through KPIs than the results of the work of a financial director.

Elena Nagornaya, recruitment consultant in the field of Audit/Accounting/Finance, Member of the NP "Labor Market Experts":

Due to the specifics of the work, I often have to communicate with the financial directors of various companies, both with client representatives and with candidates. Our relations are not always simple, but in general it is pleasant to communicate with them, they are purposeful and specific people, professionals in their field. They can always back up their conclusions with numbers. But at the same time, not all of them consider the KPI requirements fair. Many prefer target management according to the SMART system. Interview candidates always ask me what indicators will be used to evaluate their work, what results are expected from their position.

Influence of the indicator on the variable part of the salary (example) Key performance indicator Weight of the indicator, % (influence on the variable part) KPI1 - percentage of the sales plan completed 50 KPI2 - percentage of the work plan completed 50 Total 100 As can be seen from the table. 4, both indicators affect the variable part of the salary equally. This means that achieving each of them is equally important. Next, we determine the values ​​of the coefficients for each indicator (Table 5). Table 5. Indicator coefficients depending on the percentage of plan fulfillment Percentage of indicator fulfillment Coefficient Plan fulfillment less than 50% 0 Plan fulfillment 51-89% 0.5 Plan fulfillment by 90-100% 1 Plan fulfillment more than 100% 1 To simplify further calculations, we will set the same the values ​​of the coefficients for KPI1 "implementation of the sales plan" and KPI2 "implementation of the work plan" (Table 5 will be suitable for calculating each of the indicators).

Examples of kpi and how to implement them

Dangerous Liaisons Incorrectly designed KPIs can lead to abuse and fraud. For example, intentional misrepresentation of reporting. If before financial director if there are certain profit maximization goals that are not balanced by other key indicators, he can achieve them by various accounting manipulations.

There is also an indicator of the quality of planning: the degree of deviation of the situation from the plan, for example, no more than five percent, says Natalya Nadenenko. - When the forecast is very different from reality, economists often draw up so-called "corrective" or "adjusted" plans three days before the end of the planning period. In this case, management receives a report that the deviation from the planned amounted to 5%, although in reality it could be 25%, and management should think about why this is so.

Calculation of kpi in excel examples and formulas

KPI of employees is a set of indicators of its labor activity: the correspondence of his actions with the given algorithm of work, the correspondence of the time spent to the volume of tasks performed by him.

• Let's say the sales manager's KPI demonstrates the following achievements:
• the number of deals made;
• the number of regular customers and work with them;
• the number of attracted (new) customers;
• volume of sales;
• average cost of sales;
• receivables;
• work with the product line.

Payroll KPIs give employees a good incentive to achieve results. If we imagine a salary of two parts: fixed and variable, then the activity of the employee, his interest in achieving results will directly affect the variable part of the remuneration.

The higher the efficiency of its work, the higher the variable component.

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The manager usually independently sets the amount of remuneration for successfully completed work. AT current activities, when the main changes have already been implemented, the owners or shareholders, first of all, introduce indicators related to reporting.

“One of the most common is the fast close system, or quick closing of the reporting period,” says Artem Vasiliev, a leading consultant in the financial department of Antal International Russia. In this case, accounting (and with it financial and management) statements for the period are prepared immediately after end, and not on the twentieth day of the following month. Such a system, for example, operates in the publishing house Hachette Filipacchi Shkulev.
Here, accounting reports should be generated on the second day of the next month, and management reports on the fifth.

Key performance indicators: how to develop and implement

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Only because he brings these numbers together, can put forward proposals and make predictions. Russian companies are actively adopting Western technologies for managing quality and business efficiency.

Key performance indicators (examples)

Attention

Conclusion: the employee receives a planned salary established according to the payroll standard. Option 2 Fulfillment of the sales plan by more than 100% (KPI1 = 1.5).

Fulfillment of the work plan by more than 100% (value of the KPI2 coefficient = 1.5). IF \u003d 15,000 rubles. (1.5 50% + 1.5 50%) = 22,500 rubles. Salary per month \u003d 15,000 (fixed part) + 22,500 (variable part) \u003d 37,500 rubles.

Conclusion: the employee receives more than 7,500 rubles. planned wages, but the implementation of the plan for each of the indicators is more than 100%. Option 3 Fulfillment of the sales plan 51-89% (KPI1 = 0.5).

Implementation of the work plan 51-89% (value of the KPI2 coefficient = 0.5). IF \u003d 15,000 rubles. (0.5 50% + 0.5 50%) = 7,500 rubles. Salary per month \u003d 15,000 (fixed part) + 7,500 (variable part) \u003d 22,500 rubles. Conclusion: the employee receives less than 7,500 rubles. planned salary.

What are Key Performance Indicators

Key performance indicators and the weight of each of them: Let's take the following values ​​of the coefficients (the same for indicator 1 and indicator 2): KPI table in Excel: Explanations:

1. Salary - a fixed part of the salary depends on the number of hours worked. For the convenience of calculations, we assumed that the fixed and variable parts of the salary are equal.
2. The percentage of completion of the sales plan and the work plan is calculated as the ratio of actual to planned indicators.
3. Coefficients are used to calculate the premium.
   Formulas in Excel for calculating KPI for each employee: We assumed that the impact of indicator 1 and indicator 2 on the amount of bonuses is the same. The values ​​of the coefficients are also equal. Therefore, the same formulas are used to calculate measure 1 and measure 2 (only cell references change).
4. The formula for calculating the amount of premium to be accrued is =C3*(F3+G3).

Examples of kpi: study, evaluate, apply

These indicators do not inform about the current process. The developer of the KPI methodology is Peter Drucker, holder of nineteen doctoral degrees, economist, journalist, and financial advisor. It was he who in the 50s made management management a fundamental science in the study of running a successful business.

• Sales performance is calculated taking into account the following points:
• cost of production (all production costs);
• possible additional costs (transport costs);
• revenue;
• net profit.

At the same time, we understand that revenue is the amount for products, which includes all costs for its development, manufacture, shipment, transportation, etc., and profit is the net amount minus all costs.

Economist's Kpi example

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