Kpi for labor and payroll department. KPI (key performance indicators)

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Key Performance Indicators or Key Performance Indicators is an evaluation system for determining the achievement of the operational and strategic goals of an enterprise. KPI helps a company assess its current state and improve the efficiency of its own development strategy.

Very often the technique KPI used to evaluate and control the activities and activity of employees of the enterprise. In Russia and the CIS countries, the term "Key Performance Indicators" is often used, as a translation from the English term "Key Performance Indicator" (KPI). However, this translation cannot be considered accurate enough.

If the translation of the word "key" as a key (essential for achieving the goal) and the word "indicator" as an indicator (indicator) can be considered sufficiently accurate, then there are difficulties with the translation of the word "perfomance". According to ISO standard 9000:2008 the word "perfomance" can be divided into two terms, efficiency and effectiveness. According to the standard, performance refers to the degree to which planned results are achieved and the ability to focus on results. Efficiency, according to the standard, means the ratio between the result and the costs (monetary, quantitative, time and others) to achieve it. Taking into account the fact that performance combines both effectiveness and efficiency, it is more accurate to translate KPI as “Key Performance Indicators”, since the result also includes the costs of obtaining it.

KPI is an excellent tool for measuring the degree to which certain goals are being achieved. IN real activity enterprises need to use only those indicators that are related to the objectives of the enterprise.

Today, enterprise goal management or management by enterprise goals is one of the foundations modern concepts enterprise management. This concept provides for the ability to anticipate the results of activities and plan ways to achieve them.

The concept of management by objectives began its development with the work of Peter Drucker in the 20th century. According to his work, managers should avoid great attention solving daily routine tasks, instead they should focus on achieving the goals set for the enterprise (department). Today, the KPI system includes this concept, supplemented by others. modern methods and automated software.

According to various estimates, today enterprises have significant problems with setting the right goals and a system for evaluating results. According to surveys of company executives in the United States, it turned out that more than 60% of managers are dissatisfied with the system for evaluating the results of an enterprise. In Russia, dissatisfaction is even greater - more than 80%.

KPI and the employee motivation system of an enterprise are very closely related things, with the help of KPI, you can prepare and implement highly effective system stimulation of the company's personnel.

There are many more key indicators. The set of indicators depends on the area of their application; they are often used to evaluate the result of the work of enterprise managers.

Key indicators of the enterprise can be divided into the following types:

Lagging KPIs - show the results of the enterprise after the end of the period
Leading KPIs - allow you to quickly manage the situation within a given period to achieve the desired results after its expiration

Financial performance is usually driven by lagging KPIs. Although financial indicators are used by the owners of the enterprise to assess the ability of the enterprise to generate cash flows, financial indicators, due to the fact that they are lagging, cannot show the current efficiency of the departments and the enterprise as a whole.

Leading (operational) KPIs tell about the current activities of the enterprise. These indicators can often provide indirect information about planned cash flows. In addition, when properly configured, they evaluate the quality of the enterprise's business processes, the quality of products and customer satisfaction.

A set of enterprise KPIs is part of the system balanced scorecard, which defines cause-and-effect relationships between indicators and goals. Such connections make it possible to see patterns and factors of mutual influence of the results of some processes on others.

KPI system development

When developing a system of key indicators, several stages can be distinguished:

Pre-project work. Such work usually includes the creation of a project team and a pre-project survey. important in this stage also is getting approval and support from volume managers.
Development of KPI methodology. At this stage, the optimization of the org. enterprise structure, development of a methodology and a set of indicators, development of management mechanisms based on KPI, preparation of a set of documentation.
Preparation software to manage KPIs. A technical task is being developed for making changes to the software. Direct programming of the system, user training and pilot operation of the system. An example of a program based on "1C" for KPI
Completion of the project. At the final stage, the KPI system (and methodology and software) is put into commercial operation.

Explaining to staff the benefits of using KPIs
Determination of strategic indicators for the entire company
Development of mechanisms for operational monitoring of indicators
The need for further continuous improvement set of KPIs to support the development of the organization.

Rules and principles of KPI implementation

There are various assessments of the need and sufficiency of the number of key performance indicators. Norton and Coplan once suggested using no more than 20 KPIs.
Fraser and Hope recommend using no more than 10.

The most successful current practice is to use the 10/80/10 rule.

This rule means that an enterprise should use about 10 key performance indicators, about 80 indicators related to operational (for example, production) activities and about 10 key performance indicators.

very important in implementation of KPI is the principle of manageability and controllability. This principle states that the department or individual responsible for the result of the indicator should be allocated all the resources to manage it, and the result should be measurable and controllable (including by them).

There are other principles for building a KPI system:

The principle of partnership successful promotion efficiency it is necessary to achieve partnership, between all interested subjects of the company. Partnerships should start with building the system and continue as the system progresses.
The principle of transferring efforts to the main areas - increasing efficiency may require a significant expansion of the powers of certain employees of the enterprise. Often these are employees working on the front line. They may also need to upgrade their skills, conduct trainings and include them in the development of KPIs relevant to their activities. There is also a need to improve communication between various departments and employees.
The principle of integrated performance evaluation, reporting and performance improvement. Created in the enterprise should encourage employees to make responsible and concrete decisions. It is also necessary to provide employees with all the reporting they need in their work.
The principle of coordinating operational indicators with the strategy. All indicators should be aimed at achieving the stated goals of the enterprise. Need to constantly analyze and optimize key indicators. In the work of the enterprise there should not be indicators that are not consistent with strategic goals enterprises.

The application of these principles will allow you to build an effective enterprise management mechanism.

KPI (Key Performance Indicator stands for) is a key performance indicator. Simply put, this is an indicator of the achievement of a result in a particular activity, which can be digitized and measured.

Motivational KPI system - in the Russian version, the abbreviation KPI (Key Performance Indicators) is sometimes used - an indicator of the effectiveness and success of meeting the goals. The task of this system is to direct the actions of employees of all departments in a single direction through the implementation of specific indicators. KPI of each individual worker determines the effectiveness of the performance of his specific work and is financially reflected in his salary, and in general is aimed at solving the business goals of the entire enterprise.

Key parameters can be divided into two types:

Operational, which fully reflect the current activities of the enterprise and allow you to solve problems in connection with changing conditions.
Strategic, which reflect the work of the enterprise for the entire period and allow you to make adjustments to the plan for the next working period.

There are the following types of KPIs:

Cost KPIs - illustrate the amount of costs;
Efficiency KPI - characterize the ratio of the result obtained to the costs;
KPI functioning - evaluate the compliance of a process with a given algorithm;
Performance KPIs - evaluate the ratio of the result to the time spent to achieve it;
Result KPI - show what result you got.

The last indicator is of the greatest importance in personnel management, as it shows what results employees achieve as a result of their work. labor activity. Also, the KPI of the result is used when calculating the bonus part of the salary, if the enterprise has an appropriate remuneration system.

What is KPI in salary

When developing and implementing efficiency parameters for remuneration, it is necessary to clearly understand what goals the company is pursuing. These goals should have specific features, and for goal setting, verbs and numbers must be used.

For example:

increase turnover by 20%;
take 5th place in terms of brand awareness among manufacturers this product;
reduce logistics costs by 15%;
increase sales profitability by 25%;
reduce the average application processing time to 5 minutes;
increase the number of site views by 1000;
process more addresses per unit of time, etc.

Any motivational system should be aimed at increasing interest in the work and the quality of the indicators being implemented. But you also need to understand that not all departments can influence the implementation of the company's business goals. For example, a secretary or an accountant. But even for such employees, you can set criteria for the effectiveness of their work. Just tie them not to common business goals, but to the implementation of the goals and objectives of the unit.

For a secretary, this can be: the quality of processing incoming and outgoing documentation, the speed of answering incoming phone calls, and for an accountant, the time for processing documents or the quality of interaction in matters of document management with accountants of counterparties.

The implementation of the KPI system provides for:

clearly defined goals for the business;
development of the lowest and highest performance indicators;
proper distribution of powers and responsibilities among employees;
determining how and which indicators to achieve the goals are affected by each unit;
finding out what exactly within the department an employee of the company can influence;
search and formulation of specific indicators for each employee;
creation of a new accrual algorithm wages taking into account KPI.

When implementing a KPI system, it is advisable to first implement it as a pilot or test project in one department whose work has a direct impact on the company's financial performance (for example, in the sales department). And then, after correcting possible errors, extend its effect to all other units. In the event of a change in the conditions of the external market environment or a change in the strategy and goals of the company, KPI indicators are necessarily revised.

It is important that the development of the KPI system is not carried out only by employees of one department, for example, the personnel department. This should be a team effort of the heads of all departments in order not to make mistakes in determining the key parameters. Within the department, it is necessary to develop a system from top to bottom, i.e., first to the head, and then to his subordinates, so that the goals and objectives within the unit are uniform. Instead, it would not work that, for example, the head of the department should increase the sale of low-margin positions, and managers receive a percentage of the sale of positions with high profitability. With such indicators, managers are generally not interested in selling positions with low profitability, and the tasks of the manager will be difficult to fulfill.

In a properly built system, each KPI coefficient is a well-thought-out and defined value.

It is also very important to understand: KPI salary - what is it. One employee should not have many indicators for which he is responsible (3-5 is the most optimal number). Each indicator must have its financial value, which will be reflected in the salary. It is also recommended to keep the employee's salary, and make the motivational component additional, and not part of the former salary.

Development of KPI, rules and principles of implementation:

there should not be many indicators;
each indicator must be measurable;
the costs (time and financial) for measuring a parameter should not exceed its cost.

When implementing new system wages, you need to be prepared for resistance from workers. Often, employees assume that they want to deprive them of their salaries, and not increase their income, they are afraid of not meeting the new established standards and losing their jobs altogether. It is very important to explain to employees what this developed system is aimed at, what results management expects from them. And understand that the goals set by management may turn out to be radically opposite for employees to what they did before. It is especially difficult for workers of the “Soviet temper”, accustomed to other systems of motivation and remuneration, to get used to such innovations.

In general, the development of a KPI system is a very controversial topic for any manager. This process can be quite costly and painful for employees, but with the right approach, it is an excellent tool for motivating and stimulating employees to work.

How to evaluate performance

Evaluation of the fulfillment of the tasks set is an important element of the work of this motivational system. The standards of ordinary workers should be transparent in their assessment, so that a person himself can understand during the accounting period whether he fulfills them or not, and not learn about it after the end of the period. Managers may have indicators that may take time to determine the implementation of, such as % of the company's return on sales. But within a month, the employee should understand in which direction he is moving, and be able to evaluate his current work by other indicators.

In large companies, performance evaluation is usually automated, and the results are determined "with a button". IN small companies results are evaluated either by managers or representatives of the HR department.

Based on the performance of the indicators, a bonus is awarded.

The following calculation formula is usually used:

KPI weight - the weight of each indicator of the system in the total amount equal to one. The maximum weight is given to the maximum significant indicator. For example, the main achievement of a sales manager will be an increase in the amount of sales;
plan - the planned result that the employee must achieve;
fact - the result actually achieved.

By calculating the index for each indicator, you can immediately see which tasks the employee had problems with and how this affected the overall results of his labor activity for the reporting period.

To determine the appropriateness of bonuses and calculate the bonus component of wages, a general performance ratio is used, which is the sum of all indices.

If it is more than one, then this indicates an overfulfillment of the set plan, which means that the employee can be rewarded.

This approach makes it possible to make the bonus distribution process more transparent and understandable both for the employee and for senior staff company that distributes bonuses.

In addition to paying a bonus, an employee can be encouraged in some other way. For example, provide an unscheduled day off, give him more promising project, include in personnel reserve to a higher position, etc.

It is optimal to combine material and non-material incentives. It is this motivational system that will allow employees to work well and efficiently, and companies to achieve high financial results.

Pros and cons of the KPI system

Pros (and, as a result, the achievement of goals):

the employee's ability to influence his salary;
responsibility of the employee for his area of work and transparency of tasks;
participation of the employee in achieving common purpose companies;
the possibility of adjusting the goals of the head in the process of work;
the interaction of the leader with the subordinate in a more dense mode.

Cons (and, as a result, demotivation of the employee):

unattainability of the set parameters;
a small share of each indicator in the total bonus due to their large number;
labor input of the system implementation;
uneven problem solving due to incorrect determination of the cost of standards.

KPI examples for different positions

It is necessary to understand very clearly, speaking about KPI, what it is when paying. For different positions, even to achieve the same goal, it is necessary to use different indicators.

Consider examples of indicators for achieving the goal of “increasing profitability (delta between revenue and expenditure) of sales” in a company that sells sweets.

What is a KPI matrix

On the Internet you can find different interpretations of this concept. Sometimes the concept of "KPI matrix - agreement on goals" is used. But the most accurate interpretation is the efficiency matrix.

This table contains indicators of the employee's KPI system, planned and actual values, as well as the KPI coefficient for each item. The final average value in this matrix reflects the effectiveness of the employee in his activities within the framework of the tasks set and the indicators determined for his position.

An example of a KPI matrix for the above employees of a company that sells sweets, within the limits of the indicators defined for them.

Special opinion

At development of KPI there are 2 main mistakes. The first is the confusion between KPI and money. KPI is not a description of a bonus system. Yes, bonuses can be paid for the achievement of indicators. But in general, KPI is a reflection of the effectiveness of an employee, department, direction, department. For example, in production, there should be a client assessment of the quality of work. Majority large companies they don’t put it in the bonus system, but fix it only as a KPI - if an employee is in critical areas, he is pulled up to the desired level or parted with them, but he is not paid a bonus if 90% of clients are satisfied with his work.

The second is KPI for the sake of KPI. KPI is always a decomposed goal of a company. For example, in a salon, the arrival of an administrator by 9 am can be recorded in KPI (otherwise the shopping center will fine the company for a closed salon), but in production such an indicator is meaningless (an employee can come at 9 and leave at 18 o’clock, but the amount of work will not change, namely, the volume of work affects profit).

Boris Teklin

Head of department customs activities in Russia DHL Worldwide Express

It is believed that correctly selected KPIs must meet the so-called SMART criteria (Simple, Measurable, Agreed, Relative, Timebound). This means the following: KPIs must be understandable to the employee and easy to calculate. KPIs should be "digital", that is, measurable in certain units (in cubic meters of excavated soil, tons of cargo transported, the number of calls answered, the percentage of the plan completed, etc.). You cannot use unmeasurable "analogue" indicators as KPIs, such as "quality", "good", "beautiful", etc. KPIs must be consistent with the goals of the unit and agreed between the employee and his manager. KPIs should be related specifically to this employee and the work assigned to him, the expected result of the work should be dependent on this employee. KPIs should be measured at the agreed time intervals (if there is a link to a premium, then it is logical to "link" the indicator to a month or quarter).

KPIs should be as clear as possible to those who set the task and those who complete it. Their the main task- contribute to the achievement of planned indicators and motivate to fulfill new ones. Based on our experience, we highlight a few errors.

1. KPI is not developed for business management, but to motivate specific departments, employees, divisions, to evaluate the effectiveness of their work. If these indicators are not linked into a common system and do not work to achieve business goals, the question arises: what effect do they bring to the business?

2. KPIs are not integrated into the motivation system. The indicators are set, but employees have no incentive to meet them.

3. KPI indicators are only financial. In a properly designed KPI system a large number of not financial, but leading indicators by which we control the activities of the business and the achievement of the required results.

4. There is no planning and KPI accounting system. Indicators are needed when we know how to count them, when we can get them from the accounting system and calculate them objectively, and the employee trusts these indicators.

5. KPI indicators are compiled in such a way that the employee works not for the result, but for the indicators.

In our opinion, KPI is not effective in creative professions and in unstable markets. Today we see the following alternatives to the traditional KPI: a) The employee makes decisions independently (the principle of work according to the "Turquoise Management Model"); b) Planning for performance goals.

Olga Pavlenko

HR manager Soyuzkhimtrans-Auto

The article presents in sufficient detail the important aspects in the development of a KPI system. I would like to add an important, in my opinion, nuance that there should not be too many key indicators. Of course, there are positions in which it is very important to take into account a lot of various factors and components. But the more parameters for taking into account the effectiveness of an employee, the more difficult it is to keep them all in the head and the more difficult it is to focus. After all, developing a KPI system is still half the battle, the system must work. And for this, one should not forget the basics of psychology, namely the features of attention and memory. 3-5 indicators are exactly what is optimal for a working KPI system.

And the second important point that I would like to add concerns the base salary paid to the employee. The salary part of the salary must be unchanged and indivisible. This state of affairs gives the employee a sense of stability and confidence. Complementary base salary payments according to the KPI system should motivate and encourage the employee to professional development and more successful completion of tasks. If the base salary also becomes a variable value, there is a risk of demotivating the employee and provoking him to avoid difficult situations instead of solving them.

When developing KPIs, it is important to consider the following factors.

1. An employee must necessarily influence KPI.

2. Achievable KPI. An ambitious goal is good, but keep in mind that it is impossible to build a house in 2 days.

3. Relevance to functionality. KPI - an indicator for the achievement / improvement of which this position exists (marketing - attracting customers; seller - sales).

4. KPI weight depending on the position. For example, a manager for sales KPI can be up to 80% of the salary level. For a back office employee, it cannot be more than 50%, because the presence of his activity already creates value, and KPI is an additional motivation.

5. The optimal number of KPIs is from 1 to 3.

KPI is not effective in the following cases:

1. High degree of uncertainty of the final result/product.

2. The competencies of the employee are unique (in the company/industry).

3. We need a super result (build a house in 2 days).

4. The employee does not have tools to influence the result. KPI will push and limit, which will lead to regression.

An alternative is: the introduction of additional bonuses for super performance; description of the lower bar with a high degree of uncertainty of the result; checklist for a unique employee.

Key performance indicators allow you to evaluate the effectiveness of the actions performed. They can be used both to evaluate the work of the entire company, its individual divisions, and specific employees. With the help of 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 possibility of its measurement.

Often the work of the company contains a lot of 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 the result, conversations with managers will have the character of persuasion. If it meets the goals of the company, you can continue to work in this format.

If the task 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 personnel motivation system “tied” to specific figures and indicators.

KPI(key performance indicator) is a key performance indicator. They allow you to evaluate the effectiveness of the actions performed. KPI can be used both to evaluate the work of the entire company, its individual departments, and specific employees. With the help of 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 operation of the indicator is the possibility of its measurement ( tab. 1).

Tab. 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 / fact (the ratio of the fact of profit to the plan of profit)
Accounts receivable (AR)	Plan / fact (relation of the fact of remote sensing to the plan of remote sensing)
Other indicators	Plan fact
Non-commercial (qualitative) indicators
Timeliness of reporting	Plan / actual (the ratio of the actual deadline for submitting a report to the planned deadline for submitting a report)
Execution of the customer visit plan	Plan/actual (the ratio of the fact of customer visits to the plan of customer visits)
Personnel turnover	Plan / actual (the ratio of the actual percentage of "turnover" to the planned percentage of "turnover")
Number of new clients attracted	Plan / actual (the ratio of the actual number of attracted customers to the planned number of attracted customers)
Other indicators	Plan fact

Requirements to the KPI system:

each indicator should 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 in the area of responsibility of those people who are being evaluated;
indicator must be meaningful;
indicators can be general for the entire company, i.e. "tied" to the company's goal, and specific for each division, i.e. "tied" to the goals of the division.

I. The payroll system as part of the motivation system

The personnel management system runs the risk of being costly and ineffective if the staff does 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 mean the process of stimulating employees to achieve their goals and tasks.

It is desirable that the personnel 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 the employees of any organization are most sensitive.

KPI-based payroll system allows:

ensure control over the current and long-term performance of the organization;
evaluate the personal effectiveness of each employee, unit and organization as a whole;
orient the staff to achieve the required results;
manage the budget for the wage fund and reduce the time for its calculation.

II. Methodology for the formation of the remuneration system

1. Determine the list of positions (position) in the structure of the company, 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 " CEO» (business owner) - Achievement of the first level goal (plan / fact)
Level "management" (heads of departments) - Achievement of the goals of the second level + indicators of the organization of planned work (plan / fact)
Level "ordinary personnel" - Achievement of set goals + implementation of current tasks (plan / fact)

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 order in which indicators are calculated ( tab. 2):

Tab. 2. Linking goals to key performance indicators

№ p/p	Company goals	Possible key performance indicators and calculation procedure (measurements)
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 12/31/11	1. Key performance indicator - sales plan. Measurement system: (sales fact) / (sales plan). 2. Key performance indicator - an increase of 20%. Measurement system: (actual increase) / (planned increase).
2	Business 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 on the date).
3	Qualitative goal to increase the number of customers by 10% during the period from 01/01/11 to 07/01/11 in territory B	The KPI is the number of customers in the company's database. Measurement system: (actual number of clients in the database) / (planned number of clients in the database).
4	Qualitative goal to develop and hold an event for 50 clients (30% key and 70% potential) during 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 performance of the indicator, the value of the coefficient of the indicator and the meaning of its value ( tab. 3):

Tab. 3. Percentage of performance indicator and coefficient (example)(*)

	Coefficient	The meaning of the coefficient
Implementation of the plan is less than 50%		Unacceptable
Implementation of the plan 51–89%	0,5	Low level
Implementation of the plan by 90–100%	1	Achievement of the target value (implementation of the plan)
Implementation of the plan 101–120%	1,2	Leadership
Implementation of the plan more than 120%	1.5, 2 or 1(**)	Aggressive leadership or planning precision control**
() This table is a sample. The coefficients are given as a possible option. (*) The coefficient is set depending on what policy exists in the company regarding overfulfillment of the plan. A coefficient of 1.5 or 2 means that the employee is motivated to significantly overfulfill 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 overfulfill it later, since in this case he will receive a coefficient corresponding to the fulfillment of the plan by 100%, and not more.

5. Form a motivational formula by which wages will be calculated. Determine the ratio of "fixed part", "variable part" and "bonus" in wages.

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

7. Check: Calculate all possible salary options for all possible KPI values.

8. Prepare an employee motivation scheme.

As you can see from point 1, key performance indicators (KPIs) differ depending on the level of the position in organizational structure and meet the objectives of this level. This connection, using the example of second-level goals, was discussed above in tab. 2.

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

An example of calculating the indicator "Monthly sales plan"

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

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

The spread of percentages of the plan and the values of the coefficients (meaning) is determined by the company independently (they are affected by: the amount 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 for the formation of a motivational formula

The standard motivational formula is:

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

If bonuses are provided, then:

Salary = Fixed part + Variable part + Bonus.

The ratio between the fixed and variable parts will differ 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 launching a product on 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

Suppose the average salary in the market for the position of "sales manager" is 30,000 rubles. per month. It can fold in different ways. For example, 30% of the fixed part, i.e. 9,000 rubles, and 70% of the variable, i.e. - 21,000 rubles. Total: 30,000 = 9,000 (fixed portion) + 21,000 (planned variable portion). 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 keep it, the situation in the company and the market is stable, then the fixed part can be equal to 70%, and the variable 30%. In this case, 30,000 = 21,000 (fixed portion) + 9,000 (planned variable portion).

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

For further examples, let's take the ratio of 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. Influence of key performance indicators (KPI) on the variable part of wages

Define key performance indicators for the required position, for example:

KPI1 - percentage of sales plan implementation;
KPI2 - the percentage of the work plan completed.

To establish the extent to which each of the selected KPIs will affect the variable part, we determine the contribution (weight) for each of them ( tab. 4):

Tab. 4. Influence of the indicator on the variable part of wages (example)

As seen from tab. 4, both indicators affect the variable part of the salary equally. This means that achieving each of them is equally important.

Tab. 5. Coefficients of the indicator depending on the percentage of the plan

To simplify further calculations, we will set the same values of the coefficients for KPI1 "implementation of the sales plan" and KPI2 "implementation of the work plan" ( tab. 5 will be suitable for the calculation of each of the indicators).

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

PV = Planned amount of the variable part x (KPI1 Weight x KPI1 Factor + KPI2 Weight x KPI2 Factor)

Tab. 6. Checking everyone options wages for all possible KPI values
(with a detailed breakdown of some values)

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

Option 1

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

IF \u003d 15,000 rubles. x (1 x 50% + 1 x 50%) = 15,000 rubles.

Salary per month \u003d 15,000 (fixed part) + 15,000 (variable part) \u003d 30,000 rubles.

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

Option 2

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

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

IF \u003d 15,000 rubles. x (1.5 x 50% + 1.5 x 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 7500 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% (value of the KPI1 coefficient = 0.5). Implementation of the work plan 51–89% (value of the KPI2 coefficient = 0.5).

IF \u003d 15,000 rubles. x (0.5 x 50% + 0.5 x 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 by 7500 rubles. planned salary.

Option 4

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

IF \u003d 15,000 rubles. x (0 x 50% + 0 x 50%) = 0 rub.

Salary per month \u003d 15,000 (fixed part) + 0 (variable part) \u003d 15,000 rubles.

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

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

Tab. 7. Completed form illustrating the methodology for the formation of a motivational scheme

№ p/p	Methodical procedure	actual value
	Determine the position in the company structure	Sales manager (sales department)
	Determine key performance indicators (KPIs) for the position and the weight of each, based on the goals set for this level of organizational structure	KPI1 - fulfillment of the sales plan. Weight - 50% KPI2 - implementation of the work plan. Weight - 50%
	Determine the order in which indicators are calculated	Fact: plan x 100%
	Determine the spread of the percentage of performance of the indicator, the value of the coefficient of the indicator and the meaning of its value	*Percentage of performance indicator*	*Coefficient*




	Form a motivational formula by which wages will be calculated. 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	PV = planned amount of the variable part x (KPI1 weight x KPI1 factor + KPI2 weight x KPI2 factor)
	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 breakdown of some values)” ( tab. 6)
	Execute the document "employee motivation scheme"

Motivation, Incentives and Remuneration

Keywords:

1 -1

In the article, we will look at examples of KPI, the features 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 marketing KPI.
What can be the KPI of the chief accountant.
What KPIs can be applied to senior managers.
How KPI can be calculated in Excel.
Which companies have successfully implemented KPIs.

Instructions for calculating KPI for different employees

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

Preparatory activities: creation of a working group, analysis.
Formation of assessment methods and methods: 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.
The stage of using the KPI calculation system: monitoring performance, adjusting indicators.

Two main methods are used to develop KPIs: process and functional. How to calculate the premium for each of them, you will learn from the table published below.

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

An example of KPI for managers that will make them go all out

If a salesperson is reluctant to meet their KPIs, then those performance metrics should be abandoned. The editors of the "Commercial Director" proposes to set KPIs that motivate managers to sell and make a profit.

Table. KPI - calculation examples using process and functional methods

process

Functional

Sales process. Goals:

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

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

The enterprise level is a plan, a strategic development model. Examples of KPIs:

income, profitability;
increase in net assets.

Inventory process.

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

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

customer satisfaction level;
sales volumes.

Customer Satisfaction Process. Goals:

decrease in the number of returns (KPI - the percentage of the decrease in the number of purchase returns);

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

Professionalism of specialists - job descriptions. Examples of KPIs:

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

Personnel process. Purpose: to increase the quality level of recruitment (KPI - percentage of closed vacancies).

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

Index	Base	Norm	Target	Fact	Runlevel	KPI index
Sales volume (c.u.)
Average income from one buyer (c.u.)
Number of marks "I liked the service" (pcs.)
Share of overdue receivables (%)
Final KPI

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

The table below provides an example of a methodology for calculating "Average Revenue 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 revenue per customer for a sales professional

The calculation of performance indicators for supporting departments is a rather complicated procedure. Consider below examples 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 KPIs:

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

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

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

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

	Baseline (monthly average)	Planned indicator
Increase in new customers	160 new clients	20% increase, i.e. 192 new customers
Percentage of buyers who made a repeat purchase	30 repeat purchases	20% increase, i.e. 42 repeat purchases
Percentage of buyers who left a positive review or recommendation on the site		20% increase 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. Fact is actual data.

In the above example, it can be seen 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. Payroll.

The salary fund of the marketer in this example is $800. In this amount, $560 is the fixed part and $240 is the variable part. Full salary is paid in case of achievement of a result with an index of 1 or 100%. Since in our example a KPI of 113.7% was scored, which is an overfulfillment of 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 size of the bonus is reduced.

A table with an example of KPI demonstrates the problematic points in the work of a marketing specialist. Insufficiently high indicators may be the result of an incorrectly chosen strategy to increase customer loyalty to the company. Such data allows you to control the work of a specialist. If the state of affairs does not change in the following periods, then it is necessary to revise the system of requirements for KPI.

By constantly following this 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 calculation may vary depending on the planned indicators. It is permissible to supplement the regulation 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 the salary for an employee who has fulfilled the sales plan:

KPI calculation for a marketer: an example

Before you start calculating a 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 in a numerical display the indicators of results for which the marketer is specifically responsible.

For example, let's imagine 5 KPI indicators of a specialist:

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

To achieve the target indicators, the marketer uses the material and labor resources of the company (interacts with software and design developers, with analysts and copywriters). A mandatory procedure in this process is budget control. Accurate cost accounting will help to establish the ratio of the results obtained by the specialist and the material resources used by him.

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 for 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 the work of a specialist;
form a plan and determine the optimal KPI indicators (we will analyze 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 that will ensure the competent organization of the procedure for setting goals, quick data entry and effective monitoring of KPI implementation.

Practitioner tells

Examples of KPIs that made ordinary staff look for the best way to get the job done

Maria Ponomarenko,

director of the Moscow firm Smart Personal

For some time I worked in a team that managed an enterprise in the field of black metal rolling. The clients of our company were construction and manufacturing companies that needed timely delivery of goods. To meet the needs of customers, 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 attracted cars from third-party contractors. We had to solve two problems: to ensure fast delivery of products at a convenient time for the customer and to achieve maximum loading of each vehicle.

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

The indicator of the transfer of delivery to other days. If our capabilities did not allow delivery on time, with the consent of the customer, it was postponed to another time approved by the customer. The maximum number of transfers of deliveries per dispatcher should not exceed 3%. With an increase in this indicator, the size of the employee's bonus decreased. And vice versa, if the dispatcher could avoid transfers, the amount of his bonus increased (see data in Table 1).
Average number of deliveries per vehicle(the total number of deliveries that were made in 1 day divided by the number of cars 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).

Bonuses were calculated according to 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.

KPI indicators turned out to be mutually exclusive. For example, it was possible to increase the number of deliveries by one car, 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, delivery region, vehicle capacity, compatibility of delivery of various types of rolled products on one vehicle).

In parallel with the introduction 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 was launched in March, and already in October, the average daily delivery efficiency ID rose from 1.8 to 2.3. Thus, in just 7 months of work using the KPI system, the efficiency indicator for the operation of the fleet increased by 28%. At the same time, we managed to reduce the allowable number of delivery transfers by 6 (!) times - from 3% to 0.5%.

In the general part of the provision on KPI follows:

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

In the main part of the provision on KPI, it is also necessary to describe the procedure for the formation and coordination of performance indicators. It is necessary to disclose the criteria that they must meet (example: measurable, achievable, specific, etc.). Our example, available for download below, will help you create such a document for your company.

KPI of individual specialists is better to issue a special document called a scorecard. It is coordinated with the CEO, senior managers of the personnel and financial department and signed by a specific employee.

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

Table. KPI map for financial service specialists

№ p/p	Type of KPI	KPI performance levels			KPI weight, %	KPI performance level
№ p/p	Type of KPI	Lower level	Target level	Top level	KPI weight, %	KPI performance level
	Speed of turnover of receivables and payables	Growth in the turnover ratio from 0 to 1% compared to the base year	Growth in the turnover ratio from 1 to 3% compared to the base year	Growth of the 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, %
	Decrease in operating expenses per function by industry relative to the previous year, %
	Free cash flow, million rubles

The regulation on KPI should contain requirements for the procedure for developing and approving maps of key identifiers. 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 map. For example, it should include identifiers for calculating the performance of indicators (continuous, discrete, cutoff) and recommendations on the measurement methodology (quantitative and qualitative). In the provision for each KPI identifier, it is important to indicate its target value, weight, type, as well as the upper and lower levels. In addition, you need to take into account that the total weight of all indicators in the KPI map should be 100%.

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

The KPI regulation should describe the procedure for monitoring the performance of indicators, which will help to quickly identify and eliminate the causes of significant deviations of KPI identifiers from target values.

In the provision on key performance indicators, the frequency of implementation of control activities (for example, once a quarter) and the employees responsible for their implementation should also be noted.

For possible (internal or external) changes in the conditions for the implementation of economic and economic activities, the procedure for adjusting KPI should be described. The reason for their application, for example, may be changes in the employee's duties. Here you also need to write down a list of persons who can initiate the use of adjustments, as well as the parameters by which such adjustments can be carried out (for example, changing the number and composition of identifiers, targets, the level of their achievement, etc.).

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

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

KPI of the chief accountant: an example of assessing the workload of the department

The management of the enterprise often considers accounting to be a costly unit. Chief accountants regularly complain about the high workload of the department and ask to increase its staff. How can a manager find out if the accountants are really overwhelmed by the current work or if the problem lies in the low efficiency of the work organization? How to define KPI for accountants?

A qualified chief accountant must have the tools to objectively assess the level of workload of specialists in his department. There may be situations when some employees need to increase the range of responsibilities, while others, on the contrary, need to narrow the scope of tasks. Such measures will help to ensure a more even distribution of the workload on 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 the preservation, but also to the increase in 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 filling of declarations;
timely payment of company invoices by customers;
absence of errors in accounting;
the amount of financial resources saved (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 salary costs;
presence/absence of complaints from external and internal clients of the enterprise about the work of accountants.

If we consider KPI for an accountant, there are various examples, but it must be taken into account that it is this department that is able to influence the efficiency of all the main business processes of an enterprise by increasing profits and optimizing costs.

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

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

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

Depending on the tasks set and the deadlines for their implementation, the manager evaluates the work of an 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. Here is an example of such for the accounting department, where the work includes such components as:

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

To calculate the required number of employees of the accounting department, you need to know the approximate amount of primary documentation received for 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 officer responsible for payroll, the following criteria are used:

the number of employees of the enterprise served by him;
payroll according to the number of employees (pay slips);
withholding tax and other obligatory payments according to the number of employees;
the number of intercalculations.

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

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

KPI identifiers are set by management (the chief accountant or director of the company) and may contain more or less indicators than in the examples presented in this review. The main motivation of employees lies in 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.

6 tricky interview questions that will take anyone by surprise

Key Performance Indicators: Examples for a Senior Manager

In the process of building a KPI system, the heads of structural units of the enterprise must observe the following principles presented in the table.

The main guidelines of the company 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 can be considered a leading position in the market or a prospective 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 capital of the enterprise in order to obtain the highest sale value.

To do this, first determine the main goal and justify it in detail in writing. Then they break it down into several small goals, which are specific tasks with which it will be possible to achieve the main idea. 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 perform the task at random, without even understanding its essence. Based on the results of monitoring the setting of tasks in one well-known holding, it turned out that at a meeting with the top management, many employees agreed with what was said, but, leaving the office, asked their colleagues what the boss had in mind.

Each item of the KPI system should be clearly spelled out. To this end, the company's management (general director, board of directors and board) draw up and approve the regulation on KPI. It would be nice if the document gives examples and calculations with formulas, and ties all the terminology 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 systems of reporting documentation, it is necessary to indicate by which method each indicator should be calculated.

For a better understanding of the provision on KPI, several general meetings are held. Each manager must independently calculate their 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 revealed.

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

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

The KPI is calculated once a year. This is the most optimal period for evaluating the achievements of a specialist. What if the lead manager was hired during the current year? As an example, consider the metropolitan group of companies Insol. 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 previous achievements of the manager in terms of similar indicators with an increase of 20%. This is the planned interest rate set by the head of the company;
if the lead manager was recently hired, the performance of his predecessors is considered (20% should be added to the average).

The amount of bonuses depends on the level of planned indicators achieved. Consider this situation with an example:

50% bonus if the actual figure 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 in the event of an unacceptably low result.

When calculating KPI, it is better to take into account general and personal indicators. The first includes the results of the activities of the department, which is managed by the top manager of the company. The overall results motivate employees to teamwork and serve as a manifestation of the specialist's interest in the end. The specifics of the enterprise and the position of the head 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 can range from 10 to 20% (or they may not be taken into account at all). For the head of the company, a personal KPI is the receipt of qualification certificates for a specialist in the financial sector, which is mandatory for some firms, as well as the preparation of a successor.

KPI is expressed in specific numerical values. For example, for a head of personnel, such a criterion as “attracting highly qualified personnel” is unacceptable. In this case, there are no such indicators as terms, 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 “skilled” and “highly qualified specialist”.

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

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

threshold (indicators below which bonuses are not accrued);
target (according to this indicator, a specially provided remuneration is paid);
maximum (increased bonuses are paid).

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

If the percentage of the bonus is insignificant compared to the employee's total income, then he will not spend his time setting strategic goals, but 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 an employee of the company, the indicators are considered fair if they differ by no more than 30% from the average figures in this industry. In this case, when developing key performance indicators, the experience of colleagues will be useful.

A very important aspect is the fair procedure for calculating KPI. If a certain amount of profit was set for a top manager in relation to KPI, but according to the results of the reporting period, the indicators barely reach 50%, then according to the KPI provision, the manager is not rewarded. 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 companies in the industry, where all the rest went to zero, then according to the results 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 we link the main indicators to industry-wide ones.

Rules for managing sales managers: how to protect the base after the dismissal of employees

Practitioner tells

KPI leader by example

Tatyana Kostenkova,

legal and business development advisor, Finstar Financial Group, Moscow

Case study 1. KPI for a store manager

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

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

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

KPI 3. Work of subordinate employees. Evaluation 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 worth 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 stage, it became difficult to comply with corporate standards.

Four tasks were set for the heads of departments:

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

To stimulate the director to solve the tasks set, 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. Compliance is assessed by the board of directors based on audit data prepared on the basis of the operating income statement. The weight of the indicator in the bonus is 0.3.

KPI 2. Failure to meet EBITDA. The identifier is evaluated by the board of directors or an audit committee based on 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 the 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 KPI in Excel: examples and formulas

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

Any company determines KPI 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 shipping amount by 20%. KPI - average shipment volume. Measuring system: actual average shipment volume / average shipment plan.
The goal is to increase the number of customers by 15%. KPI - the number of customers in the company's database. Measuring system: actual number of buyers / planned number of buyers.

The spread of KPI (scales) is determined by the company 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% - a coefficient of 0.005 for every 5%.
No errors - coefficient 0.15.
There were no comments in the reporting period - coefficient 0.15.

This is just one of the possible examples of defining motivational KPIs.

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 a salary (fixed part) and bonuses (variable part). Motivational KPI affects the calculation of the variable part of the salary.

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

We accept the following values of the coefficients (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 the same weight.
The percentage indicator of the implementation of the implementation plan and the work plan is calculated as the ratio of the indicators obtained to the targets.
To calculate bonus payments, coefficients are used. In our example, the impact of indicator 1 and indicator 2 on the amount of the premium is equivalent. The coefficients are also the same. Therefore, the same formulas are used to calculate measures 1 and 2 (only 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 a sample summary (Excel KPI example). Each company forms its own table, taking into account the characteristics of its activities and the bonus system used.

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

KPI Matrix Example in Excel

In order to evaluate employees on key indicators, it is necessary to form a matrix or agreement on goals. According to the general form by which KPI is calculated in Excel, the examples are as follows:

Key identifiers are the criteria by which the company's employees are evaluated. Different positions use different criteria.
The weight of the indicator is indicated in numbers from 0 to 1 so that the sum of all indicators is 1. The weight number indicates the priority of this KPI, taking into account the tasks of the enterprise in the reporting period.
The base value of the KPI indicator is the acceptable minimum. The level, the value of which is less than the “base”, is the absence of a result.
Norm (planned figure of the indicator) - a mandatory level. If the "norm" is not implemented, it means that the employee is not coping with his job responsibilities.
Goal (above the norm, which makes it possible to improve results) - the value to which it is necessary to strive.
Fact - actually achieved performance indicators.
The key performance indicator index shows the level of the result in relation to the norm.

KPI calculation formula:

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

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

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

Where was the successful implementation KPI: company examples

The KPI system is being actively implemented at domestic enterprises.

1. Sberbank: employee motivation through KPI.

An example of an enterprise that has successfully implemented a KPI system is Sberbank. 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 took place in the work of the enterprise. For ordinary personnel, group indicators were developed, called "5+":

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

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

2. "Magnat" - a new control system.

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

Improve Tier 1 Key Performance Indicators by the second year after implementation.
Improve the movement of variable costs by increasing the dynamics of the payroll.
Increase business transparency and manageability.
Strengthen team interactions.
Recoup the cost of implementing the system.

The results of the implementation of the KPI methodology can be an example of how quickly the 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 technological and understandable.
The motivational system has become more technologically advanced and flexible.
Level 1 KPIs of the enterprise are constantly improving.
GC "Magnat" is an example of successful implementation and use of target 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 the 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. The implementation of KPI is not an easy task that requires temporary resources and serious efforts, but the effect of the implementation of the system is worth it.

You will learn:

What are the pros and cons of the KPI system.
Which employees should not implement KPIs.
What KPIs to set for the manager.
What to do if employees sabotage KPI implementation.
How to review the KPI system.

What is a KPI system

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

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

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

KPI and BSC are indirectly related. BSC is endowed with the perspective of business processes, where the associated goals are present. To measure how these goals are achieved, specialists use business process KPI indicators.

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

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

Here are some examples of KPIs . Possible KPIs for a sales manager are as follows: “Sales volume is not less than…”, “Number of new clients is not less than…”, “Average contract amount per client is approximately…”, “English proficiency is not lower…”.

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

how many people the manager talked to bought the equipment (percentage);
the amount of the average check;
to what extent the sales plan has been fulfilled (for example, the amount of the minimum bar is 350 thousand rubles a month; the level of overfulfillment of the plan as a percentage will affect the manager’s salary).

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

3 interesting facts about KPI

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

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

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

How to avoid mistakes when implementing KPIs

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

Where does KPI development begin?

KPIs should be created from the top down, starting with the company's large-scale goals to the tasks facing the individual employee. To fully solve problems, it is necessary that all personnel be involved in the preparation of the KPI system. We are talking about employees working in planning, economic, financial, specialists in the management of the organization of labor activity, a team of personnel departments, sales, technology departments.

To get started, the organization needs to figure out which KPIs to prioritize. To do this, the enterprise specifies and checks the goals of a strategic and operational nature. The formulation of the goal should ideally be such that it does not have a clear designation of the financial component as the main indicator. It is better if the financial indicator follows from the main task. With this approach, the company will be able to feel confident in the crisis period.

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

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

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

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

The regulation on KPI should include information about the goals and objectives pursued by the system:

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

Key performance indicators and their types

Key KPIs are:

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

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

Examples of KPIs

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

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

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

Process, indicating what result the process has brought, how requests from consumers are processed, how new products are created and brought to the market environment.
Client: how satisfied are the customers, how is the interaction with the sales markets, how many buyers were attracted.
Financial allow you to judge the external economic situation of the enterprise. Here we are talking about the level of profitability, turnover, market value of products, financial flow.
The development criteria show how dynamically the company is developing. This is the degree of productivity of specialists, the level of staff turnover, the cost per employee, employee motivation.
Indicators of the external environment: how the price fluctuates, what is the level of competition, what is the pricing policy in the market. These indicators should certainly be taken into account when creating KPIs.

How to calculate KPI

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

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

Stage 2. Determining the weight of each indicator. The weight in the total is equal to 1. At the same time, the largest share belongs to the priority indicator. As a result:

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

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

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

KPI calculation formula: KPI Index = KPI Weight * Fact / Goal

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

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

Stage 5. Payroll preparation.

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

Result:

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

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

Such a table allows you to see the problems in the work of a marketer, the difficulties with which he cannot cope. Possibly, not enough good results of activity can be caused by the wrong strategy of increasing the level of customer loyalty. However, it is possible that initially the plan itself was drawn up illiterately. In any case, the situation must be controlled. If things don't improve in the future, reconsider the requirements for performance indicators.

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

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

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

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

Implementation of KPI in the company

Both employees and third-party consultants can be responsible for the process of implementing the KPI system created in the company. At the same time, one should take into account the specifics of the enterprise, how business processes flow in it, what goals and objectives the company sets for itself. It is necessary that the rank-and-file staff be aware of how the payroll system will change. Communicate to employees that the main indicator will be the level of their effectiveness. When introducing a KPI system, specialists should be trained. Personnel must understand that changes are beneficial mainly to them. The introduction of the system involves the development of special documentation: employment contracts, staffing, collective agreement and other papers related to the payment of employees.

Before introducing a KPI system, test it with a pilot project. Take 1-2 departments and work out new processes and wage formation in them in a pilot mode. The ratio of fixed and bonus components of remuneration can be adjusted in real time, taking into account target indicators for specific groups of personnel.

When the new order in the company is tested and fully adjusted, you can introduce it to other departments. Remember that it is better not to implement a KPI system without testing. As part of the pilot project, it will be possible to clearly understand what difficulties the system causes for personnel, learn about possible shortcomings and quickly eliminate them. All employees of the enterprise must work towards a common goal. Otherwise, employees will only experience discomfort, and all actions and aspirations will be in vain.

In the process of introducing KPIs in the company, make sure that the indicators can be adjusted if necessary. Thanks to the constant monitoring of indicators, it will be possible to adapt in time to changes in the market environment and edit the working strategy. In addition, every year it is necessary to improve the model for the formation of premiums, that is, to optimize it. As part of the optimization, the evaluated indicators are changed to others that are more relevant for certain employees and departments.

What KPIs to set for the manager

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

The main goal must be written down and formalized, and then divided into sub-goals. When specialists successfully fulfill subgoals, they approach the solution of the main task of the enterprise.

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

When preparing KPIs, try to set indicators in the optimal amount so that the employee can easily monitor work performance. It is better if there are five KPIs. When installing more indicators, the director may not pay attention to the main ones and focus on the minor ones.

When creating a KPI system for management, a combination of general and personal indicators is optimal. General indicators are called the results of the activities of the department subordinate to the specialist. On the basis of general indicators, it becomes clear how the team works, how much the manager is interested in solving the tasks. Personal indicators are called individually achieved goals and results of activities.

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