Top Tips for Setting KPI’s for Employees

One of the most important components of running a successful business is ensuring your employees understand their Key Performance Indicators (KPIs).

KPIs are standards that your employees need to meet in order to perform their roles successfully. Our team of business consultants have put together these top tips to help you develop and implement your KPI strategy.

1.       Start with their ‘position purpose’ first

Every single person in a business or organisation should have a specific purpose that contributes to the success of the enterprise, with a clear set of duties and targets they need to fulfill. This ‘position purpose’ should be communicated to all employees. The KPIs for each employee will then come from their position purpose.

By deriving your employees’ KPIs from their position purpose, you create a metric for assessing their work that is relevant, easily understandable and constructive for your business. If part of an employee’s position purpose is to bring in new clients, one of their KPIs could be that they must contact a certain number of potential clients per month. If part of an admin staff member’s position purpose is to promptly respond to emails from clients, one of their KPIs could be that each email is responded to within a certain number of hours.

2.       Clear, specific, measurable

The KPIs for all of your employees need to be easily understandable and expressed in simple language or concepts. KPIs are there to give clarity to employees as to what they need to achieve and are a great way to break larger tasks down into their smaller components to make them more digestible. If a KPI is too complex, your employees will feel demotivated.

The specificity of your KPIs is another key factor in how effective they can be. Not everyone in your business has the same duties or responsibilities, so the KPIs for each role should be different. Salespeople should have KPIs relating to revenue, stock management team members should have KPIs relating to efficient management of stock.

Making a KPI easily measurable also helps to provide clarity. A KPI ‘make as many calls as possible’ is not helpful, as it doesn’t set a clear standard and is both difficult for the employee to achieve and for a supervisor to monitor. Instead, think about how to set a measurable standard for your employees to achieve. This will be easier for some roles than others, so think carefully about ways to create quantifiable standards for your employees to meet.

3.       Create KPIs for both individuals and teams

Make sure that your KPIs relate to both individual targets and collective goals. When you create KPIs, you are showing your employees what you believe to be important, so make sure they accurately reflect your priorities and goals for your business.

Let’s use a retail store as an example. If the KPIs for a sales assistant requires them only to process a certain number of transactions per hour, then their focus is going to solely be on efficiency. This could mean that customer service declines, or that they aren’t motivated to help out other employees, as these points aren’t specifically covered by their KPIs.

4.       Report regularly

Regularly checking in with your employees on their progress is vitally important for an effective KPI strategy. It can be easy for employees to lose sight of what their KPIs are if they aren’t being regularly reminded, and it helps you as a manager to understand how your team is performing.

Team catch ups are also important, as they remind employees that they are working towards a collective objective, improving your team. Employees in this setting are able to discuss their individual progress and compare their work with others, providing a forum to share strategies and discuss how to work better as a whole.

 

Are you ready to take the first step towards creating killer KPIs for your employees?