KPI is one of the effective measures to evaluate and track the progress of each individual in the business. KPIs are used to direct employees to implement, closely follow the goals and strategies set by the business, indicating the performance and efficiency of the organization’s operations. An organization that sets the right KPIs will encourage employee morale and effort. If the KPI is set too high, it will be easy to put too much pressure on employees and be counterproductive.

Purpose of setting KPI

• Help objectively evaluate work efficiency
• Evaluate employee performance and progress over time
• Help employees focus on the most important goals
• Reduces ambiguity and uncertainty in the organization
• Tools to measure indicators, fair value
• Verifiable, ensure data accuracy

Mistakes when setting KPI

• Set measures, measurement values ​​to easily achievable or too high
• Lack of close link between metrics and company strategy
• Operating a measurement system that is not tied to salary and bonus policies
• Design too many KPIs for a department, a position
• Lack of perseverance and lack of determination when using the KPI system
• Not regularly evaluating and improving KPI

How to build effective KPIs

• Build strategies that can be measured, delivered, and deployed more easily
• Select and design performance measures suitable for each position
• Apply measuring tools with care, use them rationally and correctly
• Get signals through metrics to see if operations are improving
• Regularly improve reports and assessment measurement systems in line with the actual situation

Steps in KPI design process

Before designing KPIs:

Start setting goals with the right strategies. Use one of the popular methods for setting goals and defining strategies such as Balanced, Scorecard, SMART, MBO, OKR, WIG or others.

Set KPI:

• Description of results and goals to be achieved
• Understand the KPIs to use
• Choose the right metrics for each goal
• Set targets and target thresholds
• Identify documents and information to be collected for measurement

Performance analysis:

• Collect and track performance
• Analyze and draw conclusions

Collected by EMSC – Giải pháp phần mềm quản lý nhân sự hiệu quả