If you set up a “difficult problem list” for the company’s business team….
Editor’s note: This article comes from WeChat public account “Zhilian recruitment HR guild” (ID: clubhr), author Ding Luyao.
If you set up a “difficult problem list” for your company’s business team, I think the most votes may not be the topic of “how to develop a sales strategy” or “how to maintain a customer.”
In the workplace, the most troublesome, insomnia and nightmare is the question of “How to complete the KPI?”
I believe that HRs should be familiar with KPIs, but let’s take a moment to ask ourselves, what does the “KPI” that always hangs on the lips mean? Do we really understand the KPI assessment?
01 What is KPI Performance Review
KPI (Key Performance Indicator) refers to the operative tactical goal of the company’s strategic objectives through layer-by-layer decomposition. It is a specific quantitative indicator used to measure the performance of a job in a position, and is also an employee. The most direct and objective measure of the completion of work tasks.
It’s easy to understand literally, but we must be clear that KPI is just a tool for performance management. In practice, there are still many people who equate KPI assessment with performance appraisal.
The theoretical basis of KPI comes from the “two-eighth principle” proposed by the Italian economist Pareto.
The so-called “two-eighth principle” means that in a process of value creation, there is a “80/20” rule, that is, 20% of key employees create 80% of the value of the enterprise.
And the “82 Principles” apply to every employee, that is, 80% of the tasks are done by 20% of the key behaviors. Therefore, we must seize 20% of the key behaviors, analyze and measure them, so that we can grasp the focus of employee performance evaluation.
What are the characteristics of the KPI assessment? In summary, there are the following main points:
1. KPI must be tied to the organization’s strategy
KPIs are essentially a tool to help companies accomplish their strategic goals. Through KPI, the overall strategic goal of the enterprise is decomposed into several effective goals, and each level of sub-goals is set by the included relationship, so that the entire company and each employee are working hard to accomplish the mission objectives.
2.KPI is a measure of key operational processes, not a reflection of all processes
The job content of each position involves different aspects, but the KPI assessment only measures the work that has a greater impact on the overall strategic objectives of the company and plays an integral role in achieving the strategic goals.
3.KPI is rightMeasurement of controllable parts of performance composition
The performance of employees is the result of the combination of internal and external factors. The internal cause is the part that employees can control and influence. Therefore, the key performance indicators should reflect the direct controllable factors of employees’ work and eliminate the influence of others or the environment. .
4. KPI requires developers and implementers to communicate and reach consensus
The KPI assessment is not determined by the superiors, nor is it made by the employee’s own position. The formulation process is completed by the superior and the employees. It is a consensus of the relevant personnel in the organization on the performance requirements.
02 What are the common application errors in KPI assessment?
Over the years, KPI has become the most commonly used method of performance management, and it is also regarded as a professional basic skill in the HR circle.
But in practical applications, there are still many problems. In the final analysis, I don’t think that KPI is not good. Once it is not used well, it will not achieve the effect of performance appraisal, but it will also make employees very disgusted.
What are the misunderstandings in the KPI assessment?
1. I got caught in the “digital trap”
There is a common saying in the workplace that “please take data to convince me” or “data will never lie.”
But I always feel that the data is dead, and that people are alive, behind the data of a key indicator, does it really reflect the objective facts?
For example, some companies now have designed a bunch of assessment projects in order to achieve a comprehensive quantification of performance appraisal indicators. In the view of these management designers, as long as there is data, the level of assessment is very high.
But in the actual application process, the result of pure pursuit of numbers has evolved into a form-filling game, because some assessment items are difficult to objectively quantify or not suitable as key performance indicators, and the reviewers will score for the score. Relying entirely on subjective creation, this may lead to double complaints from the reviewer and the reviewee.
2. Formulating indicators only focuses on short-term behavior, ignoring long-term benefits
Know that enterprise performance management is not a short-term behavior, but a systematic project. However, many managers still only use performance as a tool, a means, and the purpose of the assessment is not clear.
For example, the company I have a friend is also implementing KPI assessment, but they have not set a overall strategic goal.
So when formulating KPIs, strategy and performance are completely decoupled. For example, the indicators set for the sales department only focus on a single profit value, and never consider the indicators such as market share, customer satisfaction, and team building. . Therefore, in recent years, the company’s sales performance is very unstable, peopleThe flow of staff is also great.
So, establishing a long-term KPI performance system must be forward-looking and predictive.
3. The relationship between organization and individual assessment is not handled correctly
KPI assessment requires a breakdown from the organizational strategy, so the individual performance of employees needs to be translated into departmental performance before the ultimate goal of promoting the company’s strategy.
In practice, across the department or project team, it is not scientific enough for managers to directly conduct KPI assessments on individual employees. This often leads to individual employees, only concerned with individual performance, and not with team performance.
After all, what we need is a team full of combat, not a personal star.
03 KPI assessment, how to be reasonable and effective
Performance assessment and even the entire performance management system is closely related to the interests of each employee. Therefore, how to use the KPI assessment reasonably and effectively, everyone can understand the value of the assessment, the company can reach a consensus on the target, and performance management can really play a role.
The KPI assessment process mainly includes the following basic steps:
1. Defining the company’s strategic goals
HR wants executives, middle-level managers and employees, including bosses, to attach importance to KPI assessment. It is necessary to develop performance ideas from the perspective of strategic execution. Only in this way can the candidates and the evaluators be included in the assessment. In the system, the performance appraisal can be related to the daily operation of the company, and the strategic guiding role of performance appraisal can be truly exerted.
2. Decomposition of target layers to form KPI indicators
From the perspective of organizational structure, KPI is a vertical indicator system: first determine the KPIs at the company level, and then determine the KPIs that departments and individuals need to bear.
First, based on clear strategic goals of the company, use brainstorming or fishbone analysis to identify the business priorities of the company and refine key performance indicators (KPIs) in these key business areas. This is the enterprise-level KPI. index.
Second, with enterprise-level KPIs, by decomposing them through strategic maps and other tools, you can establish departmental KPIs, identify relevant factor targets, and analyze performance drivers (technology, organization, people). Develop an evaluation index system for each department.
Thirdly, the department-level KPI is further decomposed into more detailed employee-level KPIs, which form performance measurement indicators for each position, and these performance measurement indicators are the elements and basis for employee assessment.
We also need to note that the KPI indicators at all levels must be set in accordance with the SMART principle, ie S (Specific), the target must be specific; M (Measurable), the target can be measured; A (Attainable), the goal is achievable NoExceeding the actual capacity of the employee; R (Realistic), the target is in line with the actual situation of the company and can be proved; T (Timebound), the realization of the target has a time limit.
3. Setting KPI evaluation criteria
After the KPI indicator is established, a set of scientific evaluation criteria needs to be set. Generally speaking, the indicator refers to the aspects from which to measure or evaluate the work and solve the problem of “evaluating what”; and the evaluation standard refers to what level should be achieved in each indicator, and how to solve the “evaluator” , how much do you do?
Taking the KPI indicator of the company’s sales department “Complete the company’s new product sales task” as an example, the evaluation criteria can be set as follows:
The new product is completed at 3 million. The score is 30 points, with a base of 300,000. Each excess is completed with a base, plus 10 points, not capped; for each less than one base, 5 points are deducted.
After the above basic steps, we can take further measures to track, record and analyze the performance of the organization and individual KPIs (such as the mandatory distribution order), and finally achieve the goal of performance appraisal.
Write at the end
Now, with the popularity of Internet thinking and the success of many Internet companies, there are many calls for “decentralization and KPI”.
But personally, the KPI is still not outdated. Because from the nature of the KPI assessment, setting a strategy around the quantifiable goals and letting employees fight for it is not a problem in itself. The question is how do you design correctly and use it correctly!
As Alibaba founder Ma Yun once said in a speech at the University of Lakeside, “Although KPI, everyone hates it, but without KPI is not enough, we must set KPI.”