How to set the right KPIs for your employees

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How to set the right KPIs for your employees

“Business! Business! Numbers!”

This quote from “The Lego Movie” reflects the idea of KPIs perfectly.

In order to keep the business growing, everyone on a team should know what’s going on in the company right now and what has to be done next. But if a manager says: “We have to do better next month!” it can be understood in a dozen different ways.

Should we do better in terms of motivation? Does it mean a higher percentage of sales or less negative reviews about the company? Or maybe the manager meant something else?

In order for the whole company to be on the same page, managers need to identify clear goals and then set the right key performance indicators to track the progress and help people navigate through work.

But what exactly are the KPIs, and how do you set the ones that will bring you profit? Let’s have a look.

The importance of KPIs

Key performance indicators are the measurable values that help you track your progress and evaluate whether you are doing everything right.

However, there are no KPIs without a goal – the end result that you want to reach. Different goals will call for different KPIs, and you need to define them all in order to reach the desired result.

Because KPIs are usually visible and understandable for everyone in the company, they aid in eliminating blind spots and guesswork. Once everyone on the team understands where they are heading, the work process skyrockets and the progress will not be long in coming.

Another important aspect that KPIs impact is employee motivation. If the person does not know whether their work matters and how it affects the company, this employee will not strive for excellence. On the other hand, if a manager explains how exactly the work of every team member affects the company and what they can do to help the company grow, chances are high the employees will be willing to stretch to meet and exceed expectations.

Now that we are clear about the role of key performance indicators in your company’s development, let’s look at a step-by-step guide on defining and setting your goals.

Setting the right KPIs

There are no KPIs without setting your business goals first. And this requires a thought-out approach.

Choose your goals

Your business has four main areas that demand attention:

  1. Customers
  2. Employees
  3. Revenue
  4. Process

A well-balanced company takes care of all four areas equally. However, most companies tend to focus on one or two areas only, leaving the others behind. And to be honest, just how many times did you check the revenue growth versus the psychological comfort of your employees?

So before getting down to the KPIs, first set a goal (or few) for every area. For that, ask the following questions:

  • Are my customers happy?
  • Are my employees motivated and productive?
  • Are all our strategies and offerings aimed at growing the revenue?
  • Are all our process well-aligned and organized?

By answering these questions, you can easily identify the problem areas and set the corresponding goals to fix them.

Define the right KPIs

A goal can be non-definite, i.e. a revenue growth or increase in employees’ motivation.

A KPI, on the other hand, is always a definite value that can be measured: 10 closed deals per month, 12 hours to get in touch with the customer upon request, etc.

With the help of KPIs, you set a certain goal for a team or a person and help them move in the right direction. And considering the fact that KPIs are aimed at boosting the company’s performance, the accomplishment of the KPIs will definitely make an impact.

You can set KPIs for a single person or a whole department, depending on your goals. Here are some tips on choosing and setting the right KPIs.

Follow the SMART pattern

Any KPI should be:

  • S: specific
  • M: measurable
  • A: attainable
  • R: relevant
  • T: timely achieved

The SMART concept is great when you define the right KPIs for your team. It is important that the KPI will bring value for the company (relevance), can be measured and delivered in a specific time period (measurable + time) and can actually be attained.

Never set unrealistic KPIs! It would be better to set a smaller goal and achieve it rather than set up an unrealistic big goal that everyone will quickly realize is unattainable.

Double-check whether you chose the right goal and KPIs

One of the biggest mistakes that companies do is measuring the wrong thing or assigning the wrong person for a certain KPI.

Let’s see an example. A manager sets up a KPI for a copywriter that says: “Achieve a 20% higher visibility of blog posts in 3 months.”

On the first sight, it all seems relevant: a copywriter creates content for the blog so he is the one responsible for the content.

However (unless your copywriter is also an SEO pro), this KPI is not right, and neither is the person assigned to it.

A company wants more people to see the blog, explore it and then navigate to product pages. If you increase the blog’s visibility, it will not guarantee the conversion rate growth, as people can just visit the blog then leave. So it’s the responsibility of an SEO specialist, not the blog writer, to optimize key pages for search.

Track progress

Perform regular audits to check whether your KPIs are being achieved and how things are going. Usually, companies do these audits every quarter but you can tailor the frequency to your specific company.

During the audits, check if everyone understands what they do and why, whether the goals are achieved and what the possible reasons for failure may be.

Such an analysis will help you adjust your strategy and identify any issues that harm your progress.

Learning how to set the right KPIs for your company is crucial. Start by defining your goals to find the right KPIs to measure, and then track your progress quarterly.


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