How To Set Up Key Performance Indicators

How To Set Up Key Performance Indicators
Key performance indicators or KPI's is what companies use to better their staff and department performance. Here's how to do it.

After the book “How Google Works” was released companies started trying to come up with ways to create a hyper-productive office environment.

The book mentions the rise of smart creatives and proves that people are a company’s main asset. Investing time and effort on keeping employees’ engaged is necessary, and for the ever-evolving workplace, it is vital to keep job satisfaction rates high.

The book is a good read, aside from the fact that it may come off as a Google recruiting tool. The one thing that is mentioned is the use of Key Performance Indicators. Google believes in having a data-driven culture. Aside from being a fun place to work, it’s important to have incremental improvement of personal metrics.

Personally, I have worked with companies that have done KPI’s right and companies that have done it wrong. Seeing both ends of the spectrum, allowed me to get a feel for how to perfect the use of key performance indicators. Here are the basics:

What Is A Key Performance Indicator?

A key performance indicator (KPI) is simply the measurable, or quantifiable, aspect of a person’s job. Performance is determined by the data (that can be collected by several tools) that pertains to the position.

For instance, if you are looking at determining the success rate of a salesperson, you can look into closed sales percentage as a way of finding out how good the individual is at closing sales.

Companies can do key performance indicator’s incorrectly, simply by measuring irrelevant data for someone’s position, as it may pertain to someone else’s position. For instance, let’s say the manager of that same salesperson is looking to see if the online ads are driving conversion for the sales team. Sure, it’s relative to the department, but it is probably the responsibility of a marketing department.

When setting performance indicators, leaders cannot afford to assign employees with the wrong metrics to measure to a person’s job. The best way to find a KPI for a position is to question “what is that individual’s specific duty?” or “what is that person’s best talent?” Find that one quantifiable strength that an individual offers and keep improving it.

Developing key players can revolve around key performance indicators. So do it the right way.

Find The One Metric To Measure

Finding the one metric to measure revolves around getting an individual KPI’s and narrowing it down all the way down to the right metric.

You can have several Key Performance Indicators but all of them must go back to that one metric that is most valuable to it. So set up about two to three goals per individuals, and within those goals have subcategories that have quantifiable metrics attached to them.

For instance, the aforementioned salesperson keeps that goal of wanting to boost sales. Some metric to measures will be something around the lead that is brought to them.

So let’s say, that in order to improve sales overall, you have to improve conversions from the online site, word of mouth, and referral. Quarter to quarter, that salesperson can see the kind of growth they’re having and a manager can determine if they want to keep that person on a specific task.

The task of a manager of a data-driven company is to put the right people at the right positions. Play by the strengths of individuals and create a culture of selflessness in order to encourage one another at work.

Once all is measured, do what you can to get better and make sure the right people are playing to their strengths.

Set Up Key Performance Indicators

Of course, the application is much more difficult than the practice.

This can take years to perfect and if you’re an up-and-coming startup, you have to be able to move fast and make smarter decisions faster.

If you’re an established company, the major hurdle is overcoming the changes that are brought by the data that is collected through a person’s performance. The culture of your company is also dependent on what kind of changes you can make.

Not every company likes a lot of change, that’s why collecting small bits of data can go a long way when it comes to making decisions.

If you’re able to do it, come up with 2-3 goals per department with the metrics to measure around them. Using the department goals, have individuals come up with what they believe will be the goal for their position and their job. If you have the time, approve of them and make sure that all is aligned.

After that, focus on iterations, growth, and coming up with new concepts that will help your office and your company do well.

Are You Going To Set Up KPI’s?

Are you looking to give key performance indicators a shot? If so, how will you go about it? Let us know!

Jeffrey Fermin is a leader in the HR Tech industry, he spends his collaborating with multiple companies to help come up with solutions that will improve the modern-day workplace.

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