How to Improve the Key Performance Indicators
Original post by Wanda Thibodeaux of Demand Media
Key performance indicators, or KPIs, are measurements that show how your company is performing in one or more areas. KPIs are tied to organizational goals and therefore reflect what your business wants to achieve and its fundamental philosophy. Low performance indicators sometimes signal that your company is in trouble and that, for whatever reason, your employees are not performing up to their full potential and thus are not t meeting company objectives. Raising your KPIs means evaluating your company as a whole, as well as individual employees, addressing discipline and rewards, eliminating inefficiency and analyzing data.
Look at and clarify your company goals. KPIs measure whether you've reached the goals you set, so you cannot create a good KPI management system until you're sure what you want your organization to achieve.
Specify what is most important, given the goals you've clarified. For example, if your goal is to improve customer service, you might specify that a higher customer service call resolution percentage is more important than making each call five minutes or less.
Look at financial and performance records for your company. Assess where your company stands in relation to each of the goals you've set. The assessment shows you the amount by which you must improve your key performance indicators and the areas of most concern. For instance, if you want to produce 100 units of a product and you're only producing 80, then you know the performance gap is 20 units, or about 20 percent. If the gap were 30 percent, it would likely take more effort to close the gap and meet the company's goals.
Set clear targets for the KPIs. This gives your employees a definite point toward which they can strive. Define how you intend to measure performance. An example of a target could be decreasing production waste by 5 percent. To measure this, you'd count the number of waste barrels or bins you have transported away from your company or look at emissions records, then reduce the figures by 5 percent.
Meet with employees individually or in groups, depending on your company's size. Check their understanding of the company's goals, KPIs and KPI targets -- that is, clarify your expectations.
Establish and begin enforcing a discipline policy that corresponds to the responsibilities related to the KPIs. Write-ups and withholding of performance bonuses are two common disciplinary techniques.
Conduct regular performance evaluations for each employee. Discuss both strengths and weaknesses with the employee, setting goals for improvement and offering resources to help the employee meet those goals as is reasonable and allowed by your current resources.
Hold periodic open-forum meetings with employees to determine issues that are holding the workers back from meeting their KPI targets. For example, people on a production line might find that a current piece of equipment simply cannot meet the set production standard and that a new piece of equipment could solve the dilemma.
Evaluate your current management scheme and operations. Look for areas where your company is inefficient given the management system and revise the system to eliminate those inefficiencies. For example, you might determine that communication is very slow and therefore provide employees with mobile devices for business texting or calls. Another common problem is having a manager-to-employee ratio that is too high.
Utilize motivational techniques such as good-natured departmental competitions to encourage employees. You might give a gift certificate to the employee with the best attendance or on-time record or cater lunch for the department with the best overall performance reviews.
Compile all data -- of financial, evaluation, operational and strategic information systems -- that show whether your business is progressing with KPIs. Update employees on the general progress -- or lack thereof -- on a regular basis.
- Company goal statements
- Performance evaluation forms
- Company financial and performance records
- Vorne: KPIs -- Key Performance Indicators
- Success Factors: Using Key Performance Indicators to Increase Productivity and Profitability
About the Author
Wanda Thibodeaux is a freelance writer and editor based in Eagan, Minn. She has been published in both print and Web publications and has written on everything from fly fishing to parenting. She currently works through her business website, Takingdictation.com, which functions globally and welcomes new clients.
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