When I first heard of KPIs (thanks Sue), I immediately felt dumb. I mean, what the hell is a key performance indicator? Also, why are there acronyms for everything?
Anyway, back to KPIs. Apparently it is good to set these for your team, who knew? To save you the embarrassment of asking what these are and then being mocked, let me break it down for you.
The dictionary defines KPIs as: a quantifiable measure used to evaluate the success of an organization, employee, etc., in meeting objectives for performance.
Doesn’t that clear it up for you? Essentially, KPIs are goals that you can measure, meaning you will know when a person meets that goal because you have defined what success looks like. When setting these with your team, do the following:
- Make sure you are on the same page. Ask your employee to describe what they are responsible for, then compare to your expectations and adjust accordingly. This will help you define areas of responsibility which play into determining the KPI.
- What is the main purpose of the role? What is it they do that has the biggest impact on your business? For example, our project managers are responsible for client retention and growth.
- A KPI must be measurable. This doesn’t mean it will translate into dollars, it could be a behavior such as demonstrated collaboration. KPIs are easy to understand when you look at them as dollars and cents. For example, our web division is currently at $$ net revenue and by the end of 2017 they are expected to be at $$$. For a project manager, it could be keeping a client happy which results in them staying on with 834. In other words, of the 8 clients you manage the KPI is retain all of them into 2018.
If a KPI is a behavior, it could be Employee X needs to demonstrate collaboration in the following ways: attendance at all team meetings and participation in the annual strategic planning retreat. Obviously the more detailed the better.
Once the KPIs are set, be sure to schedule check-in times with the various team members to help them stay on track and to keep you apprised of their progress.
The fact is, KPIs are measurable goals. Success is defined by A and B and they will do C and D to meet A and B. I am certain that last sentence couldn’t have been clearer.
What do you think?