Using KPIs effectively in your teams
You may have heard about KPIs or even use KPIs in position descriptions or for your employees’ bonuses. KPIs or Key Performance indicators can be a useful way of identifying the important areas of a role, and measuring an employee’s performance in those areas. We see KPIs used in many workplaces but not always effectively!
Often managers feel that KPIs are needed but if KPIs are not practical, specific, measurable or relevant to the business objectives, they’re unlikely to be of any use. Instead ambiguous, vague or general KPIs can create confusion, and the lack of clarity around expectations can lead to sub-par performance.
Why would you set KPIs for employees?
Clear and relevant KPIs can help to establish expectations and requirement for the role and hold employees accountable to achieving these. When KPIs are specific, measurable and include a time frame, it’s easier for both managers and employees to objectively gauge their performance.
When KPIs are not used, or are not used effectively it can be difficult to assess performance, managers have less data to provide feedback, and employees may be less motivated to meet the requirements of their roles when these are not clearly defined.
How can you implement effective KPIs?
For KPIs to be useful they need to relate to the overarching objectives of the business so the first step is to consider the business strategy from the perspective of safety, operational, commercial and HR objectives.
Consider what is required from each of your departments, to meet the set objectives and contribute to the overall business goals. These requirements then inform the KPIs of the managers and in turn managers can set KPIs for their team that will contribute to achieving their KPIs.
Linking KPIs to business strategy
Your business strategy should be shared with your people, to a level that is appropriate for the audience, as this helps each person understand the bigger picture. Employees are likely to be more engaged and motivated to achieve KPIs is they can understand how their performance will contribute to the bigger goals of the business.
Timing is everything
Consider the time it takes to define the business strategy and KPIs for the leadership team. If KPIs are going to be updated and shared with employees during their performance reviews, managers will need sufficient time to set the individual targets for each role.
Key points to consider when developing KPIs
To ensure the KPIs you’re giving to staff are going to be effective consider the following:
- Are the KPIs achievable given the resources available? There’s nothing more demotivating that unrealistic targets and employees can feel that they’re being set up to fail.
- How will the KPIs be measured? Determine the method for measuring progress against the target and the frequency this will be reported on.
- Who has ownership of the KPIs? Employees can be responsible for reporting on their own progress, or the manager may take responsibility for assessing performance against the KPIs using available data.
- Do the KPIs clearly relate back to the business strategy? It’s important for the KPIs to be driving work habits and behaviours that are in support of the bigger business objectives, otherwise your team could be working hard but going nowhere as everyone is pulling in different directions.
- When are your KPIs reviewed? Depending on your business and the various factors at play, you may review and realign KPIs weekly, monthly, quarterly or annually.
- How will you communicate KPIs to employees? This is important. It could be through their Position Description, posted for teams to see on noticeboards, updated in monthly reports or advised in letters to individuals.
Are KPIs working for your business?
If you’ve already got KPIs in place for your team, consider if these are helping you or your managers to make better decisions, improving employees’ performance and contributing to achieving your business goals. If they aren’t doing these things then it’s time to review your process, metrics, reporting or communication methods to ensure your team isn’t wasting time with a ‘tick and flick’ approach to their KPIs.
Do you need help developing effective KPIs in your business, and processes to implement these? We can help. Get in touch with our team, via the chat box or give our friendly team a call.