How to set KPI

Setting KPI must follow the SMART principle.

S stands for specific, which means that performance indicators are in line with specific work objectives, and they should change with unpredictable situations when refining.

M stands for measurable, which means that performance indicators can be measured and data and information can be obtained.

A stands for achievable, which means that performance indicators can be achieved, avoiding setting too high or too low a goal.

R stands for reality, which means reality, that is to say, performance goals can be proved and seen, not assumed.

T stands for Time-bound, which means there is a time limit, which means there is a certain time limit for the completion of performance indicators.

Third, the steps of setting KPI

First, determine the work output.

Work output is the basis of setting KPI, which mainly defines what the team or individual's work results are. Usually, it is an appropriate way to work and export in temples with customers as the guide. No matter whether the object of work output is inside or outside the enterprise, it constitutes the customer. Defining work output needs to start from the needs of customers. Here, the concept of internal customers is particularly emphasized, that is, the relationship between the work and output of different departments or individuals within the enterprise is regarded as customer relationship. When setting up work output, ask the following questions:

* What are the internal and external customers facing the appraisal object?

* What does he offer these customers?

* What products and services do customers need?

* What percentage of this person's work is output from these jobs?

Second, establish evaluation indicators.

After determining the work output, we need to determine from which angles to measure these work outputs and from which aspects to evaluate these work outputs.

There are usually four KPIs: quantity, quality, cost and time. The following table lists the types of KPIs and where to get this information:

Indicator type

for instance

source of evidence

amount

yield

sell

profit

run chart

financial data

quality

breakage rate

Uniqueness

Accuracy (sex)

Production record

Superior evaluation

Customer evaluation

expense

Unit product cost

Commercial rate of return

financial data

limited time

in time

Time to market

Supply cycle

Superior evaluation

Customer evaluation

Third, set evaluation criteria.

Generally speaking, the standard refers to the level of each index, that is, how much the assessed is required to do and how much is completed. The following table gives some examples:

output

Indicator type

Specific indicators

Production quotas; Performance standards; Operating standards; Work performance standard

profit on sales

amount

annual sales

Profit rate before tax

The annual sales volume is between 200,000 and 250,000.

Pre-tax profit rate 18%-22%

New product design

quality

Superior evaluation:

novel

Reflect the company image

Customer evaluation

Price–performance ratio

Preference degree of products relative to competitors

Uniqueness

persistence

Superior evaluation:

At least three products are different from competitors.

Use high-quality materials and appropriate colors and styles to represent and enhance the company's image.

Customer evaluation

The value of the product exceeds its price.

Testing customers without telling the brand, we found that the probability of choosing our products is higher than that of choosing competitors' products.

The reaction is different from the similar products they have seen.

This product has been used for a long time.

time

A predetermined timetable

Can provide samples of new products before the set deadline.

selling cost

expense

Changes in actual costs and budgets

The difference between the actual cost and the budget is within 5%

Fourth, review KPI.

Audit KPI mainly from the following aspects:

* Is the work output the final product?

*KPI can be proved and observed?

* Can multiple evaluators agree on the evaluation results of the same performance indicator?

* Can the sum of these indicators explain more than 80% of the work objectives of the assessed?

* KPI is defined from the customer's point of view?

* Track and monitor whether these KPIs can be operated?

* Is there room for exceeding the standard?

After the above four steps, we can get a KPI that can be measured and verified. In this way, if we take measures to track and record the performance, we can get the performance of the evaluated object on these performance indicators, and anyone who is interested can operate in their own enterprises. Has the problem of performance appraisal been solved?