KPI’S OBJECTIVES: HOW TO SET UP KPIs GOALS
A company absent of goals and without proper organization will not get very far.
Business success is linked directly to a management that’s organized, agile and productive, applying the simplest to the most complex of tasks.
And what does all this have to do with setting KPIs for your team?
Absolutely everything!
First, before learning setting KPIs for your team, let’s remember what is KPI?
KPI stands for “Key Performance Indicator”. They are business management tools aimed at measuring the performance of a team, a process, a product, a service or a business unit.
No matter what the sector within your company, practically everything that is done can be measured and monitored for later analysis.
Based on this performance analysis, company management team leaders are able to make decisions based on concrete facts and outline changes and improvements with tangible objectives.
See more on our blog: Performance indicator management: why and how to deal with a set back?
Setting KPIs goals for your team
The first step is to establish which processes need to be monitored, those that add more perceived value to the products or services that the company delivers to its customers.
So, for example, it may not be that important to establish KPIs on the efficiency of the cleaning company contractors.
On the other hand, it is essential to define KPIs on levels of customer satisfaction or delivery delays.
Deciding what your company needs to evaluate and monitor within the KPI, is the moment to choose how this indicator will be structured practically and in what departments and sectors of your business.
See how to set up KPIs goals by understanding 3 fundamental concepts and their differences:
- Objective: this is what the manager seeks to accomplish in the company (increase sales, better service, etc.)
- Indicator: points outperformance with the help of graphs and numbers, what will be measured, and what is measurable within the objective.
- Goal: If the goal is to increase revenue, and the indicator is monthly revenue, the goal will be the number you want to reach, for example: to reach a monthly turnover of R $100,000.
After specifying these points, it’s time to get your hands dirty and build the performance indicator itself.
We will use a method called SMART, without it there is no way to create adequate performance indicators.
The word SMART is an acronym of 5 words:
- Specific: What are you going to do, when, where, how, why?
- Measurable: Are the figures measurable?
- Attainable: Is it attainable?
- Relevant: Is it relevant?
- Term: Is there a deadline?
Classification of KPIs
To learn how to set up KPIs goals for your business, it is important to know their types. There are several types of KPI which are classified into groups according to the consistency of the purpose of each one.
Check out:
- Productivity indicators: they are related to the execution of tasks and process management. Example: time required to produce X units of a product.
- Capacity indicators: to measure the responsiveness of machines and equipment in general. Example: how many sheets are printed by a printer in 1 hour.
- Strategic indicators: measure the company’s strategic objectives. Example: a building material retailer needs to increase gross sales. The KPI can be gross monthly revenue.
- Quality indicators: measures issues related to meeting the level of customer demand or inspection standards. Example: How many products are defective?
- Tactical indicators: they are sectoral measurements directed to different departments. Example: sales invoicing.
- Operational indicators: measure the efficiency and effectiveness of operations, can refer to individual employees or sectors. Example : quantities of deliveries made without delay per day.
Importance of goals for tracking results
How can creating performance indicators help your company?
As mentioned, organized and planned companies tend to grow and develop faster.
The use of KPIs for performance monitoring is crucial for the company to keep an eye on its objective of developing.
But it is necessary for the manager to know where he wants to go and when observing set backs in goals, take the necessary measures to correct the problem.
See the advantages of having well-defined KPIs:
- The manager has at hand all the necessary information on each stage of the company’s process.
- It has accuracy to make decisions.
- Processes become safer after monitoring the KPI.
- There is more productivity and a better understanding of the results presented by the indicator.
- The manager also has a holistic, broad view, with all the information available to understand mistakes and successes and shape what is necessary for the company.
How to create performance indicators:
Check out our final tips on how to set up KPIs goals
- Make strategic planning.
- Set your company’s goals.
- Choose the best indicator that represents the sector or process that will be subjected to the measurement.
- Follow the KPI daily, weekly or as often as the business requires.
- Consider relevant information when defining your KPI.
- Be clear and simple when adding data. The KPI needs to be easy to understand and well structured.
- Share the KPI information with your team.
- Hold team meetings to answer questions and solve problems. In these meetings, the KPI can even be improved and added to other information that became necessary during the assessment.
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