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What are KPIs? Process of developing KPI system

In companies and businesses, people often build KPIs to monitor the performance of the company; based on KPI to assess employee performance; pay salary and bonus for employees under KPI. So what are KPIs? How to calculate KPI for employees and process of developing KPI system.

What are KPIs?

What word KPI stands for?

What are KPIs? KPI stands for Key performance indicator which means an indicator of performance. KPIs are common terms in businesses. Heads of departments set KPI targets to be achieved; assess employees with KPI; calculating salaries and bonuses according to the achieved KPI for employees, …

KPI allows to accurately assess the performance of employees, the performance of a department, business, thereby, make improvements, methods of handling.

Building KPI is important for every company or business. However, the KPI system to be built must ensure science, suitable to the conditions of each person and each enterprise.

KPIs là gì?
What are KPIs?

What is KPIs in marketing online  

In the field of marketing, KPI is the indicator showing the number of customer feedback, the number of customer calls to consult, …

In addition, KPI in marketing is also reflected in the brand identity and products after each campaign. This can be calculated through questionnaires, evaluation cards, ..

In marketing online, people calculate KPIs based on number of views, feedback, likes, share … articles, products.

What is the importance of KPIs?

What is the role does KPIs play with the progress and development of businesses? Why do companies and businesses have to set up KPI?

KPI measuring goals

Measuring the implementation of goals is the most important role of KPIs. When setting up a KPI, you can clearly define the implementation of the plans and targets that you set for a certain period of time.

Monitoring the progress of KPI implementation helps us evaluate our strategies, plans for success or failure. From there, draw experience and correct mistakes quickly and promptly.

KPI creates positive working enviroment

KPI helps find mistakes in strategy, in every stage of the job. This is a great opportunity to understand and evaluate each person’s strength. From there, make appropriate work plans.

KPI góp phần xây dựng môi trường làm việc tích cực hơn
KPI contributes to building a more positive working environment

KPIs help synthesize important information

KPI is set and used in many fields with many different indicators. A comprehensive and effective KPI system helps businesses capture accurate information about market demands, strengths and weaknesses of the company.

The rationalization of our internal information will quickly help us make accurate plans in the future.

Build KPI to boost working spirit

Build KPI to help each person, each department has accurate goals to strive for. This is also clear evidence to evaluate the performance of employees. If you have a KPI, most employees will work harder to fulfill and exceed the previous target.

Moreover, publicizing the implementation of KPIs by each person helps them to be motivated at work. Everyone tries to exceed or at least reach the KPI number.

How to calculate KPI for employees – What is the process of building a KPIs system

The process of developing a KPI system includes the following steps:

Identify subjects to build KPIs

The KPI builder is usually a person working in senior management and management positions: head of department, director, manager, …. They must be highly professional, clearly understand the concept and role of KPI. At the same time, the person who builds the KPIs must also understand the objectives and tasks of the departments as well as the project.

Only a person is hardly to build a complete KPI system. Therefore, it is necessary to seek comments and suggestions from the relevant departments and individuals, with professional knowledge.

Khi xây dựng hệ thống KPIs, cần phải tham khảo, xin góp ý từ nhiều nguồn
When building a KPIs system, it is necessary to consult from many sources

Determine the functions and tasks of the departments

KPI not only applies to a single department, department, or individual. It is not enough to only understand the tasks and objectives of a part or individual. Instead, it is necessary to understand the roles and operational objectives of all departments that need to apply KPI performance indicators.

Determine the position, duties and work of each individual

Each person has different positions and titles. Must define the position and work of each person correctly and clearly.

Determining key performance indicators KPIs

  • Index of groups, department: built on the basis of functions and tasks of each group.
  • Indicator of individuals: determined based on individual KPIs according to SMART criteria.
  • Determine the period of time to evaluate each specific criteria.

Determine the score frame for each indicator and result

Each target set will have different importance. Based on that, determine the score for each result.

Measuring, summarizing, evaluating and adjusting

Based on the achieved score of each individual and department, managers will summarize the performance by calculating the total score. From the total score, managers will make conclusions and make adjustments accordingly.

Making KPIs is important and necessary in the operation of an enterprise. However, in Vietnam, this work has not been as effective as its role. The reason that experts say that builders do not fully understand KPI and implementers see KPI as a thing to monitor themselves rather than a tool to measure work efficiency as its nature.

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