What is KPI. Key performance indicators KPI - what they are and how to use them KPI bonus system

KPI (Key Performance Indicator) is an indicator of success in a certain activity or in achieving certain goals. We can say that KPI is a quantitatively measurable indicator of the results actually achieved.

The term is most often translated into Russian as "key performance indicator", which is not entirely correct: efficiency characterizes the relationship between the achieved result and the resources expended, and other parameters can be measured using KPI. A more correct translation is "Key Performance Indicator".

KPI and BSC

There is a misconception that KPI is directly related to BSC (Balanced Scorecard). However, the developers of BSC - Norton and Kaplan - did not use the term KPI, but used the term measure - “measure”, “meter”.

There is a rather indirect connection between KPI and BSC: in BSC there is a “business process” perspective, which contains goals related to business processes. Indicators of these business processes - KPIs - are often used to measure the achievement of these goals.

The most relevant use of the concept of KPI is. business process management: KPIs are measures of effectiveness, efficiency, productivity of business processes.

The following types of key indicators are distinguished:

1. KPI result— how much and what results were produced;
2. Cost KPI— how many resources were spent;
3. Operational KPIs— performance indicators of business processes (allows you to assess the compliance of the process with the required algorithm for its execution);
4. Performance KPIs— derived indicators characterizing the relationship between the result obtained and the time spent to obtain it;
5. Efficiency KPIs(efficiency indicators) are derived indicators that characterize the ratio of the results obtained to the expenditure of resources.

When developing process indicators, you must adhere to the following rules:

1. The set of indicators must contain the minimum required number to ensure full management of the business process;
2. Each indicator must be measurable;
3. The cost of measuring an indicator should not exceed the managerial effect of using this indicator.

Algorithm for developing business process indicators

Let's consider the types of key performance indicators using the example of the “Logistics and Technical Support” process of a Manufacturing Company (Fig. 1)
It is most convenient to highlight indicators in relation to the Process depicted in the IDEF0 notation, when the figure shows Inputs, Outputs, Control (process execution rules) and Mechanisms (equipment, personnel). Key performance indicators and performance indicators, being derivatives, when using such a scheme, characterize the process as a whole.

Figure 1. Process "Logistics"

Identify the process and its result.

For example,

The process “Material support” is the result of “Useable inventory items”.

Identify input-resources (resources processed in one cycle of the process) and input-mechanisms (resources that ensure repeated execution of the process - equipment, personnel).

For example,

Inputs-resources of the Logistics Process:

• Applications for the supply of inventory items;
• Inventory assets (materials and materials) - raw materials and supplies that must be provided according to the procurement plan or according to supply requests;
• Information about the availability and cost of goods and materials on the market.

Input mechanisms of the process under consideration:

• Equipment of workplaces for supply department employees;
• Supply department staff.

1. Identify control inputs (rules and requirements for process execution)

   For example, the process in question may be regulated by:

   • “Instructions for the acceptance and storage of raw materials, semi-finished products and materials in the warehouse”;
   • “Methodology for selecting suppliers”;
   • “Rules for concluding a contract for the supply of raw materials and supplies”;
   • "Procurement Plan".

2. Knowing the result that should be obtained, it is necessary to evaluate it quantitatively - to form result indicators. They can be either simple or calculated (using a formula or other method).

   KPI 1— the number of applications for goods and materials (inventory items) completed on time.

   KPI 2— % of applications for inventory items completed on time.

   KPI 2 = KPI 1 / Z x 100%,
   Where Z is the total number of submitted applications for the supply of goods and materials.

   KPI 3— % of goods and materials of appropriate quality that entered production.

   KPI 3 = A / B x 100%
   Where, A is the number of goods and materials of appropriate quality entered into production,
   B is the total number of goods and materials received into production.

   Based on the process inputs, cost indicators can be generated.

   KPI 4— Costs of purchasing goods and materials (costs of resources).

   Based on the process mechanisms, additional cost indicators can be generated.

   KPI 5— Costs of carrying out activities (costs of personnel and equipment).

   The correctness of the process, in addition to the cost indicators for carrying out the activity, is also reflected by the performance indicators.

   KPI 6— The number of failures to submit a draft budget to the financial department during the year.

   Performance indicators are calculated as the ratio of the result obtained to the time.

   Performance indicator KPI 7 can serve as the average number of orders processed by the purchasing department per day.

   KPI 7 = C/r
   Where C is the number of processed applications per month,
   r — Number of working days in a month.

   Calculation of key performance indicators is carried out on the basis of pre-allocated KPI results and KPI costs. Efficiency indicators, therefore, act as integral characteristics of activity.

   Example:
   An indicator of enterprise production efficiency KPI 8 You can consider the cost of completing one application. This indicator is calculated using the following formula:

   KPI 8 = KPI 5 / KPI 1
   Where KPI 1 is the number of applications for inventory items completed on time,
   KPI 5 - Costs of carrying out activities.

Using this principle (the ratio of costs to results obtained), it is possible to calculate both production efficiency indicators and project efficiency indicators or management efficiency indicators.

Practical application of KPIs

Use in the planning and control cycle

Since KPIs are measures of results and costs, they can be used in planning and monitoring activities as elements of a plan.

Indicators whose values ​​can serve as plan elements for the Logistics Department:

• % of timely fulfillment of requests for inventory and materials - 99%;
• % of goods and materials of appropriate quality entered into production - 100%.

After the activity is carried out, the actual values ​​of the indicators are measured and recorded. In case of serious deviations of actual values ​​from planned ones for the worse, it is necessary to conduct an analysis of activities and develop corrective measures.

Benefits of using a KPI system c. ordinary activities of the company: planning and analysis of activities are carried out on the basis of the results that the business system needs. All indicators are not invented in the abstract, but “originate” from a process that consolidates the activities necessary for the system. If planning occurs on its own, in isolation from real activities, then often the choice of indicators and their target values ​​does not contribute to achieving the main goals of the organization, but is arbitrary and not always justified.

Staff motivation

When implementing KPIs, the motivation system becomes clear and transparent: since planned and actual values ​​are recorded, it is clear to the manager why and how to motivate the employee. He, in turn, understands well under what conditions and what reward he will receive, and for what he will be punished.

Head of Supply Department:

• Rewarded for successful achievement of planned efficiency and effectiveness indicators;
• Deprived of bonuses for failure to meet performance indicators (missing the deadline for submitting the draft budget to the financial department);

Thus, thanks to the KPI system, the company rewards the employee for obtaining the results it needs, and the employee is interested in obtaining results on an equal basis with the company.

1. What is KPI?

KPI (Key Performance Indicators) - “key performance indicators”, but more often translated as “key performance indicators”. KPI is one of the tools with which you can analyze how effectively staff works to achieve the company's goals.

KPI indicators are often used by larger companies (not where the owner, director, seller and loader are the same person), but on the contrary, when the company has a large number of employees and branches. The use of “kipiai” greatly simplifies monitoring the performance of all departments of the company. Having key performance indicators gives us the opportunity to manage the process and make changes to it. Set goals for staff and motivate them to achieve them.

Let's look at an example of key performance indicators. You are the owner of a large household appliances store and you have 12 sales managers on your staff. The performance of each manager for the month can be assessed according to the following criteria:

• what % of clients with whom the manager communicated made a purchase;
• average customer bill;
• fulfillment of the sales plan (for example, the minimum monthly limit is 350,000 rubles, and the manager’s salary will depend on the percentage by which he exceeds the plan);

If, for example, you need to sell blenders of a certain model, you can set a plan for each manager of at least 5 units; if more, then for each “extra” unit the seller receives 3% of its cost. Thus, the goal is achieved to sell a certain product and motivate managers to do so. As practice shows, the optimal number of KPI criteria for one employee is from 5 to 8.

2. Types and principles of KPI

Types of key performance indicators:

• Result KPI – quantitative and qualitative indicators of results;
• Cost KPI – amount of resource expenditure;
• KPI of functioning - how well the execution process corresponds to the established algorithm;
• Performance KPIs are derived indicators that characterize the relationship between the result obtained and the time spent to obtain it;
• Efficiency KPIs (performance indicators) are derived indicators that characterize the ratio of the results obtained to the expenditure of resources.

There are principles to follow when developing key performance indicators. The costs of measuring performance indicators should not exceed the management benefits of using the indicator. You won’t hire a person who will count the number and duration of the manager’s calls; the result will not justify the costs. For a more accurate result and the possibility of comparison, indicators should be measurable and as simple as possible, understood equally by each department, in order to avoid misinformation. And, most importantly, KPIs are necessary; if we do nothing based on the results of their measurement, then in this case they are meaningless.

3. Pros and cons of KPIs

The main advantages of KPI include:

• fairness, transparency and comparability of results (management and staff see who works and earns how much);
• adjusting the employee’s work according to the lagging indicator;
• involvement of personnel in achieving the goals of the enterprise;
• quality control of performance of duties.

Despite all the positive aspects of the KPI system, it is not universal. Not all indicators in the work of personnel can be measured quantitatively, and therefore each business has its own ways of assessing efficiency, and finding them will require a large investment of time, labor and finances.

4. How to calculate KPI. Example

There is no single formula for calculating KPIs, since each company has its own specifics and, therefore, its own “kipiai”. Let's look at the example of calculating the salary of a sales manager, taking into account his KPIs in the Kotelok online store. Rate 7,000 rub. +2% from personal sales (800,000*0.02=16,000 rub.) + bonus for fulfilling the plan for the number of new clients (2,000 rub.) + bonus for fulfilling the enterprise plan (for example, the plan is 100% fulfilled - 5,000 rub. , by 70% - 3,500 rubles) in our case, by 80% - 4,000 rubles. In total, at the end of the month the manager will receive a salary of 29,000 rubles. This counting system motivates managers to sell to existing customers and attract new ones.

5. What are KPIs in sales

In the sales field, the main key performance indicators for the sales manager and sales department are:

1. Sales volume. The manager is given a plan for a certain period of time (month, quarter, year). For example, in March the manager must make sales of 1,300,000 rubles.

2. Number of sales. Number of customers who made a purchase (number of receipts).

3. Traffic. The number of customers who learned about your product are potential buyers. Of course, attracting traffic is the task of marketers, but the seller himself can also influence the flow of customers, for example, through word of mouth.

4. Average check. It is implemented in order to encourage the manager to sell additional products. For example, purchase a heat-resistant glass plate or baking dishes for the oven.

You can develop a KPI system yourself, but this will require a lot of effort and more than one dog to eat. Most large companies still prefer to entrust the construction of a “kipai” system to professionals with extensive experience in this field. If you need help implementing KPIs in your company, please contact us, we will be happy to help!

The KPI (Key Performance Indicator) indicator came to us along with American and Western European companies, where it has been successfully used for several decades. KPI is a tool that helps analyze the effectiveness of certain activities, as well as the level of achievement of set goals.

Research shows that about 80% of Russian top managers are dissatisfied with the performance assessment systems existing in their companies. Using existing algorithms, they don't see connections between plans, execution, results and motivation. The introduction of KPIs helps to completely change the picture. KPIs allow you to monitor the business activity of employees, departments and the company as a whole and take the enterprise to a new level.

In Russia, KPI is usually translated as a key performance indicator. In fact, this is not entirely true. It would be more correct to call him "key performance indicator", since the English word performance includes not only the concept of efficiency, but also the concept of effectiveness. Despite the apparent similarity of these terms, they have a significant difference:

• Efficiency expresses the relationship between the results achieved and the resources expended and determines the company’s ability to implement its goals and plans with a given quality level, expressed by certain requirements: time, costs, degree of goal achievement.
• Efficiency is the ability of an enterprise focus on results(degree of achievement of planned results).

Thus, KPI in the meaning of “key performance indicator” is more voluminous and contains both the degree of achievement of the result and the costs of obtaining it.

You can use performance indicators in various areas of activity, for example, if you want, you can use metrics such as the number of clients and the average check amount.
The same indicators are suitable for assessing the activities of a hairdressing salon. You can read more about opening a hairdressing salon.

Why do you need KPI?

As for the practical application of KPI, this indicator is introduced at enterprises in order to make it convenient to measure the performance of the company as a whole, individual departments and employees directly, as well as motivate staff to achieve the required results.

Using these indicators, you can create, if not perfect, then very effective motivation and incentive system company employees.

Of course, their use makes sense mainly for those workers whose work most affects the financial and economic performance of the enterprise. In insurance companies these are primarily agents, in trading companies - sales managers, and in recruiting offices - personnel selection consultants. KPIs are also used to determine the performance of administrative and managerial personnel.

Key performance indicators can be divided into:

• lagging– reflect the results of activities at the end of the period. These include financial indicators that show potential, but do not convey the current performance of departments and the company as a whole;
• operational (advanced)– make it possible to manage the situation within the reporting period in order to achieve specified results after its expiration. They talk about the current situation in the company, while simultaneously showing what cash flows may be in the future, and also demonstrate the quality of processes and products and the degree of customer satisfaction.

By type, key indicators can be as follows:

1. KPI result– show the quantity and quality of the result.
2. Cost KPI– show the resources spent.
3. Operational KPIs– relate to indicators of the execution of business processes and allow one to assess how well the process corresponds to the required algorithm for its execution.
4. Performance KPIs– derived indicators that characterize the relationship between the result obtained and the time spent to obtain it.
5. Efficiency KPIs(efficiency indicators) are also derived indicators that characterize the ratio of the result obtained to the expenditure of resources.

Key indicators are needed not only by the company’s management - they are also more convenient for the employees themselves, especially those whose income directly depends on the results of their work. KPI allows company employees to easily calculate the steps needed to achieve the desired result.

For example, in the insurance industry, especially in European and American companies, where such a system has long proven itself and is used everywhere, KPIs allow you to increase the number of sales due to transparency and a clear understanding of the required actions actions that the employee must take.

You can use KPIs in any business related to sales. For example, when selling flowers. Read on and start your own flower business.

The KPI system can be used to motivate clothing store salespeople using performance metrics such as the number of sales. Read about how to open a clothing store from scratch and how much it costs.

Performance evaluation also finds application in the service sector. By following this link you can find information about opening a real estate agency and learn how to start a real estate business.

Examples of using KPIs in business

Direct sales companies mainly use performance KPIs that show the ratio of cold calls, meetings with clients to the number of sales.

An insurance consultant (or sales manager), using key indicators adopted by the company, sees a clear picture of his activity. He understands that in order to reach the planned income, he needs to sell a certain number of policies (products), having previously made a certain number of meetings and calls. The standard KPI for life insurance newbies is considered to be 1/10, that is, to make one sale, you need to have 10 meetings, and for each meeting there are an average of 10 calls.

As an example of key indicators for a sales manager, you can also cite the following options: “the number of new clients is not less than …”, “sales volume is not less than …”, “the size of the average contract for a client is within …” and so on. This is another type of indicator – KPI result.

Such KPIs are personal, and there should not be too many of them for each employee. Three to five are enough; the main thing is that they are clearly stated and easily measurable. An example for a sales department or a company as a whole could be the key performance indicator “average revenue per client” included in the strategic goal “Increase average revenue per client from 25 rubles to 30 rubles for 2014.”

In addition to stimulating and motivating employees, KPIs are used by the manager as a tool for analyzing the activities of subordinates, helping to clearly see at what stage of work his employee is failing.

If we again take a sales manager as an example, then key indicators allow the head of the sales department to identify problem areas: does the manager make enough calls and meetings, does he have a large client base, etc. If the indicators are met, and the required number of sales no, it means that the quality of work of this employee suffers: lack of skills, knowledge, perseverance, etc.

All these moments easily tracked by KPIs, therefore, all activities of sales departments in successful companies engaged in active sales are mainly based on the use of this indicator.

The types of indicators and their quantitative values ​​depend both on the direction of the enterprise’s activities and on its strategy, therefore they can take different values ​​in different companies.

The bonus begins with an assessment; you also need to remember the basic principle: the variable part of the salary is intended to stimulate work activity and should encourage the achievement of above-standard results. And you should always remember that the bonus is not part of the salary. After all, deprivation of bonuses in this case creates stress, conflicts and leads to demotivation of staff.

The Performance Related Pay (PRP) system is based on a personnel assessment procedure based on key performance indicators (KPIs). However, in order to introduce such a system into management practice, simple and reliable methods must be developed that establish a connection between the employee’s KPI values ​​and the value of the variable part of the salary.

Personnel assessment based on KPIs

Previously, our magazine published a methodology for assessing personnel using KPIs, based on a combination of current assessment of results and employee competencies. Let us briefly recall its main provisions.

For each position in the organization, based on the employee’s job functions, two models (tables) are developed - results and competencies. The first lists all performance criteria for evaluating performance: quantitative and qualitative, individual and team. In the second - the competencies required for this position: corporate (common to all company personnel), managerial and expert (vocational). From the two indicated models, 5-7 key indicators (of any type) are selected to assess the employee’s results and competencies in the coming month (quarter or other reporting period - depends on the position level) and are recorded in the personal performance table (see Table 1). In this case, competencies are “equated” to the quality results of the employee’s activities. Each of the selected indicators is assigned a weight in accordance with the priorities of the immediate manager - from 0 to 1 (the total weight should be 1).

Table 1. Personal performance

For all indicators, three “levels of effectiveness” are set:

1. Base - the worst permissible value (“zero” point), from which the result begins to be counted.

2. Norm - a level that must be achieved taking into account the circumstances (for example, the market situation), the characteristics and complexity of the work, and the employee’s capabilities. This is a satisfactory indicator value.

3. Purpose - an excess level to which one must strive.

At the end of the month (quarter), the actual KPI values ​​are assessed. In this case, quantitative indicators are measured on a “natural” metric scale, and qualitative indicators are measured on an ordinal 100-point scale. With its help, you can have a flexible approach to assessing quality KPIs by setting “reference points”, for example: base - from 0 to 20, norm - from 40 to 60, goal - from 80 to 100 points. At the same time, assessments must be “deciphered” so that employees understand exactly what results internal clients expect from them.

After assessing the actual KPI value, the partial result of work for this indicator is determined in accordance with the formula:

This result reflects the degree to which the norm has been met or exceeded. So, if the actual indicator is below the norm, then the partial result for it is from 0 to 100%. If the “fact” exceeds the norm, then the partial result is above 100%.

After evaluating each indicator, the employee's rating is determined. For this, partial results (in percent) are multiplied by the weight of the corresponding KPIs and added up. The result is a “weighted average” efficiency ratio, reflecting (as a percentage) the overall performance of the employee for the reporting period, taking into account the importance and actual values ​​of all his KPIs. If the coefficient is more than 100%, this indicates a person’s high performance (above the norm), if less, it means that for some or even all indicators the norm has not been achieved, and the overall result of work is below the established level.

Next, you should link the ratings received and the amount of the employee’s bonus. To do this, it is necessary to remember the basic principle of bonuses: the variable part of the salary is intended to stimulate people’s work activity and should encourage them to achieve above standard results. In Russian practice, there are often cases when a bonus is actually considered as part of the salary and is paid “automatically” when the plan is fulfilled. If the employee does not achieve the standard indicators, he will lose the bonus in whole or in part. This practice creates nervousness, stress, conflicts and leads to demotivation of staff. The variable part of the salary should encourage people to achieve higher results compared to standard ones. And for fulfilling the plan, the employee must receive a salary. It is important that the permanent part of the salary remains constant! Based on these considerations, we will consider two methods of calculating bonuses if the employee’s KPI estimates are known.

The first method of calculating bonuses

The variable part of the salary (performance bonus) is calculated as a percentage of the official salary using the employee’s performance coefficient using the formula:

Of course, this formula only applies to those employees whose performance ratio is above 100%, i.e. who have achieved above-standard indicators, taking into account the values ​​of all KPIs and their weights. Otherwise, these persons do not receive a bonus. The amount of payment is limited by the employee's bonus fund.

Let's look at an example. The work of the shop manager for the past reporting period (month, quarter, half-year, year) was assessed according to five key indicators (see Table 2).

Table 2. Example of bonus calculation (method 1)

Let's assume that the official salary of the shop manager is 40,000 rubles. Then his bonus based on work results will be 9.3% of his salary: 40,000 rubles. × 0.093 = 3720 rub.

As you can see, for two indicators (“share of production by assortment” and “satisfaction of internal customers”) the results obtained were below standard. However, the overall result (109.3%) is above the norm, and therefore the employee is given a bonus based on performance.

Thus, the bonus is calculated as a percentage of the official salary, depending on the employee’s performance coefficient.

Second method of calculating bonuses

The total bonus based on performance is calculated on the basis of the employee’s bonus fund as the sum of “private” bonuses earned for each KPI separately. If the size of the bonus fund is known, then the maximum bonuses for all KPIs are first determined depending on their weights:

Then the actual bonus for each KPI is calculated as a certain fraction of the maximum bonus, depending on how much the actual value of this indicator exceeds the norm:

This formula is applicable only for those indicators for which the “fact” is greater than the “norm”. Otherwise, no bonus is awarded for this indicator. Then the private bonuses for all KPIs are added up, and the employee’s total bonus is displayed:

Let's return to our example. Let's assume that the employee's bonus fund is 40% of the official salary, i.e. 40,000 rub. × 0.4 = 16,000 rub. Then, when using the second method of calculating the bonus, the personal performance table will be different (see Table 3).

Table 3. Example of bonus calculation (method 2)

In this case, the maximum bonus for each KPI is determined as a share of the bonus fund in accordance with the weight of this indicator and is accrued when its target value is achieved. For example, for the criterion “production volume”: 16,000 rubles. × 0.35 = 5600 rub. The same is true for other indicators. In addition, the actual premium for each of them is awarded only if the “fact” exceeds the “norm”. So, in the above example, for two indicators - “share of production by assortment” and “satisfaction of internal customers” - the standard was not met, so the bonus was not awarded. For other indicators, the premium is calculated as follows:

If you add up the actual bonuses for all KPIs, you get the total employee bonus: 2800 rubles. + 800 rub. + 800 rub. = 4400 rub.

Thus, the bonus for each KPI is calculated as a share of the maximum bonus, depending on how much the actual value of this indicator exceeds the standard value.

Choosing a method

Let's figure out which of the two methods described above for calculating the premium is preferable.

First way - more stringent for employees, since it hides a “fine” for failure to meet the standards for individual KPIs. If according to these performance indicators the result is less than 100%, then the performance coefficient decreases and, as a result, the employee’s bonus decreases. Thus, the first method of calculating it to a greater extent encourages people to pay attention to all indicators, and not just the most important ones. However, it should be borne in mind that the basic KPI values ​​should not be overestimated or underestimated. Otherwise, this may lead to the fact that the result (in percentage) for these indicators will be inadequately high if the “fact” turns out to be even slightly higher than the “norm”, or too low - otherwise. It is clear that this will distort the performance ratio. In other words, the range between the “base” and the “norm” should be wide enough to increase the robustness of the assessment and premium calculation results.

Second way - softer and more “democratic”, since it does not involve a “fine”. As noted above, bonuses for indicators for which the standard is not achieved are simply not awarded.

On the one hand, this is good, because... The threat of punishment irritates and demotivates many people. In fact, the “fine” for failure to comply with the norm is a hidden deduction from the permanent part of the salary, which contradicts one of the basic principles of remuneration: the permanent salary should remain constant. If the standard is not met, you should not blame the person, but figure out why this happened. After all, in any organization everything is interconnected, and the reasons can be very diverse. And the bonus should not be a means of punishment for omissions, but a tool of encouragement for achievements.

On the other hand, this is bad, because... employees may simply ignore some indicators that they “don’t like” or not make any effort to perform their duties if they realize that they cannot cope with the standard. Due to the fact that “automatic” punishment is not included in the bonus calculation, the workload on the immediate superior increases. To avoid this, the manager must work with subordinates, find out the reasons for low results and motivate people in other ways, primarily intangible.

The main responsibility of the company's top management is to create a strategy, determine the goals and objectives of the enterprise. The implementation of these goals falls on the shoulders of employees from structural divisions. A company's growth can be jeopardized if information is poorly shared between employees and management. This mainly happens due to information overload of management and the inability to rationally assess the situation in work positions. This, in turn, affects the quality of control over the actions of personnel and the implementation of the strategy.

Impact of KPIs on the company

If the staff does not have specific strategic goals, and there is also no sufficient motivation, this leads to the fact that employees are not able to determine the right course and are not able to act for the benefit of the company's development. This inconsistency often leads to waste of company resources on tasks that are secondary. Such problems arise quite often, and many businesses around the world suffer from them.

It is difficult to call a self-sufficient enterprise strategy. Management's aspirations are to achieve goals by setting tasks for personnel, as well as quality control over the quality of work performed. In the chain of elements that are necessary to realize these goals, which constitute the management cycle, there are two elements:

That is why many modern entrepreneurs are interested in KPI (key performance indicators), what it is and how it can help in management. After all, the weak link in the chain shown above is, in fact, the connection between management and staff. If there are failures in its work, then decisions will be made taking into account information that is incomplete. According to some managers, the guarantee of the correctness of their decisions depends on the amount of information collected. But in this case, this is a wrong opinion, since the time required to evaluate information increases, and its quantity is not at all responsible for its quality.

Management Tools

Any management needs a tool that allows them to obtain high-quality and adequate information for decision-making. Western companies have long been using key performance indicators and a balanced scorecard for this purpose.

KPIs are considered a system of indicators (financial and non-financial) that have an impact on the qualitative and quantitative change in the result of personnel work or the result that is expected. It includes the coefficients of each controlled object, as well as the methodology for their evaluation. This allows you to focus on achieving strategic goals, based on an assessment of the organization's performance.

The assessment of key performance indicators is precisely the tool that can show how well management is carried out in relation to the results relative to the set goals, taking into account the cost and position of the company in the market. It is worth keeping in mind that this tool can facilitate the decision-making process of management thanks to complete and high-quality information, but it cannot solve serious systematic problems of the organization. This technique does not provide ready-made solutions, it only identifies the area in which the problem arises.

The transition to new methods of progressive company management is justified by the fact that old methods, including increasing the scale and pace of production, as well as improving product quality, do not create the necessary competitiveness. Thanks to modern management tools, an organization can quickly respond to any change occurring in the market.

The main objective of the KPI system together with the balanced scorecard is to move the company into a comprehensive set of necessary indicators that can highlight the main elements of management and measurement. Thanks to this set, an organization strategy is formed that is able to include all the necessary qualitative and quantitative characteristics in order to promptly inform workers about the factors that influence present and future success. Having formulated the results that should be achieved, the organization not only defines the goal, but also works on the conditions that allow it to be achieved better and faster.

It is not the amount of information that is important, but its objectivity, accuracy and relevance in order to correctly carry out all the necessary calculations. The concept of the balanced scorecard is that traditional financial and economic indicators are not enough for the success of a strategy. To solve problems, it is necessary to better balance key performance indicators, taking into account various planes, in order to control the factors that influence these indicators. You should not pay much attention to past achievements; you should evaluate future results. If you focus indicators on only one area of ​​activity, this will undoubtedly have a bad effect on the final result.

System implementation

To implement a system in an enterprise, there are certain steps that must be performed sequentially. Violation of this sequence can negatively affect the final result.

The first stage is the formation of a strategy

A clearly formulated strategy should describe the main steps to achieve the desired results and goals. It needs to be broken down into specific initiatives, with tasks assigned to individual departments of employees. Thanks to this, significant savings occur not only in money, but also in time.

The second stage is identifying key factors

Here it is necessary to determine the most important factors, or rather, the parameters of aspects of economic and economic activity that have an impact on the implementation of the assigned tasks and the implementation of the strategy. These factors have a significant impact on success.

Stage three – key performance indicators

Here the activities necessary for the strategy to be successfully implemented are determined. KPIs are used as a tool to determine them. It is worth highlighting only the most sensitive of them, without using secondary indicators. They should be stimulating for staff. Among the main requirements for the system of key performance indicators are:

• Clear limits on the number of indicators.
• They must be uniform for the entire company.
• Possibility of obtaining a digital format of the indicator.
• It must be directly related to the factors influencing success.
• Metrics should motivate employees to meet the goals required by the organization.

Key performance indicators: examples

Let's take, as an example, a well workover shop. The strategic goal for this organization will be to increase the level of product production, which will be expressed in well production and reduce the factors that provoke the loss of the product and reduce its cost. In this regard, KPIs should be set so that they reflect not only the goals of the company itself, but also address issues regarding a specific division. If repairs are carried out, the well’s operation will be stopped, therefore, it is worth considering the costs caused by the shutdown.

The structure of key performance indicators for a given division may have the following structure:

Thus, using KPIs (key performance indicators), examples of which are discussed above, employees are encouraged to reduce costs and increase oil production. This not only corresponds to the overall goals of the company, but also affects the quality of work of a particular department.

The fourth stage is working with a balanced scorecard

This stage involves the development of a generalized system that includes financial and non-financial indicators. This takes into account both the object of control and the assessment of factors influencing the overall picture of the enterprise’s performance.

Fifth stage – selection of a technical solution for implementing the tool

At this stage, the data source through which the indicators will be filled is determined; it must satisfy all the conditions for the reliability of the information received. It is necessary to first create a strategy that allows you to implement a new management tool. Decide on goals, taking into account how positively they will affect the state of the company. It is also necessary to configure the information flow in order to correctly calculate all indicators. There are still many points necessary to achieve the main goals and objectives of the organization, which key performance indicators will help to cope with.