The creation of an effective KPI (key performance indicator) system can be done internally by engaging external consultants or experts. It is important that senior management, as well as lawyers and HR specialists, participate in this development. Sometimes even the opinion of ordinary employees can be useful.
The process of implementing the KPI system includes the following stages:
Analysis of the existing motivation scheme.
Creation of a project for a new motivation system.
Definition of strategic goals instagram data package and objectives of the company.
Development of the KPI system itself.
Setting target values for KPI indicators.
Implementation of a motivation system.
Subsequent adjustment of indicators and their values based on testing results.
When developing such an evaluation system, you should start by defining the overall goal of the company and the corresponding KPIs, then move on to establishing criteria for each department and employee. It is important that the scheme is transparent and understandable, otherwise it may cause a negative reaction in the team.
It is generally recommended to select 3 to 5 performance indicators, each of which should weigh no more than 50% and no less than 5% of the overall score.
The indicators and the size of the bonus for employees should be set taking into account their functions and the characteristics of the company. The wording of the performance indicators should be clear and unambiguous, and the indicators themselves should be achievable.
There are three main approaches to measuring KPIs:
Plan fulfillment as a percentage (e.g. number of successfully completed projects).
Number of cases (this approach is used to measure negative indicators such as the number of errors made).
Amount in monetary units (assessment of financial losses).
The choice of specific KPIs depends on the goals and needs of the company.
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Stages of developing a bonus system
When the employee bonus system becomes obsolete, it needs to be reviewed. Most often, this happens when the company changes the list of services provided, the range of goods, the client base expands, or the volume of work increases.
Developing a new model of a bonus system in small companies does not cause difficulties. But if you have a large company with a complex structure and a large number of positions, you cannot do without the help of experts. Developing and implementing a new bonus system is an important step to motivate employees and achieve the company's goals.
Here are the steps of its creation:
Analysis of the current scheme, identification of problems
Assess the current bonus system, identify its shortcomings. If adjusting the bonus amounts does not solve the problem or does not lead to the desired changes, this may be a signal to create a new one.
Evaluation of the company's goals and operating conditions
Determine your company's strategic goals and the conditions in which your employees work. Bonuses can be used to motivate employees to achieve them.
Determine the parameters of work performance
Select key performance indicators (KPIs) to measure your team's performance. Make sure they are objective and measurable.
Calculate your budget for rewards
Determine how much money the company has to implement the new bonus system. Keep in mind that implementing the system may require additional financial resources.
Develop and approve the “Regulations on Bonuses”
Create a document in which you describe the goals of material incentives and their criteria. Be sure to include in the "Regulations..." clear labor rules and bonus features:
production performance indicators;
conditions for calculating bonuses;
level and sources of bonuses;
circle of employees eligible for bonuses;
payment procedure.
Prepare the accompanying documentation
Inform department heads about the possibility of presenting employees for monetary rewards. Issue bonus orders based on their notes. Ensure transparency of the process by explaining to employees why some of them were selected for rewards and others were not.
Launch a rewards system and track the results
Implement the development and monitor the employees' reaction. In case of significant changes in productivity or if people are dissatisfied, review the bonus system to ensure a normal atmosphere in the team.