5 Steps to building KPI standards help BUSINESSES increase 200% performance

However, building KPI not merely putting a few numbers and measurements. Businesses are deploying solutions to digitize processes, the system set KPI accuracy associated with the step operation is a survival mission to ensure the entire operating system of development is effective. In this article, we will help you:

• Understand the nature of the building KPI in the context of management of
• Master the process of building KPI lessons
• Avoid common mistakes that businesses fail when applied KPI
• Get the template KPI fact for each department

1. Building KPI what is? The common misunderstandings should be avoided

Definition of KPI and KPI development

KPI (Key Performance Indicator) is the index key help measure the effectiveness accomplish specific goals. However, not everyone understands right, do it right when “building KPI”.

Building KPI is the process of specifying, designing, measuring, operating performance indicators a systematic way, associated with strategic objectives, operational processes of the business. In the environment of culture, this becomes important because:

• Each KPI can be measured automatically by the software
• Process digitization indispensable indicators to control input – output – efficiency

For example:

• KPI craft: “the Number of orders processed per day” – need staff input → to false
• KPI in the number system: the Number of single handle/day is automatically updated from the software workflow

The wrong common when enterprises“, started to build KPI”

A lot of businesses start building KPI with the mentality of “build yes”, “mounted on to test employees,” or “copy template on the network”. This is the most frequent mistakes:

Wrong KPI's targets imposed

Many leaders use KPIS as a tool to monitor or punish, instead of improvement tools. This makes employees lose motivation, KPI become “fear”, not “lodestar”.

Integral KPI from the actual process

KPI effective only if you are attached to the specific steps in the process of operation. If not, digitized, integrated, KPI will be neglected because there is no updated data.

Use KPI according to the sense

Select KPI according to intuition, or just choose one, easy-to-measure, not measured correct performance is important. For example, Measuring the number of email sent instead of measuring the response rate or quality problem solving.

Case failure typical

A logistics company in ho chi minh CITY.HCM ever build a KPI delivery “90% true romance” but there is no system which recorded the actual time each delivery. Results: KPI is measuring wrong, no one is appreciating – the business idea of “everything nice” until customers leave because of slow delivery.

2. The step by step build KPI basically tied to the number of chemical processes

Building KPI is not merely “think of a few indicators” to monitor employees. For businesses that are digitized operate, KPI should reflect the way the business works – more important, must be integrated into the process of a logical, feasible, there are real data stock.

Here are 5 steps to deploy this version to build the system KPI effective, in accordance with the business model number:

Step 1: Define the strategic objectives as the foundation for KPI

Pre-built KPIS, businesses need to look back at the overall picture: Enterprises want to achieve anything in 6 months – 1 years to come?

The KPI only has value if it is set to measure achieving strategic goals, such as:

• Revenue growth
• Advanced quality of service
• Increase operational efficiency
• Reduce operational costs

Businesses should use the admin framework target as OKR or BSC (Balanced Scorecard) to decay, the goal of the specific axis:

• Financial
• Customers
• Internal processes
• Capacity development

Hint: Each strategic goal should be mounted with 2-3 KPI key, avoid too much cause thinning.

Step 2: analyze the actual process – define measuring point performance

After the goal, enterprises need to look in a mirror process enforcement to find out what score can measure.

The implementation steps include:

• Draw the process flowchart current: Use the chart as BPMN or Swimlane to describe the process according to the work flow.
• Mounting the execution time for each step: From there easily see the processing time score, congestion, ease of measurement.
• Identify the points may collect data: the starting Point – intermediate – end process is the ideal place to measure the KPI.

For example, the process to approve the proposed purchase:

• Send inquiry → 2. Test → 3. Approval → 4. Purchase
  → Can set KPI:

• Duration browser each level (hours/day)
• Rate request denied
• The rate of late-term approval

The analysis process thoroughly will help avoid build KPI “on the sun” – there is no real data to measure.

Step 3: choose the KPI according to the principles of SMART

This step is a decision to choose which metrics will be measured, rather than “want to measure something is well”.

Apply the principle of SMART:

• S – Specific (Specific): KPI should be clear, not vague
• M – Measurable (measurable): There are data to collect
• A – Achievable (feasible): Located in the carrying capacity
• R – Relevant (Related): Must be tied to objectives or processes
• T – Time-bound (time limit): There are specific timelines

Compare:

• Not SMART: “Improve customer service”
• SMART: “Increase the rate of customer satisfaction up to ≥ 90% in the fourth quarter”
• Not SMART: “Reduce costs”
• SMART: “Reduce the cost of processing orders, 15% in the next 6 months”

The filter standardized KPI according to the SMART will help easy to operate, easy to assess, especially to internal communications.

Step 4: mechanism design, collect, inspect and KPI data

One of the points of the “death” of the KPI is... there is no data to measure, or measure wrong because depend enter the hand. Therefore, you need to ensure:

• KPI must be fitted with automatic data generated from the system
• There are processes to inspect, clean, verify data
• There is the person responsible for updates or collated data (KPI owner)

While mechanism design, KPI data, businesses need to determine:

• Source data (from any software? table anyway?)
• Frequency measurement (real-time, by day, week by week...)
• How to display (table, chart, dashboard)
• Warning when the KPI threshold

Note:

• If the KPI has no data source available, automatically, the ability to “forget” KPI is very high.
• Best to link KPIS to the operating system available (CRM, ERP, HRM...)

Step 5: Attach the KPI with each role, feedback mechanism – improvement

A KPI good not only to “review” but also to “improvement”. So:

• Each KPI must be the owner responsibility (KPI owner)
• KPI should be clear hierarchy: level strategy → departments → personal
• Can schedule meetings periodically to revise and re-evaluate KPI (week/month/quarter)
• Set feedback mechanism – adjustable KPI if conditions change

Suggestions:

• Mounting KPI system, salary and reward/recognition transparency, but not rigid
• Considered KPI's learning tools, continuous improvement – not to pressure employees

3. The template KPI according to departmental popular for business

Building KPI doesn't just stop at frame theory. Business need specific goods KPIS for each department to ensure strategic objectives are allocated reasonable, we can measure the effect. Below is the sample KPI practices, is synthesized from the business model has deployed digitization process.

KPI for sales department

The trading room is the main output of the business, where directly reflects on the growth performance and revenue.

The KPI downloads:

• Sales (Revenue): Total sales during the period. This is a KPI core, reflect the performance of the team.
• The number of new clients: shows the ability to expand the market.
• Conversion rate (Lead to Customer Rate): From the number of potential customers to actual customers.
• The average value per order (AOV): Help define the sales strategy accordingly.
• Cycle average sales (Sales Cycle): average Time to latch an order – as short as effective.

Tip applied: Business should be divided KPI by region, sales channel, and individuals to track, compare performance. Sample KPI for sales office:

KPI for Marketing department

Marketing is launchers for sales. Measure the right help business control costs, optimize conversions.

The KPI downloads:

• The cost of attracting customers (CAC): the Total marketing costs divided by the number of new customers.
• The conversion rate from the campaign (Conversion Rate): effective Measurement from each specific campaign.
• Interact on a social network (Engagement Rate): indicates the attractiveness of the content, level of interest.
• The page's bounce rate (Bounce Rate): Reflects the quality content and user experience.
• Your campaigns ' ROI (Return on Marketing Investment): Measuring financial performance.

Tip applied: Should track each channel (Facebook, Google Ads, SEO...), according to the specific objectives (brand awareness, lead generation...). Sample KPI for marketing department:

KPI for hr

KPI hr help ensure effective recruitment, retention, human resources, maintaining the work environment positive.

The KPI downloads:

• The rate of quitting (Turnover Rate): unusually High as warning signals.
• Time recruitment medium: Measured speed feedback, effective recruitment.
• The rate of completion of training: shows the active development of internal capacity.
• Index of employee satisfaction (eNPS): Measure level of satisfaction, loyalty.
• The response rate KPI of employees: Measuring the quality of personnel according to the objectives.

Tip applied: Should build KPI different for new employees, key personnel, management team. Template KPI for hr

KPIS for Finance and accounting

This is the room to ensure transparency, safety, financial management, cash flow for the business.

The KPI downloads:

• The expense ratio on sales: effectively Manage spending.
• Spin public debt: Speed, debt collection, payment provider.
• Errors in the collated data: Reflects the effect of internal control.
• Report due: Measure the level of compliance with the reporting process.
• State budget (Budget Adherence): the Level of spending than planned.

Tip applied: KPI finance should be linked tightly with KPI the other room to assess the overall effect. Sample KPI for finance and accounting:

KPI for operations / Production

Operating room is the center of the value chain internally, the need to measure according to the time factor, quality, performance.

The KPI downloads:

• Performance, use machinery (OEE): Overall equipment efficiency.
• Rate error: Reflects the quality, affect the cost.
• Time average delivery (Lead Time): the Ability to meet orders.
• Utilization rate of raw materials, reasonable: a Measure of the loss, cost optimization.
• The rate of complete the order due date: assess the stability of the production process.

Tip applied: Need to update the KPI according to each tranche improved to reflect the change after each optimization process. Sample KPI for operating room production:

KPI for customer care

Customer service determines the level of loyalty, the ability to retain customers.

The KPI downloads:

• Response time average: Measuring the level of agility of the support department.
• The proportion of complaints resolved in the first time: Increases experience, reduce support costs.
• Point customer satisfaction (CSAT): Directly from the feedback of our customers.
• The proportion of customers back (Retention Rate): shows the long-term value of the customer.
• NPS (Net Promoter Score): ready to introduce the business to others.

Tip applied: combined KPI quantitative (data), qualitative (feedback, survey) in order to have the full picture. Dashboard KPI template for customer care department:

Note when applying the template KPI according to departments

• Personalization according to business: should Not copy the original template – every business has its own peculiarities.
• Connect KPI personal – departments – company: forming a logical chain, ensuring the actions of each individual are served on a common goal.
• Use software support: Manage KPI best when there is background digitization process helps to track, update alerts, automatic.

4. The elements required in a KPI effective

A business can build many KPI, but not the KPI would also bring effective. Here are 3 vital element to ensure KPI promote the correct value in the digital space.

The close link between KPIS, system processes, the number of

Can't build KPI effective if the operation has not been digitized or fragmented. KPI need:

• Attached to each particular step in the workflow
• Automatically updated according to the actual data (auto-tracking)
• Compatible with the software are used

For example: System LV-DX allows for the installation KPI within each state, handle profile, easy to measure:

• Duration browser step by step
• Percentage completed on deadline
• The frequency of delay according to the curator

Transparency, easy-to-follow

KPI's should be presented visually in the form:

• Dashboard synthetic
• Periodic reports (weekly, monthly)
• Warning threshold

Benefits: Help leadership decisions quickly, the staff clearly see her now, need to improve anything.

The feasibility, measurement is

Don't put out KPI “impracticable”. A KPI good must:

• Have clear data updated in real time
• Have the ability to achieve in current capability
• There are feedback mechanisms if not reached (for example: review meeting KPI weekly)

According to research by Deloitte (2023): “70% of the KPI failure not because of the wrong targets, but because businesses do not have the tools or data to accurate measurement.”

5. Why should I use LV-DX Dynamic Workflow when building KPI

In the construction of the KPI associated with the process of LV-DX Dynamic Workflow is a special tool fit thanks to the ability to:

• Set the checkpoint KPI in each state work
• Automatically collects performance data from employee, department
• Display dashboard KPI in real time, help managers easy decision
• Warning KPI exceeded or not reached, through email – system – mobile

Advantages of LV-DX Dynamic Workflow:

• Customizable KPI according to each process peculiarities (purchasing, recruiting, sales, production...)
• Drag & drop interface without code
• Integrated reporting KPI system, BI helps business-depth analysis, multi-dimensional

Business is developing or intends to build KPI associated with the process number should be considerations LV-DX Dynamic Workflow as part of a transformation strategy of comprehensive.

6. Mistakes businesses often encounter when building KPI

In the process companion implement KPI for many businesses, we recorded a number of common error led to the KPI is counterproductive:

Design KPI according to the sense, not measurable

Many businesses choose KPI no data measurements, or indicators too abstract that employees don't know what to do to improve.

Not integrated KPI in the process of

Set KPI but measured... Excel. This makes the data non-transparent, updates slowly, can't use to decision immediately.

Too many KPI – diluted target

An employee is given 10 KPI per month, they almost certainly won't reach top 3. Please choose the correct 2-4 KPI really affect performance.

KPI does not come stuff done

Delivery KPI for parts that do not provide software, no manual, no training – leads to a KPI just lies on paper.

7. FAQ – answer faq about building KPI

Question 1. Other KPI anything to OKR?

• OKR is a goal frame, including objectives, main results (key result). KPI is a measurement indicator – KPI can be the “key result” in OKR.

Question 2. Should we use KPI for new employees?

• Yes, but should be used KPI-oriented instead of KPI pressure. Priority indicator easy to reach, help them build the habit.

Question 3. How often should update KPI?

• Minimum 1 quarter/times. Businesses should review KPI cyclical strategy, or when changing operating procedures.

Question 4. KPI there should be tied directly to the reward/punishment?

• Should. However it should be fair, transparent, that route. Avoid “hanging KPI to wage,” which does not confer the right tool for employee performance.

No KPI – business like you're driving in fog: don't know go slow or fast, effective, or stagnation. The building KPI basically, fastened with the system process number LV-DX Dynamic Workflownot only help you measure performance, but also the tools of early warning, only the improvements, measure the maturity of the organization. Action today:

• Review the strategic objectives
• Re-evaluate the process is operating
• Re-design the system KPI on platform number → That's the way to not only survive – but also accelerated in the digital era.

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