Many people who have worked in corporate places may be familiar with the term KPI or KPI process. This is an acronym for Key Performance Indicator, something used to measure the effectiveness and performance of an employee. In most cases, this is the most valuable tool for evaluating employees whether or not they have worked according to company specifications. Some employers also use or measure core values other than KPIs. However, some companies also believe that performance should be based on actual performance and not on perceived behavior.
The use of key performance indicators is important in the development of an individual and the company. These numbers that are measured are what managers use to determine whether an employee’s activities are aligned with the organization’s goals. In most cases, organizations that use KPI as a management approach are also very particular in coaching employees. Obviously, measuring performance on a regular basis will be useless if the employee does not receive adequate feedback on their performance.
The process of measuring key performance indicators is quite simple. It is necessary to identify which metrics have a significant impact on the performance of the organization in various aspects, such as financial perspective, customer satisfaction, quality, etc. These things are then translated into metrics called KPIs. For example, there are some companies that need people present and a single absence will significantly affect production or operation. As a result, attendance will be included on an employee’s KPI or performance scorecard. This will most likely incorporate lag-based performance as well. Each case of tardiness or absence will affect the status of the employee in the organization, and this will also affect the evaluation of his salary and the eligibility for the promotion.
KPI is an important tool in business performance management. People know that to run an organization effectively, there have to be numbers. However, there are still those who make the mistake of relying on personal observation and not on documented and validated performance. This type of management often leads to bias, and unfortunate employees who experience unwarranted judgment from the manager will often feel unhappy and unmotivated. On the other hand, using a standard set of metrics as KPIs will help employees understand what is expected of them.
Using KPIs is the very essence of having an organized organization. If employees know how they are being measured and what these measurements are for, they will know how to perform well and why. They will have a clear idea of what they need to prioritize and will also know what to achieve. Employees have goals, perhaps a career advancement, and an organized management process will certainly help these people achieve these goals. If employees perform to the best of their ability, the company will not be the loser. In fact, the company can very well identify potential leaders in the organization and train them. Personal development is the core of the KPI process, if you really think about it.