Article: Measuring the effectiveness of the personnel service

KPI - definition and basic concepts

KPIs are key performance indicators (KPIs) of an employee, department or organization. Knowing their KPIs, employees better understand where they influence business processes and what they can do to be most effective.

Thus, KPIs play a significant role in achieving the strategic and operational goals of the company.

Types of KPIs

How to measure the effectiveness of top managers and calculate fair salaries

CEO. He is the executor of the owner's will. His attention is focused on external factors: market conditions, investment attractiveness of the organization, responsibility to clients.

KPI of the CEO - global company indicators :

• Profit increase
• Increasing the organization's capitalization
• Increase in the number of investors
• Increasing the company's market share

Chief Operating Officer. Manages systems and processes within the company. When they are well tuned, the activities of the top manager bring more revenue and profit. However, the COO salary cannot be tied to revenue growth. It is necessary to take into account the consumable part. You can increase revenue, but if at the same time the expenses part increases significantly, it will simply “gobble up” all the profit.

The main indicator of the operating director is the profit margin , that is, the ratio of actual profit after paying all taxes to actual revenue (gross income) for the month. This way you can maintain a balance between income and expenses.

The company's profit should be 20-40% of revenue, depending on what the company does. You can take the market average as the basis for calculation. If the profit margin is maintained, it means that the operating director has fine-tuned the system.

Director of Sales Department. This is the head of a key business department who brings money into the company. He supervises his employees and handles sales himself, and takes on the most difficult clients.

Director's KPIs include:

• Increasing sales department throughput
• Achievement of KPIs by subordinate managers (number of calls, sales amount, speed of processing applications, etc.)
• Increase in the number of calls or meetings with VIP clients with the conclusion of a deal
• Receiving a certain amount of revenue

Marketing director. Analyzes the market and sales channels, introduces new products to the market, and deals with PR and advertising. His department, unlike the sales department, only spends money.

You can use the following as KPIs:

• ROI - return on investment in marketing
• Lead price, customer price
• Increasing customer loyalty index - NPS

How to build a system of performance indicators

The KPI system is based on key indicators.

To organize such a system in a company, you need to choose a model of key performance indicators. The two most popular models in Russia now are the classical approach and the balanced scorecard.

The classical approach is based on taking into account, first of all, financial parameters. It is suitable for small companies, since it does not require large expenses for consulting with specialists and implementing an information system. But it is important to understand that financial KPIs cannot be set for every employee - for example, a programmer or editor will not have them.

In addition, financial performance is not the only component of business success. The level of interaction with clients, personnel management, the smoothness of internal processes, the quality of services or products, etc. - all these aspects are no less significant, but they are problematic to evaluate from the perspective of probable cost.

Therefore, as the organization develops, it will be possible to refine the created classical system and include non-financial parameters in it, and in the case of medium and large businesses, immediately introduce a balanced scorecard (BSC).

Its structure identifies four key aspects of the organization’s work, which answer the following questions:

• How do shareholders/owners evaluate the company? ("Finance").
• How do clients rate it? (“Clients”).
• How can the quality of work be improved?
• What processes can make a company a market leader? ("Business processes").

In these four dimensions, target results are determined and a strategic map is drawn up. It reflects the cause-and-effect relationships between key tasks.

The map shows only those tasks that are necessary and sufficient to achieve the target result. Therefore, such a system of target indicators is called balanced. That is, the system of indicators is in balance with the system of strategic objectives of the organization.

https://youtu.be/0vDmYvTn7io

HR-KPI system

1. Characterizing the efficiency of using human resources. They are a kind of reporting to the owners of the company and are aimed at reflecting financial efficiency, which in its simplest form can be expressed through the ratio of the level of personnel costs and productivity (for example, “personnel costs as a percentage of revenue”). Thus, these indicators answer the owners’ question: “What do we get by investing in personnel?”

In order to control and optimize overall HR costs, more detailed monitoring is necessary. For these purposes, indicators such as “costs to fill one vacancy”, “average cost of an hour of training”, “costs of training one employee”, “payroll costs as a percentage of personnel costs”, etc. are used.

2. Characterizing the effectiveness of the HR service. They are more extensive because they characterize the effectiveness of the use of HR tools (that is, operational activities). Information on such indicators is most interesting to heads of HR services or top managers in charge of the HR function, as well as general directors.

Indicators of this type can be expressed through three fundamental tasks of the company’s personnel service: selection and promotion, training and development, motivation. To do this, it is necessary to identify subtasks for each function.

This function is evaluated in several ways.

1. Attractiveness of the company to potential candidates. In order for an organization to successfully recruit and promote employees, it must be appropriately attractive to potential candidates. At first glance, the most relevant way to assess the attractiveness of a company involves the involvement of external sources (through a sociological survey, participation in independent ratings, etc.). You can also evaluate attractiveness on your own, based on available information. There are quite objective indicators for this:

• candidate activity (for example, “competition for a position”, “number of responses to a vacancy”, etc.). This indicator is easy to measure yourself, without resorting to the services of external providers;
• information from employees. Satisfaction surveys allow you to see the company through the eyes of its own staff, including in matters related to attractiveness (salary level, social security, working conditions, etc.);
• competitiveness of the offer. We are talking about both the level of salaries in relation to the market one and the comparability of social benefits. For example, you can formulate this in the form of a KPI “salary at the 75th percentile level” (less than which is 75% of offers on the personnel market).

2. Selection of candidates. To solve this problem, a sufficient number of selection specialists is required (in KPI language - “the number of vacancies per selection specialist”). The next factor in the effectiveness of this area of ​​work is “the presence of clear selection criteria.” It is necessary to take into account both the number of positions to which the requirements apply and how often they are applied. Thus, this indicator can be assessed in terms of “yes”/“no” and quantitatively. Since the selection is carried out not only among external candidates, but also among employees, the quality of the requirements (their understandability, accessibility) can be assessed by surveying members of the workforce.

In addition, for effective selection, it is important to have methods that allow you to evaluate candidates according to developed criteria, as well as the percentage of use of these methods (that is, “the percentage of employees hired from outside based on the results of the assessment”). Such double control is necessary to identify situations where, for example, specially designed tests are provided for certain positions in the company, but they are not used (percentage of use is estimated).

The quality of selection can also be assessed by the indicator “staff turnover in the first three months of work.” It can be used to judge how accurately the candidate’s expectations regarding work in the company were formed during the selection process. The indicator “turnover in the first year of work” is also often used, which reflects both the quality of selection and the quality of adaptation.

3. Efficient personnel reserve (HR). It is one of the most popular tools for effectively managing recruitment. The quality of preparation of the CD and the effectiveness of its functioning can be described through a number of indicators:

• prevalence (“percentage of positions for which there is a reserve”; “percentage of employees who are members of the Kyrgyz Republic”);
• efficiency of the Kyrgyz Republic (“percentage of vacancies filled by reservists”).
• quality of selection of reservists (“percentage of employees enrolled in the reserve based on the results of the assessment”);
• quality of reserve training (“percentage of reservists who have an individual development plan”; “average number of training hours for one reservist compared to the number of training hours for a non-reservist”);
• Ultimately, the effectiveness of the reserve is determined by whether vacancies are filled through it or not. In Russian practice, unfortunately, there are situations when a company stops at assessing the “prevalence” of, at best, also the “quality of selection and training of reservists.” While the meaning of the existence of the reserve lies precisely in its demand.

Education and development

How to choose KPIs

Let's look at four specific steps to help you select key performance indicators for an employee or department.

Step 1. Select groups of indicators and distribute responsibility among managers

In the classical approach, which includes only financial indicators, the following groups are distinguished in the development of the KPI system: profitability, liquidity, turnover and financial stability.

Using the balanced scorecard, which includes both financial and non-financial aspects, we highlight KPIs in the four aspects mentioned above: Finance, Customers, People Development and Business Processes.

Responsibility for each group must be distributed among managers at all levels - from the general director to department heads.

Step 2. Write down the KPIs that managers already use

Each manager should create a list of criteria that he uses to evaluate his area of ​​responsibility, such as customer satisfaction. An HR specialist should analyze the lists and select only those indicators that are really necessary to manage and evaluate the achievement of set goals.

Remove all criteria that exist “for general information” - they make the system cumbersome and add an unnecessary burden associated with data collection and processing.

Step 3: Select metrics that best reflect achievement of strategic goals

Form an expert group of division and department heads. They must decide for each indicator on your overall list:

• does the indicator reflect the degree of achievement of the company’s strategic goals;
• is it clear to those managers who will make decisions based on it;
• Is it useful for decision making?

If you find it necessary, add some additional criteria.

For ease of assessment, you can introduce a point system, for example:

• 1 point - “no”
• 2 points - “partly”
• 3 points - “yes”

Based on the results of the assessment, only those indicators that scored the threshold (for example, 7) or the highest number of points should be included in the KPI system.

Example KPI for an SMM marketer:

• community audience growth rate
• number of views
• audience engagement rate
• frequency of content generation cost per lead

Step 4. Describe the parameters and algorithms for calculating KPIs

A manager at any level must clearly understand how to calculate each of the key performance indicators. Therefore, it is important to formalize parameters and algorithms. To do this, you need to make a description of each KPI, which will include the main parameters, method and frequency of calculation and other information.

KPI for the manager

When building a KPI system for managers, several principles must be taken into account (see also Table 1).

Linking KPIs to strategy

Key indicators should depend on the company's goal, on what you want to achieve over a certain period. For example, the objectives may be to occupy a leading position in the market or to sell a business profitably. Then, in the first case, the KPIs will be sales volumes and expansion of the customer base, and in the second case, increasing the company’s capitalization and obtaining the maximum value for sale.

The goal must be formalized, that is, expressed in writing and divided into lower-level goals - tasks, the implementation of which will allow achieving the main goal. It is advisable to draw a tree of goals and link them with the current organizational structure of the company.

KPI
clarity Oddly enough, people are often afraid to show their ignorance of any issue and are ready to work without even understanding the task. I observed the setting of tasks in one large holding company. At meetings with the boss, employees nodded their heads as they listened to assignments, and when they left the room, they asked each other what the boss meant.

You need to clearly state what you mean in each term of the KPI system. The company must have a KPI regulation approved by the company's authority (General Director, board of directors, management). It would not be amiss to provide examples and calculation formulas in the provision. If possible, all terms should be linked to accounting items. If you use Russian accounting standards, then rely on them; if IFRS, then use the terms and calculated indicators from this system. If you use two reporting systems, then clearly indicate which system will be used to calculate a specific indicator. For example, not all tangible assets accounted for in IFRS are also reflected in Russian standards.

Hold one or two meetings where you explain the contents of the KPI statement. Let each top manager calculate his bonus (for example, based on data from the previous year). Give it a few days, and then call everyone again and sort out the mistakes. Sometimes after such meetings it is necessary to make changes to the situation.

Limit number of indicators

When approving KPIs, determine the maximum number of indicators that will be set for each manager. I believe that a person can simultaneously monitor no more than five to seven indicators.

Real reachability

A big mistake is made by those who set inflated KPIs, guided by the principle “if you chase the sun, you will catch a firefly, if you chase a firefly, you will not catch anything.” A top manager, receiving a task that is obviously impossible or extremely difficult to complete, simply stops making efforts to complete it.

KPIs are calculated once a year - this is the minimum period sufficient to evaluate the achievements of a top manager. What to do if a top manager gets a job within a year? To answer this question, I will give the example of the Insol group of companies (Moscow). The variable part of the salary is calculated there as follows. The work plan includes indicators that are based on an analysis of the manager’s achievements according to similar criteria for previous years with an addition of 20% (the planned percentage of development per year established by the executive director). If a manager has recently been hired by the company, then when drawing up a plan, the performance indicators of his predecessors are studied, and then 20% is also added to the average value. The amount of the bonus depends on the level of implementation of this plan. For example:

• 50% bonus if the result is higher than planned;
• 30% if the planned indicator is achieved;
• 10% if the result is lower than planned;
• the variable part is not paid if an unacceptably low indicator is obtained.

Combination of personal and general indicators

It is better to combine personal and general indicators in the KPI system. General are the performance indicators of the structural unit managed by your top manager (an enterprise in a group of companies, a branch, a department, a unit). General indicators will help ensure teamwork and the manager’s interest in the final result. The proportions of personal and general indicators depend on the specifics of the industry, the specific company and the position of the person for whom KPIs are established. The higher the position of a person, the lower the share of personal indicators. A top manager’s personal indicators may be 10–20% or even completely absent. Examples of personal KPIs of the head of the company could be obtaining qualification certificates as a financial market specialist (mandatory for some companies), training a successor.

Result that can be calculated

KPI must be expressed in specific digital indicators. For example, for the HR director, such an indicator as providing the company with highly qualified personnel is unacceptable. Several mistakes were made at once: the deadline, number, and composition of personnel are not clear. In addition, the evaluation category “highly qualified” was given. The HR Director and the General Director may not agree on whether qualified or highly qualified personnel have been selected.

It is necessary to determine how the indicator will be calculated. It is wrong if for the calculation you need to buy expensive information, involve third-party organizations or spend a lot of your own time for the calculation. For example, if the marketing director sets the “brand awareness” indicator, then he must understand that he will have to order an expensive study to evaluate this indicator.

For each KPI, it is better to set achievement levels: threshold (below which the bonus is not awarded), target (at which the stipulated bonus is paid) and maximum (above which an increased bonus is paid).

The manager's ability to influence the indicator

There are some general indicators that can be influenced indirectly, but in personal indicators there should be a direct connection between the action and the result. For example, the KPI “presence of cash gaps” cannot be set for the financial director if the decision on payment terms, provision of trade credits and payment to one counterparty or delay to another is made personally by the General Director.

The remuneration must be significant

If the share of the bonus is insignificant in the manager’s total income, then he will not devote enough time to achieving strategic goals, but instead will be immersed in solving “urgent” current problems. The top manager's bonus must be at least 100% of the fixed part of the salary (for ordinary personnel - at least 20%).

The remuneration must be fair

Your employees will perceive as fair those indicators that are no more than 30% different from the indicators in the industry. Therefore, when developing KPIs, study the experience of your colleagues.

The next important issue is the fair procedure for calculating KPIs. Imagine that a certain profit level was set as a KPI for top managers, and at the end of the reporting period it turned out that only 50% of the indicator was achieved, which, in accordance with the KPI regulations, is not rewarded. At first glance, everything is fair. However, if we take into account that this year was a crisis and more than 50% of the companies in the industry went bankrupt, and the rest barely broke even or received minimal profit, then it turns out that the management of this company, having received 50% of the key indicator, accomplished a feat and certainly deserves bonus. To avoid such a problem, the indicators should have been linked to industry-wide ones.

Table 1

Example of KPI for a top manager - General Director

Case Study 1. KPI for Store Manager

Let me give you the example of the Narodny trading house (Bishkek, Kyrgyzstan). This company has the following KPIs for store directors.

KPI 1. Fulfillment of the sales plan.

It is expressed as the ratio of the actual store revenue for the reporting period to the planned revenue.
The sales plan for the reporting period is approved by the General Director in agreement with the financial and commercial directors. This key indicator is assessed by a company analyst (see Table 2
).

table 2

KPI 1 of the store director “Sales plan fulfillment”

KPI 2. Compliance with reporting and performance discipline.

It is expressed in the timely preparation of reports, transfer of utility bills for payment, submission of documents to the archive, data exchange, execution of orders of the General Director, compliance with inventory standards, adherence to corporate standards, compliance with reporting and performance discipline.
The indicator is assessed by the company's commercial director. One violation – one point. (see table 3
).

Table 3

KPI 2 of the store director “Compliance with reporting and performance discipline”

KPI 3. Performance of subordinate personnel.

Personnel assessment is carried out by a curator according to approved parameters with violations recalculated into points.
For example, parking and the entrance to the store must meet engineering, technical and sanitary requirements. Discrepancy – 2 points (see Table 4
).

Table 4

KPI 3 of store director “Work of subordinate personnel”

Case study 2. KPI for the director of the Russian division of a large holding company

Initially, the company's KPI was tied to EBITDA. The business then moved into the next stage of development. At the same time, incomes grew, but there was no corporate discipline.

The division director is tasked with four tasks:

• minimizing company expenses;
• preservation of achievements of previous periods;
• compliance with the decision-making procedure according to the standards of the parent holding company;
• minimizing losses.

In order to encourage the director to achieve these goals, four KPIs have been established for him. Upon achievement of planned indicators, a remuneration is paid in the amount of 150% of the annual salary.

KPI 1. At least one of the retail outlets operating for more than a year has been at a loss for more than three months.

The implementation of this indicator is assessed by the board of directors or audit committee based on the operating profit report. The weight of KPI 1 in the bonus is 0.3 (that is, 30% of the bonus).

KPI 2. Failure to meet the EBITDA indicator for the reporting period.

The implementation of this indicator is assessed by the board of directors or audit committee based on the profit and loss report. The weight of KPI 2 in the bonus is 0.3.

KPI 3. Violation of internal regulations on the decision-making procedure.

The presence or absence of precedents is recorded by the board of directors. The weight of KPI 3 in the bonus is 0.2.

KPI 4. Failure to comply with decisions of the board of directors.

The presence or absence of precedents is recorded by the board of directors. The weight of KPI 4 in the bonus is 0.2.

Options for practical application of the performance indicator system

KPI is a truly universal tool that can significantly improve the efficiency of working with personnel. Let's consider the most important practical points.

Planning and control

As we have already mentioned, key performance indicators allow you to measure results and costs. Therefore, they can be used when planning and monitoring the work of an employee, department or company.

At a certain frequency (once a month, year), indicators for this period are measured and compared with the planned ones. If it turns out that the former are significantly lower than the latter, you need to analyze the work and make adjustments.

Knowledge of key performance indicators allows you to more accurately plan the company's work, since planning is based not on abstract indicators, but on derivatives of real processes.

Employee motivation

When KPIs are implemented, the motivation system becomes clear and transparent for both managers and employees. Managers understand for what achievements and what rewards to assign, employees know what they need to do to receive a bonus or go to free training courses.

That is, the KPI system combines the goals of the employee and the company: the company rewards the employee for achieving the results it needs, and the employee, along with the company, is interested in achieving these results.

How to implement the developed KPI system

You can implement the developed KPI system at your enterprise either with your own employees or with the involvement of consultants. In this case, it is necessary to take into account the specifics of the organization, the peculiarities of conducting business processes, as well as the goals and objectives of the enterprise.

It is important that ordinary employees understand what changes in the payment system will occur, and that efficiency becomes a key indicator in their work. It is necessary, in parallel with the implementation of the system, to train personnel so that in the end they realize that the innovations will benefit, first of all, themselves.

For implementation, it is necessary to prepare the relevant documents: employment contracts, staffing schedule, collective agreement and other documents related to remuneration.

It is advisable to implement the indicator system through a pilot project. In test mode, using the example of 1-2 departments, it will be possible to test the functioning of the system and a new model for bonuses for personnel. The ratio of the fixed and variable parts of the salary can be adjusted in real time, based on the target indicators for the selected categories.

After testing, the system, taking into account the adjustments made, is distributed to other divisions of the organization. It is highly undesirable to carry out implementation without a test mode. Using the example of a small department, it is easier to see disagreements in the work of employees, identify possible problems and solve them on the spot. Employees should not be allowed to strive for different goals, thereby they will only interfere with each other, and the efforts made will not lead to the desired results.

When implementing a KPI system, it is necessary to include the possibility of adjusting performance indicators. Regular monitoring of indicators will allow you to timely adapt to market fluctuations and change your work strategy. In addition to unscheduled reviews of key performance indicators, annual optimization of the bonus model is possible. It involves replacing the assessed indicators with others that are more relevant for certain departments or specialists.

Typical mistakes in introducing performance indicators

If KPIs are implemented incorrectly, management receives, at best, a distorted performance analysis, and at worst, a decrease in practical indicators. Let's look at the main mistakes.

Lack of a unified KPI system

Often in large companies, KPI systems for different departments are developed separately, without taking into account the mutual influence of their work.

The result is, for example, that the procurement department purchases goods in huge quantities in order to meet the KPI for cost savings, and the sales department cannot fulfill the plan because customers want product B, and the entire warehouse is still filled with product A.

The system includes indicators that cannot be measured

For example, you should not include an assessment of service quality or employee loyalty to the organization in KPIs. Remove all subjective indicators and leave only really quantifiable ones.

An employee cannot directly influence his KP

Let's take a product team that includes sales managers, a marketer, an analyst, a tester and a programmer. If the entire team is set KPIs according to the sales plan, dissatisfaction and mutual accusations will inevitably occur. Because the analyst, tester and programmer cannot influence the sales plan in any way; they work according to its results.

The staff motivation system is not tied to KPIs

Key performance indicators are introduced and known, but no one is responsible for them; bonuses, salaries and fines are assigned regardless of KPI performance. In this case, it will be impossible to achieve one of the main goals of introducing KPIs—to synchronize the goals of the employee and the company.

How to implement KPIs in employee motivation?

Before implementation, it is important to understand that the indicators you have prescribed can indeed be calculated. In the absence of an analytics system, calculating some indicators can be a labor-intensive process (incoming targeted calls, website conversion). If this is your case, then imagine how horrified your specialist will be when he realizes that he will have to count all this. How much extra work will be involved? Implementing analytics will take time or specialists, this is normal. Take this nuance into account.

When you have decided exactly what performance indicators you are willing to pay your employees for and have described everything on paper, you might think that almost everything has been done. But the most important thing is yet to come. The implementation of KPIs in a specific business is almost always a sensitive issue for owners. Rebuilding something that has already been formed and somehow works, without causing any problems or making things worse. In most cases, the difficulty is in the minds of employees who are used to working the old way and do not want to change the way it is. After all, implementing KPIs is an additional responsibility that did not exist before. There are several tips when implementing performance indicators that will simplify the process. Let's look at them.

Sell ​​the KPI idea to employees

You don’t have to explain to people why innovations are being introduced only if there is a high level of loyalty and trust in management, otherwise be prepared for all kinds of resistance and negativity. Often it’s “they want to control us,” “the management is tightening the screws,” “they want us to work more for the same money,” “they want to cut wages.”

Such difficulties can be avoided by conveying the idea that performance indicators are needed by the company to accelerate development and enable planning, and provide employees with additional pleasant rewards and personal development.

Run in test mode

If the decision is not irrevocable and can still be returned to normal, then we relax and make the decision easier. This is how people are made. In our case, this is an opportunity to propose implementing KPIs on a test basis. If an employee understands that he does not lose in remuneration and can even receive more, it will be much easier to negotiate.

Start with a loyal group

There are always those in the team who are more open to innovation than others. Why not take the path of least resistance and start with them? Form a group of loyal employees and assign them performance indicators. You can also agree on a test period. If your KPIs are truly working, then after some time the loyal group will show better results relative to other employees. If the results are supported by rewards, then others themselves will want to work in the same way. Be prepared for the fact that a certain percentage of conservatives will always remain their own. Now it’s up to you to decide what to do with them. Leave it as it is, put pressure on it or fire it.

Phased implementation

Another way is to implement the new system step by step. If you are moving from a fixed salary to a fixed salary plus a bonus, you can break the process into several stages. At the beginning, 100% fixed salary, in the first stage 90% salary + 10% bonus from fulfilling the plan, in the second stage 80% salary + 20% bonus from fulfilling the plan, and so on.

Game moments

KPI indicators do not necessarily have to influence wages. In some cases, game moments can work much more effectively. For example, for completing a plan, you can earn points that can be exchanged for prizes and rewards. Or simply compete between employees or departments.

When KPIs are not needed

There are situations where the cost of a feature exceeds its usefulness. KPIs should not be painfully invented and introduced for each position. For example, a secretary may have a very wide range of tasks, and although we can make a list of indicators, it will include several dozen items. An irrational amount of time and effort will be spent on accounting and control of each of them.

In such a situation, it makes sense to either abandon the KPIs for the secretary, or narrow them down to a short list, selecting only the most basic indicators. Moreover, in the second case, we risk getting a distortion in the quality of performance of duties: an employee can focus primarily on the tasks reflected in the KPI to the detriment of others.

It is also not always justified to introduce KPIs to employees with unique tasks. For example, an engineer is working on a new technology, and it is difficult to estimate in advance how long this or that task should take him, because no one has solved anything like it before.

In these and other cases where the introduction of KPIs is undesirable, it is important to especially carefully consider the motivation system for these employees.

What are KPIs used for?

1. To assess progress in business/company/project development. Here it is important to understand what indicators your company needs at each step and what tasks you set for yourself for a certain period of time. For example, for most start-up businesses that want to sell their product or service, the first KPI can be the number of contacts with customers. Those. how many clients do you need to make first contact with for your business to be successful? Then you can measure the effectiveness of the first contact (conversion) and other indicators.
2. To evaluate employee performance . Everything is simple here - each sales department employee has his own KPIs, for which he is paid a monetary reward. Upon achieving KPI, the employee receives appropriate payment.

Implementation of KPIs

1. Select the indicators necessary for your business. Which will give you insight into how you are growing and developing.

2. The counting system should be simple. Each employee must understand what actions he must perform in order for this indicator to be met. And, most importantly, how this calculation is made.

Some companies have already implemented such a KPI calculation, where an employee in the system at the end of the working day sees the fulfillment of his indicators and his salary at the current moment. In practice, this motivates sales professionals to perform their work at the proper level.

3. Bring the KPI system and their assessments to all employees. This is the most difficult moment, since the implementation of changes is often accompanied by protests from managers. Here the manager needs to be well prepared and think through arguments and counterarguments for his employees.

4. Control. At this stage, your task is constant and planned monitoring of the implementation of indicators. You cannot achieve KPI once and then forget about it until the end of the month. Indicators need to be checked every day, week and month. Discuss them with employees, teach them how to perform tasks correctly so that staff can achieve these indicators.

Still from the series "Sherlock", dir. Paul McGuigan

How to organize effective work of the sales department?

To organize the effective work of the sales department, it is necessary to take on a number of additional work, since it is not measured only by the profit received. Generating income is the main, but far from the only goal, so you need to set key indicators both for the department as a whole and for individual specialists.

Below are some key indicators for sales department specialists to perform and evaluate the effectiveness of their activities:

1. Fulfillment of established plans for sales volume in monetary or unit terms
   is one of the main indicators showing how effectively the work is organized. The success of the entire enterprise depends on this, so the analysis of the indicator comes first.
2. Conducting a cross-section of knowledge on the goods or services being sold,
   as well as auction offers, allows you to assess the awareness of sales specialists, as well as direct them to additional training if any gaps are found.
3. Feedback
   is an indicator aimed at studying the time that has passed from the moment the client contacted until the response from the specialist. It is necessary to set certain time frames, since long delays can lead to the buyer leaving for one of the potential competitors.
4. Quality of processing of the client base.
   To improve work efficiency, the sales manager is provided with a plan for the amount of expected profit or the number of attracted clients. Otherwise, expenses for marketing activities, maintenance of specialists and other needs may exceed the income received.
5. Using social networks
   to expand the customer base and sell more products.

Today, all large companies use the Internet to increase the efficiency of their own activities; thematic forums, websites and groups are created on social networks, where up-to-date information about products and ongoing promotions is published, and communication takes place between sales department specialists and potential buyers.

Additional KPIs in the sales department

Accounts receivable. This is the ratio of the amount of money not paid on time under contracts to the amount of shipments of goods/services to the client.

In practice, the job does not end with the ability to sell a product to a client. Another question arises: how can I receive payment on time now? Working with accounts receivable is also a mandatory job for every manager and head of the sales department - constant monitoring of payments, calling clients, communicating on timely payments.

System clients (rare and important indicator). The percentage of the total number of customers that make regular purchases from the company. These customers are often the financial core of the company and provide it with a constant flow of money that the owner can count on strategically. It is this indicator that is important for a manager to work on - to increase the percentage of such clients. The percentage depends on the area, but from my own experience I will say that the optimal is 35-40%.

Of course, this indicator is suitable for businesses where there are repeat sales. And especially for the B2B sphere.

Level of customer service. Here you can measure the famous Net Promoter Score (NPS) by surveying your customers and getting feedback from them. This indicator is characterized by the extent to which the buyer is ready to make repeat purchases and is willing to recommend your company to other potential customers.

How to evaluate the obtained indicators

KPI system indicators are assessment tools used by managers at different levels.

To obtain an objective assessment that reflects reality, it is important to measure the following characteristics of business processes:

1. First of all, the positive result obtained and its compliance with expectations are checked.
   This result of activity can be revenue, profit, number of customers, or reputation of the enterprise. Among the alternative options are the competence of personnel, quality of goods, market share of the company, production volume, number of products sold.
2. A positive result is compared with a negative result, side effects are always inevitable.
   These include: the number of defects, accounts payable and receivable, staff turnover, the number of lost clients and other negative factors.
3. Costs of material and intangible resources, expressed in monetary terms.
   The time spent on the work is also determined, after which the indicator reflecting the expenditure of resources and time is compared with the positive results of the activity.