To manage work, work progress effectively, accurately and clearly, we cannot rely on emotions but need to build accurate measurement indicators based on a common goal. . KPIs are indicators that measure efficiency and work performance against a common goal to help managers capture work progress, find mistakes, and effectively solve them.

I) What are KPIs? Two types of KPIs you should know

In modern human resource management, KPI is a matter of special concern, which has been applied in many large enterprises. So, what exactly is a KPI? How to build employee KPIs effectively with the aim of fairness and transparency to help promote the overall development of the business more and more strongly?

1 – The concept of KPI

KPI is an indicator that measures the performance, efficiency, and quality of work performance of each individual or the whole enterprise. KPI stands for 3 words Key Performance Indicators - Indicators for evaluating job performance. Looking at KPIs we can clearly understand what a company, a business unit or an individual is doing and how the actual results compare to the set strategic goals.

2 – Two types of KPIs that you should know

Due to different job characteristics and strategic goals, the KPI system is also extremely rich, for different organizations, businesses and industries, there will be different KPI systems, even for each individual. Departments and individuals in the same company will also have different sets of KPIs. However, in general, KPIs are divided into two main categories: KPIs associated with strategic goals, KPIs associated with tactical goals.

a) KPIs are associated with strategic goals: KPIs associated with strategic goals are often large KPIs, with direct influence and impact on the operation of the entire company, business or organization. For example, if a business sells products, the main goal is monthly and yearly revenue. For example, the business's revenue KPI must be 2 billion in a month, 24 billion in a year if not achieved. This level will cause the business target not to be achieved, or suffer a loss, which has a great influence on the operation of this business.

b) KPIs associated with tactical goals: Tactical KPIs are KPIs that are applied to implementation tactics aimed at implementing the previously outlined strategy. For example, if an organization has a strategic KPI of achieving a revenue of 2 billion/month, they must implement tactics to achieve the set revenue, for example, increase likes, views on fanpage, website, so KPI likes need The achievement will be 5k likes/page/month and 50,000 website traffic/month…

II) Find out what is the process of building a KPI system?

Although KPIs for each industry and business have essentially different common goals, the KPI calculation process of each company and organization is also applied with different processes. However, we will still have common standard processes or frameworks to build a KPI system. As follows:

• Identify the subject of developing KPI

The subject of KPI construction is the person who is responsible for building a set of KPIs for organizations, departments, individuals… It can be department heads, managers, departments, departments... Whoever it is, this person is the same. Must have high expertise, understand the goals and tasks of the organization and the project. At the same time, you must also have a clear understanding of KPIs and how to evaluate what KPIs are in business.

However, to ensure consistency and efficiency, to get a complete set of KPIs, it is also necessary to receive comments from relevant departments and individuals.

• Clearly define the functions and duties of the departments
  The set of KPIs is essentially a measure of work performance according to a predetermined goal, so in order to build a standard KPI system, it is first important to clearly and accurately define what the goal is, the function and the tasks of each department and department to ensure that they stick to the common goals, serving the common goals of the business.
• Clearly define the positions, functions and duties of each position
  By clearly defining the position and function of each department and each person involved, the performance measurement can be accurate, and from there, a suitable set of KPIs for that position or department can be devised.
• Define KPIs
  • Indicators of departmental groups: Built on the basis of functions and tasks of each group or department
  • Personal Indicators: Built based on individual KPIs according to the requirements of SMART criteria:

S – Specific – Specific: KPI needs to be defined and defined specifically, must be directed to an area or element that we need to improve. A KPI with no value is when it is not clearly formulated, does not improve and contribute to the performance of the work.

M – Measurable – Measurable: When a KPI cannot be measured or there are no statistics or performance standards, this means that the KPI has no value. Therefore, KPIs need to be measurable and measurable with reports and metrics.

A – Achievable – Attainable: Enterprises should assign KPIs to departments and employees that can be implemented and held accountable. If you cannot find the person responsible for the job, you should not build a KPI system.

R - Realistics - Realistic: KPIs besides being specific, the most important thing is still to be realistic. Businesses should not set KPIs for employees based on assumptions or beliefs.

T - Time-bound - detailed deadline: When giving a KPI, it is necessary to set specific achievable milestones to complete the work easily and the completion of that work can be assessed. Absolutely do not assign KPIs if employees cannot give a specific KPI deadline.

SMART is considered as the criteria to evaluate whether the KPI is capable of meeting the manager's purpose or not. In particular, the use of KPIs must ensure the organization's mission, vision, and strategies are consistent and the consistency of the general management system at work.

• Build an evaluation period for each specific indicator.
• Clearly define the scoring frame for the results
  Each indicator will have a different score level, depending on the level of completion of the proposed work.
• Measure – Summarize – Adjust:
  Based on the above score frames, managers, department heads... will summarize the total score as well as draw conclusions, and from there make more appropriate adjustments.

Above are the sharing of KPIs, the concept of KPI and the process of building a standard KPI system for businesses that we have gathered from the shared opinions of experts with the desire to contribute a part of the ideas. Useful information for managers in their working process. We look forward to receiving contributions and knowledge sharing from readers to make our treasure of knowledge richer and more complete.