How to Set Proper Measurable KPIs

Today’s corporations are continuously measuring their employees on their performance and contribution to the overall organisations growth. Going are the days where apple polishing your superiors would ensure a good appraisal for that year. Nowadays, everything is about numbers — more specifically, measurable numbers that can be translated into the organisation’s goals.

As managers, the challenge is to set appropriate numbers for our team members to ensure that:

  1. The organisation’s goals and objectives are reflected in the KPIs
  2. These KPIs can be easily measured
  3. These KPIs are logically achievable
  4. Team members are able to excel if they put in efforts

One of the considerations I make whenever I set a new KPI is to take into account the above as well as setting the target low so as to let my team members know that these KPIs are achievable. 6 months into the measurement, I will then raise the bar so that my team members will not develop the lackadaisical attitude towards the new KPI but rather to push them to better their performance.

Apart from the above, one good practice when setting KPIs is to measure ratios instead of absolute numbers; e.g. profit margin versus profit; growth % versus revenue increase. Ratios are more meaningful compared to absolute numbers and takes into account of relativity.

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1 Comment »

  1. christina said,

    September 21, 2011 @ 2:25 pm

    Thank you for this I am trying to set KPI’s for my in bound sales team and it is so difficult if you have not done it before.

    Good idea to set it low initially and then drive them up to not scare them initially. KPI’s have to be acheivable and examples on past performance is good

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