Friday, August 21, 2015

HOW TO BUILD KPI?

This is a very interesting topic.

KPI = Key Performance Indicator

KPI indicator is essential in order to measure ones performance at work. How to build it?

1. Supervisor and subordinate are to sit together brainstorming on the KPI.
    - Essential to reach mutual agreement on the KPI.
    - Another option, supervisor could build the KPI first than discuss it with the subordinate.

2. Focus on the subordinate's main scope of job.
    - This is essential because the KPI aim to look if the subordinate is getting better at their job.

3. Aim to improve the subordinate's performance on that scope of job.
    - Rate the performance, for example from poor to beyond expectation.
   - Timely bound. Basically the KPI is build at the early financial year of a company. Different company might have different financial year. Some might start from January-December, other might start from March-February.

4. Once the KPI is mutually agreed between the supervisor and subordinate, it is subordinate responsibility to achieve the KPI. Do best at job within stipulated time (a year). When it reach a year, supervisor and subordinate will sit together to discuss/ evaluate on what the subordinate have achieved/ improved within the stipulated time. Basically, good or bad at achieving the KPI will determine your bonus (especially at private sector) and any other related thing.

Here is the simple example:

Job: Retail Executive (Head of Office)
Main scope of job: Receiving goods into system
KPIs: 
1. How soon to finish receiving goods into system? 
2. If there is any discrepancy, how long to solve? 
3. Is there any mistake occurred, how frequent? 
4. The tidiness of the office? 

However, the way to rate the performance is not same for all KPI. 

For example, Rate 'how soon to finish receiving goods into system?' by indicate it from poor to beyond expectation is not relevant. Rate it this way: 1 day, 2 days, 3 days, 4 days and 5 days might be relevant. The same rate is also relevant for 'if there is any discrepancy, how long to solve?' 

The relevant rate for 'is there any mistake occurred, how frequent?' might be once in several months, once in a month, once in 3 weeks, once in 2 weeks, once in a week.

For 'the tidiness of the office', the relevant rate might be poor, weak, moderate, good, beyond expectation.

Rating level must be relevant and transparent in order to be use. Thus, it is important for the supervisor and subordinate to have mutual agreement on this.


* Correct me if I'm wrong because this is based on my experience.