How To Set KPI Goals & Measure Performance For Employees

Step 1: Identify the needs for KPIs goals and performance measures

The most important part of setting KPI goals for employee performance is understanding what they will be for. Since they are aimed to guide and improve employee input. Identifying what each department needs to do and discussing it with them will help shape the KPIs formation. You can schedule a meeting with a department and use data-driven facts to discuss the formation of the KPIs.

Step 2: Get very clear about what a KPI or performance measure truly is

If we want to develop KPIs or develop performance measures that are meaningful, we have to start with a solid understanding of what meaningful means. Too many people mistake the following things as KPIs or performance measures:

• Positive participant satisfaction surveys
• Implement new recruitment system by June
• Employee Productivity

None of these are true performance measures or KPIs, because none of them are clear, unambiguous or quantitative. The first one is a data collection method (a survey). The second is a milestone (an indicator of project progress, not performance). The third one is just some vague and undefined concept that could be interpreted in different ways and measured in even more different ways.

Step 3: Evaluate your existing KPI goals and performance measures 

If you don’t currently have a robust and proper approach to develop KPIs and measures, it doesn’t mean all of them will be bad. Don’t throw out the baby with the bathwater. It’s certainly worth a little bit of effort to evaluate your existing KPIs and measures, so you can keep the good ones and cull the bad ones.

Start by setting up an evaluation framework, maybe even just in a spreadsheet (use this template), that contains the criteria for excellence KPIs or measures. These four steps for killing off zombie KPIs will give you a simple process for the evaluation.

Then, as you gather all your existing measures and KPIs into your evaluation spreadsheet, quickly audit each one to be sure it has the complete essential details that every measure needs.

And bear in mind that it’s never good to have too many KPIs. So if you find that everything that moves has a measure, you might want to add an extra iteration of culling to your evaluation process.

Step 4: Make sure your KPI goals are measurable before you develop performance measures

Have you noticed that most KPI conversation start with someone asking a question like this: “So, what could we measure?” Wrong question. It leads us down a rabbit-hole as we rush to quick-fix KPIs. We end up creating the wrong KPIs for the goals we have. Or we end up with very trivial measures that don’t help us make better decisions.

Meaningful performance measures start with measurable goals. This means that your goal needs to be worded clearly enough and specifically enough that you can imagine how you’ll recognise when it becomes real.

Step 5: Personalize your KPI goals for employee performance

KPI goals for employee performance are meant to help your business. So, it would be suicidal to your business if you generalize or randomize it. As a business, you should have the data and facts to measure your business’s performance towards your goals. With this, you can personalize KPIs that will improve employees’ inputs specifically towards your business goals.

Step 6: Set SMART KPI goals for employee performance

SMART is an acronym for specific, measurable, achievable, realistic and time frame bound. To set KPI goals for employee performance in line with SMART, your goals must fulfil the following:

• Specific: Your KPIs goals for employee performance must be specific. Don’t generalize the KPIs rather, make them target specific areas that need improvement within your business. For example, customer service must increase client satisfaction by 5% in the next quarter.
• Measurable: To keep employees’ input focused on the business objectives, the KPI goals for employee performance must be measurable. Specify what is expected of each department and identify how to measure the progress. E.g the Sales team should close 50% of every prospective deal.
• Achievable: There is no pride in setting KPI goals for employee performance that are unattainable. Set KPI goals for employee performance that are achievable to build confidence in your employees and boost your business. The goal is to take it small and progress consistently.
• Realistic: Having realistic KPI goals for employee performance is important. Understand your current situation and set KPI goals for employee performance that can up your game. Create positive energy by being realistic. For example, if your company earns $300,000 yearly and you set KPI goals for employee performance towards attaining $30 million next year, that’s unrealistic. It would lead to discouragement from employees because their efforts would never be enough.
• Time frame: Attach a time frame to your KPI goals for employee performance. Since they are the guides towards attaining your goals, ensure they are set within a time frame. This will keep everyone on their toes to achieve the set objectives. For instance: improve customers approval ratings from 50% to 60% within the next 6 months.

Step 7: Constantly auditing KPI goals and performance measures

Always revisit the KPI goals for employee performance and judge the progress of your business towards the business objectives set in the KPI goals for employee performance. Constantly audit, edit and make changes to personnel inputs to ensure commitment towards achieving the objectives. Carry out employee competency evaluation and audit the inputs to ensure the business’s best interest is always prioritized.