Key performance indicators
Key
performance indicators (KPIs) are precise measurements of an organization's
performance in crucial areas of its business that can be quantitatively or
qualitatively quantified. KPIs can differ by project, department, or company;
they can also be financial, nonfinancial, or each project, department, or
business can weight both and them differently. KPIs are HR-related measures
that have been examined to demonstrate a connection to the organization's
long-term business objectives or essential success criteria
Characteristics of good HR KPIs
According to the diagram above, seven characteristics
of good HR KPIs can be introduced. Let’s analyze those seven factors.
Only
concentrate on a small number of HR KPIs. For a reason, they are regarded as
key performance indicators. Concentrate on the most important ones and
disregard the others. The overall maxim still holds true: the less, the better.
You
ought to be able to get into specifics. Why aren't we achieving our goal for
recruitment costs? What populations require the most money to recruit? You can
more accurately forecast your future performance and identify areas for
improvement by digging deeper.
The KPI must be understood by the users. Simple things
are easier to express and concentrate on.
Because
they have some control over them, HR only concentrates on KPIs that relate to
HR outcomes. Sales and revenue achievement are not HR's responsibility. Only
concentrate on the KPIs whose results you can influence.
KPIs
must have an owner, which is consistent with the aforementioned principles. If
the owner hits the mark, they will be rewarded; if not, they will be held
accountable. A senior member of the management team, such as a manager or
department leader, is likely to be the owner of an HR KPI.
The
KPI has to be connected to the intended result. The HR KPIs must be connected
to these business results when discussing business aims. Hiring higher
performers will not result in cost reductions in the immediate future. Although
it is important to hire strong performers, this should not be your top priority
when the business needs to make cuts to stay afloat. Without really lowering
the quality of hiring, you might be able to minimize recruitment expenditures
by 30%. This is more significant since it advances the company's goals.
Aligned means that KPIs should not conflict with one
another
Challenges of KPIs
· Picking
the right one
When
choosing their KPIs, numerous companies make the mistake of giving best
practices an undue amount of weight. Alternatively, they ask a consultant or
their business intelligence program to make the decision for them. A thorough
examination and understanding of the main operational procedures and business
drivers are necessary for selecting the appropriate KPIs.
· Locating
and collecting the data needed
In
an ideal world, a database would have all the necessary data and the data would
be of high quality. If not, it will take some work to gather the data—possibly
from a variety of sources, sometimes manually—and store it in a way that allows
for easy access and querying.
·
Picking the right software to do
the queries of the data, calculate and display the KPI
There
may be an existing BI tool that many firms must use, but it is labor-intensive
and difficult to use. When it takes a lot of resources, time, and money to
provide, this might hinder management's willingness to measure and monitor KPIs
Benefits of Reporting KPIs to the employee
·
Improve employee engagement and
morale
Individual
KPIs may significantly increase morale, foster responsibility, and enhance
performance. Having a goal to strive towards and knowing at the end of each
month or year that they have achieved it may inspire staff. KPIs are frequently
connected to rewards in some workplaces.
·
Help to set goals and plan
You
must establish a target and work toward it if you want to achieve your overall
company goals. Maintaining alignment and cooperation among various teams or
divisions within a company may sometimes be challenging. KPIs will assist in
dividing the overall goal into more digestible, attainable pieces once it has
been established, allowing you to organize your tactics for achieving it. Once
KPIs are established, they can still be altered. It could be important to
examine and modify them if your reports show that the KPI is never fulfilled.
·
Close learning gaps
Data
is hard to disagree with, so if one person or department is not operating well,
KPIs will highlight this and can assist in determining why. If an employee is
having trouble accomplishing a goal, it can be a sign that they require further
training or direction. This may occasionally be a sign that a worker is not
performing up to par or is not suited for the position. When management and
employees are fully aware of the expectations, dealing with an underperforming
employee becomes a lot easier.
·
Measure performance
It
should come as no surprise that one of the key purposes of KPIs is to measure
performance. Reporting on KPIs will enable you to gauge how close you are to
attaining the overall aim, regardless of whether it is a specific marketing
campaign, a new company initiative, or a sales strategy. A good KPI should be
quantifiable and trackable. Team leaders can choose the tactics they need to
refine by identifying locations where things are not going as planned.
·
Help to make decisions
KPIs
are helpful in informing judgments, but they should not be used as a substitute
for your own judgment. It might be tempting to focus just on one KPI when
evaluating the success of a campaign. On the other side, since some KPIs do not
provide the complete picture, it might be tempting to eliminate them. It is
important to include others in order to fully grasp KPIs and use them to make
knowledgeable judgments
Benefits of Reporting KPIs to the Organization
·
KPIs to Analyze Patterns over time
You
might start to see trends in your data if you measure the same KPIs from
quarter to quarter. These patterns may benefit your business in a plethora of
ways. Perhaps you can anticipate when business will be slow and utilize that
period to do a system upgrade or company-wide training program. Perhaps it is
obvious to you that your sales manager consistently predicts that you will
close five transactions either above or below where you typically do at the end
of the quarter. If you can identify team members who consistently perform below
or above average on their KPIs, you may utilize this information to discuss any
negative or positive repercussions.
·
KPIs to Make Adjustments and Stay on
Track
You
should track your leading indicator KPIs in addition to your present
performance to determine how close you are to attaining your objectives. You
can determine whether you are on pace to achieve your goals using these
measurements. Then, you may modify your plan as necessary. For instance, you
can opt to prioritize marketing initiatives above product development if you
see a decline in sales. Leading indicators have the ability to be measured and
are subject to direct control. They are useful KPIs to have on your dashboard
to maintain the progress of your projects.
·
KPIs to Monitor Company Health
KPIs
serve as an indicator of a company's health. To monitor the vital indicators of
your business, you only need a small number of KPIs. To direct energy where you
want to bring about change, only measure what you wish to move. We have
discovered that it is crucial to track a few KPIs for each of the four areas of
revenue, processes, customers, and employees. The company strategy, customer
satisfaction, business processes, and human resources disciplines cover these
Conclusion.
Any
organization must set, measure, and analyze KPIs, but the process does not have
to be laborious or time-consuming. Integrating your KPIs from your different
tools into a cross-platform analytics dashboard may significantly improve your
results, whether you are using a CRM or an Excel spreadsheet. Teams and
individuals may increase progress and efficiency by having real-time
measurements in one location that update automatically. You can save time and
work more effectively if you have a high-level overview of which metrics need
improvement and which ones are doing well.
References.
Dashboard Fox, 2023. Dashboard
Fox. [Online]
Available at: https://dashboardfox.com/blog/what-is-a-kpi-benefits-challenges-examples/#:~:text=The%20biggest%20challenge%20related%20to,to%20pick%20it%20for%20them.
[Accessed 24 April 2023].
McCabe,
A., 2022. Hurree. [Online]
Available at: https://blog.hurree.co/6-benefits-of-kpi-reporting
[Accessed 24 April 2023].
SHRM, 2023. SHRM. [Online]
Available at: https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/whatarekeyperfindicatorsandhowtheyrelatetothehrfunction.aspx
[Accessed 24 April 2023].
Vulpen, E. . v., 2023. AIHR.
[Online]
Available at: https://www.aihr.com/blog/human-resources-key-performance-indicators-hr-kpis/
[Accessed 24 April 2023].
Wishart, J., 2023. Rythm
systems. [Online]
Available at: https://www.rhythmsystems.com/blog/5-reasons-why-you-need-kpis-infographic#:~:text=KPIs%20are%20more%20than%20the,help%20you%20achieve%20results%20faster.
[Accessed 25 April 2023].
Dear Mafaz,
ReplyDeleteGood explanation,if u can insert KPI research data it would better.
Thanks for your comment Mahinda
DeleteHi Mafaz,
ReplyDeleteits nice topic. KPI for HR is an important measurement that helps in measuring the progress and success of an organization's HR department. they can be used to benchmark HR performance and to identity areas where improvements can be made.
Well said Abhi
DeleteHi Mafaza It is a Essential and Valuable Explanation
ReplyDeleteThank you Srimali
ReplyDeleteKPI is an important component of HRM. Thank you for sharing this with us
ReplyDeleteThank you for your comment Raihana.
DeleteYou Clearly explained about KPI ,KPIs are important for personal growth builds off of the idea of increased morale. Allowing employees to monitor their performance and respond in the moment means that they are more likely to achieve their goals and better understand how to do so in the future
ReplyDeleteThank you for the comment.
DeleteSelecting the correct and effective key performance indicators will ultimately give positive outcome. Thanks for sharing your content with us Mafaz.
ReplyDeleteI agree with you Himani.
DeleteKPI one of stertegic move, KPIs help in Employee Engagement providing accurate and useful data to measure employee Engagement levels,as well as helping to determine how well I inclusion and diversity efforts are working and identifying causes of high rates of turnover and absenteeism
ReplyDeleteExactly Sabry.
DeleteKPI is important to improve the performance , thanks for sharing useful blogs as always !
ReplyDeleteI do agree with you Sameer. Thank for your comment.
DeleteKPIs are crucial in measuring and tracking the progress of an organization or team towards achieving its objectives. However, it's essential to ensure that KPIs are aligned with the company's goals and values, and not just focus on quantitative metrics.
ReplyDeleteI do agree with you Amila.
Deletewell said, Any organization must set, measure, and analyze KPIs, but the process does not have to be laborious or time-consuming. Integrating your KPIs from your different tools into a cross-platform analytics dashboard may significantly improve your results, whether you are using a CRM or an Excel spreadsheet. Teams and individuals may increase progress and efficiency by having real-time measurements in one location that update automatically.
ReplyDeleteThank you for the comment Rally.
DeleteThanks for sharing your information on KPI. Organizations fails to satisfy employees when they do not have a proper KPI sysytem.
ReplyDeleteWell said Bhagya.
DeleteWell explained. Organizations fail when they dont have a proper KPI system
ReplyDeleteExactly.
DeleteGood content. It is very helpful to enhance organisational performance.thank you for new knowledge
ReplyDeleteThank you for the comment Madhumali.
DeleteKPI is crucial for achieving the organization's overarching goal.
ReplyDeleteI do agree with your comment Fazil.
Delete