Key Performance Indicators (KPIs) are specific, quantifiable measurements, agreed upon before implementation, that reflect your organization’s critical success factors. You can use KPIs to compare your business to industry benchmarks, measure your team’s progress, and identify potential needs. They can also be an early warning system for signs of trouble in your organization.
KPIs are part of the visioning process; if you do not make results visible to everyone in your organization, you probably won’t obtain your desired outcomes. They provide focus and direction, and can be a valuable tool to communicate performance.
To maximize the effectiveness of KPIs, you need to ensure they cover your entire organization, are measurable, and are visible.
Business Coverage: KPIs need to cover key departments or functions such as marketing, operations, innovation, human resources, and finance.
Measurable: Some areas can be difficult to measure. For instance, how do you measure innovation or your company’s culture? This is where you’ll want to think carefully about items that can be quantified. Hard data is the key. Could you graph the result?
Visible: If you can measure it, you can graph it and make the results visible. The trick is to keep things simple so that the information is easily consumable and meaningful to everyone involved in the change process.
Once you’ve identified and implemented the KPIs that will drive your organization forward, it is easy to make them a part of your employee reward and recognition programs. These programs can improve retention and productivity, empower your employees, and increase innovation. Many human resources experts believe that rewards and company-wide recognition are essential to keeping top performers satisfied and preventing them from leaving.
Maintaining employee morale is a constant challenge for any company. Making each employee feel like his or her contributions are valued can do wonders for morale and, as a result, your company’s overall productivity. This is where your KPIs can be helpful. They can be used as a tool to clearly communicate progress toward individual, team, and company goals – giving everyone a clear line of sight into how each employee’s role contributes to the company’s success.
This process then feeds into your reward strategy. Recognition itself is a form of reward, and a fairly easy one to put into place. But other company achievements made visible through your KPIs can also serve as rewards. For example, training a high performing team member to become a team leader, sharing financial savings, and awarding promotions are all rewards. You can also offer incentives in the form of cash, performance-based pay, bonuses, or non-cash rewards such as travel, gift certificates, lunches, parties, and awards for outstanding performance.
Creating a meaningful recognition and reward strategy does require some thought. Take care to create programs that truly reflect your employees’ needs and desires. Don’t forget to ask yourself whether the rewards you’re creating align to your business strategies and vision, as well as whether they will drive the right behaviors for your company and your performance goals.
What reward do your project teams or employees deserve for achieving their KPIs?
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