Weight of each KPI
Posted: Sun Dec 22, 2024 9:04 am
Each KPI should have a certain weight. It would be wrong to set 5-6 key indicators with the same priority. The bonus for each will be the same, but very small in the overall picture. Managers simply will not be able to take these indicators seriously.
It is better to establish a certain gradation. 2 indicators will be the most important, 2 more - of average importance, 2 more - the least significant. As the weight decreases, the bonus email database indonesia amount for one will also change.
Weight of each KPI
As an example, we will give 3 main KPIs for a store of large and small household appliances. We are talking about product coverage, number of customers and sales amount.
Incorrect: set the same weight for all indicators. In this case, there is no point for the manager to sell refrigerators and washing machines when he can sell coffee machines and printers.
Correct: distribute KPI weights, for example, as follows: 70% - product coverage, 20% - number of clients served and 10% - sales amount. In this case, employees will try to sell some expensive equipment in large quantities to make a profit.
Transparency
Each employee should be aware of what work and how much bonus they are entitled to, taking into account the recorded KPIs. Then this system will not become something scary for them.
If a company engaged in sales of goods has set the number of deals in the format of telephone negotiations as key indicators for managers, then:
It is wrong to record the number of transactions greater than some established threshold (for example, more than 20) and to reward for this. Employees who have concluded 30 transactions will be outraged by the same bonus as employees with 21 transactions per billing period.
The right decision on the part of the management would be to mark each fact of sale in the CRM and calculate how many transactions are needed to accrue a bonus. You can link the bonus amount to the percentage of excess of the plan. It turns out that each employee of the company will receive additional payment taking into account the efforts made.
It is better to establish a certain gradation. 2 indicators will be the most important, 2 more - of average importance, 2 more - the least significant. As the weight decreases, the bonus email database indonesia amount for one will also change.
Weight of each KPI
As an example, we will give 3 main KPIs for a store of large and small household appliances. We are talking about product coverage, number of customers and sales amount.
Incorrect: set the same weight for all indicators. In this case, there is no point for the manager to sell refrigerators and washing machines when he can sell coffee machines and printers.
Correct: distribute KPI weights, for example, as follows: 70% - product coverage, 20% - number of clients served and 10% - sales amount. In this case, employees will try to sell some expensive equipment in large quantities to make a profit.
Transparency
Each employee should be aware of what work and how much bonus they are entitled to, taking into account the recorded KPIs. Then this system will not become something scary for them.
If a company engaged in sales of goods has set the number of deals in the format of telephone negotiations as key indicators for managers, then:
It is wrong to record the number of transactions greater than some established threshold (for example, more than 20) and to reward for this. Employees who have concluded 30 transactions will be outraged by the same bonus as employees with 21 transactions per billing period.
The right decision on the part of the management would be to mark each fact of sale in the CRM and calculate how many transactions are needed to accrue a bonus. You can link the bonus amount to the percentage of excess of the plan. It turns out that each employee of the company will receive additional payment taking into account the efforts made.