The Very Essence of the KPI Process

Many people who have worked in corporate places may be familiar with the term KPI or KPI process. This is an acronym for Key Performance Indicator — something that is used to measure the effectiveness and performance of an employee. In most cases, this is the most valuable tool in assessing employees whether or not they have worked according to the specifications of the company. Some employers also use or measure core values apart for Key Performance Indicators. However, some companies also believe that performance should be based on actual performance and not on perception of behavior.The use of Key Performance Indicators is important in the development of an individual and the company. These numbers that are measured are what managers use to determine whether or not the activities of an employee are aligned with the objectives of the organization. In most cases, organizations that use KPI as an approach in management are also very particular in coaching employees. Obviously, measuring performance on a regular basis will be futile if the employee will not receive proper feedback on how he performs.The process of measuring Key Performance Indicators is pretty simple. One has to identify what metrics are significantly impacting the performance of the organization in several aspects, such as financial perspective, customer satisfaction, quality, and so on. These things are then translated into metrics called KPIs. For example, there are some companies that need people to be present and a single absence will significantly affect the production or operation. As a result, attendance will be included in an employee’s performance scorecard or KPI. Most likely, this will also incorporate performance based on tardiness. Every occurrence of tardiness or absence will then affect the employee’s status in the organization, and this will also affect his salary appraisal and eligibility for promotion.KPI is an important tool on business performance management. People know that to manage an organization effectively, there has to be numbers. However, there are still those who make the mistake of relying on personal observation, and not on documented and validated performance. This kind of management often leads to biases and the unlucky employees who experience the unjustified judgment of the manager will often be disgruntled and demotivated. On the other hand, using a standard set of metrics as Key Performance Indicators will help the employees understand what is expected of them.Using KPI is the very core of having an organization organized. If employees know how they are being measured and what these measurements are for, they will know how to perform well and why. They will have a clear idea what they need to prioritize and they also know what to achieve. Employees have goals —perhaps advancement in their careers — and an organized management process will certainly help these individuals achieve these goals. If employees perform to the fullest extent of their capacities, the company will not be on the losing end. In fact, the company can very well identify potential leaders in the organization and train them. Personal development is the very core of the KPI process, if one will really think about it.