This document introduces Key Performance Indicators (KPIs) and provides details about how to establish an effective KPI system. It defines KPIs as metrics used to evaluate factors crucial for organizational success. It also describes performance plans that outline expectations and appraisals that provide feedback. Additionally, it notes that KPIs and appraisals are tied to rewards and consequences for individuals and inform organizational planning. The document recommends setting clear, measurable targets and encouraging communication to improve appraisal effectiveness and employee satisfaction. Finally, it provides an example of how to establish KPIs at different levels of an organization to meet overall business objectives.

1. INTRODUCTION OF KPI
(Key Performance
Indicator)

2. What is KPI?
 A performance measurement system
used to evaluate factors that are crucial to
the success of an organization.
 Performance Plan: A contract between boss
and subordinate in regards to performance
expectations within a specified time frame.
 Performance Appraisal: A face-to-face
session where the boss provides feedback to
the subordinate on where he / she stands
pertaining to the performance expectations
stipulated on the performance plan

3. What is KPI?
 Individual: The score or the rating on the
performance appraisal is tied to the
organization’s reward, recognition or (even
punitive system); i.e., merit increment, bonus,
promotion, transfer.
 Organizations use the results of performance
appraisals as a basis of manpower planning,
employee development, succession planning as
well as a protection against legal suits from
employees who have been fired or demoted.

4. Why KPI?
 Is it good? Is it effective?
 Does the employee know the company’s goal?
 Are our employees satisfied with the appraisals? Most managers dislike to conduct
appraisal sessions? Why?
◦ Existence of grey areas
◦ Scoring and rating system unclear
◦ Avoidance of confrontations
 What if We make them feel like they are being heard? By…
◦ Setingt a clear target with a specific time frame to achieve;
◦ Encouraging more communication between superior and subordinate;
◦ Transparent rating system to avoid bias or other issue.

5. KPI Metric Flow
Top Management
Setting a Vision
Strategy
Middle
Management to
Set KPI
Execution /
Monitor /
Appraise

6. S.M.A.R.T Methodology

7. KPI Setup Cycle
Top Management
Sales Manager HR Manager Account Manager
Customer Service
Executive
Sales Executive
Sales Supervisor
Sales
Representative
Sales
Representative
Supervisor to set
Sales Representative
KPI





Example:
Business objective/Departmental Goal:
Sales Target 7 million in 2016
Sales Manager to set
the Executive KPI
Executive to set the
Supervisor KPI
Achieve 7 mil

8. Content of KPI
1. Specific Tasks
2. Behavioral / Attitude
3. Department Goals
4. Individual Development Plan
5. Weightage (%)
6. Rating Criteria
7. Scoring System
8. Bonus Score
If Poor Result ~> Performance Improvement
Plan (PIP) Section (Punitive System
Activated)

9. Example
 Example: Business Objective – Increase of Profit
Dept KRA KPI Target
HR
Manpower Arrangement
Recruitment Hiring Successful hiring in 90 days
(Senior Position)
Sales
Sales Recruitment
Sales Growth Sales
Acquisition
Acquire new customer – 6
customers in a quarter
6 sales closing out of 10
quotations
Logistic
Good Customer Service
Customer Service
Support
Goods Return
Customer
Complain
On time
Delivery
Zero return per quarter
Maintain <=3 per quarter
Zero delay per quarter
Purchasing
Costing
Cost Control
Supplier
Management
Find alternative
vendor
Vendor Audit
Score
> 3 or min 3 vendors
> 80% or min 80%

10. KPI Template
 Let’s go to Excel Template

11. THE END