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TRG in the Board Room Blog

KPIs - the key to identifying your top performers

Posted by Huy Tran on

Top performers are those who work consistently, positively, proactively and flexibly. They align personal goals with professional goals and take the toughest assignments as challenges or opportunities. Much has been written about the characteristics of a top performer, which can be found easily with a few clicks on Google. But are these findings practical? We must say, not much. They might help you paint a portrait of a top performer but how you are going to apply it for your business remains unanswered.

The first step is always critical; if you make a wrong move in recognising top performers, your effort would go nowhere. Hence, we cannot let gut feelings or vague criteria take over such important evaluation. Instead, the key to identifying top performers is to be quantifiable and objective.

Top performers are those who meet or exceed the pre-defined targets for their job within deadlines and the number of them ideally takes up 20% of the current incumbents at that particular position.

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“What if my company have more than 20% of the current employees as top performers?” many of our clients had this same question. Let us tell you the truth: if you identify, for instance, 50% of your employees as top performers, either your targets are too easy to achieve or your performance data has a problem. Neither means a bright future.

“What if we have none or less than 20% of the current employees as top performers?” This question is just another form of asking “How do we know which employee is doing well?” or “We do not have any ‘good-enough’ employees. What can we do?” Our diagnosis is either your targets are too hard or too unrealistic to achieve or, again, your performance data has a problem.

These two scenarios generally take place when the company does not really know how to set up an effective benchmark to measure the employee performance. As you may have known, it will hamper employee satisfaction, engagement and retention. To sustainably develop your organisation, you must know how to successfully spot your top performers. What you need to be meticulous with are the Key Performance Indicators – or KPIs.

Key Performance Indicators – Objective and Effective

Assume that you have finished setting up KPIs for a particular position and they might be elegant. But unless they help the organisation achieve its strategic objectives, they are a failure. Are you confident that your KPIs are doing a good job? Take a look at a survey by TDWI Research on 271 organisations deploying a KPI initiative. Nearly half (47%) consider the impact of KPIs to be only moderate while just 31% of the organisations say that their KPIs have changed behaviours and improved performance. Therefore, it is essential that we discuss how to build effective KPIs.

To what degree have your KPIs changed behaviours and improved performance in your organisation? 

Figure 1: To what degree have your KPIs changed behaviours and improved performance in your organisation?

(Source: TDWI Research – Performance Management Strategy, 2009)

The fewer, the better and the more drillable

When it comes to the number of KPIs to deploy, it is usually advised that less is more as most people can only focus on a maximum of from five to seven items at a time. Obviously, organisations have to take the time to discuss and create KPIs that embody their strategic goals or represent the performance of an entire department, but concentrating on a few KPIs help the users understand exactly the behaviours they drive and if necessary, fine-tune the KPIs to produce better results.

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However, even though the number of KPIs should be limited to the range of 5 to 7, you need a lot more to monitor processes. This seems to be in conflict with the previous idea but it turns out not. There might be a few KPIs that represent the organisation’s strategic goals but these can be cascaded to other “from-5-to-7-item” KPI sets for departments and each departmental KPI can be drilled down to KPI sets for each role. Therefore, within a performance dashboard, users at different levels can easily view the KPIs and dig into a particular KPI at deeper levels to see its effect on the bigger KPI.

Key Performance Indicators - Understandable and Actionable

KPIs are usually created by the managers but applied for employees. Thus, it is imperative that employees know what are being measured and how the KPIs are calculated. Carry out training for the employees to make sure they understand the KPIs’ target and concept. For example, there are KPIs in which a high score indicate a positive result but the same high score in another KPI might show a negative performance.

Also, employees need to know what to react when KPIs move downward or upward. Don’t leave them clueless when a problem happens. Instead, organisations should empower their employees to take action and managers need to be trained to delegate and coach their subordinates to take the right actions, not to penalise them as the employees are those who can directly influence the outcome.

Key Performance Indicators - Correlated and Balanced 

It is important that KPIs impact performance in a proper direction. The effect of KPIs changes over time due to many factors such as internal operation, economic situation and competition; and since KPIs are not “alive” for infinity, they should be evaluated periodically to sustain progress or modified to reflect better the current direction. However, it is the balance and alignment between the KPIs that you should take good care of. Within a KPI set, there is the possibility that a KPI may drive behaviours in an unintended direction, which urges for a second KPI to balance but not to weaken the first one. For instance, for a telemarketer, the number of calls per hour is a critical KPI, which might make the telemarketer make as many calls as possible without any care about quality. Hence, it is necessary to introduce a counterbalancing KPI such as customer satisfaction or call resolution ratio to maintain the effectiveness without undermining long-term goals.

Enhancing the organisational performance is such a long journey, in which the first step is to understand that to work towards that destination, who you are really looking for: Top performers. And with the utilisation of a concrete set of KPIs, the preciseness you put in this first single step will gear you up for the long journey ahead.

And since you know about KPIs, its relationship with goal and target and how to create effective KPIs, you shall be able to categorise your current employees at particular positions in order to identify your Top Performers as objectively as possible.

The next step is to duplicate your Top Performers to improve productivity in the organisation. Subscribe to our Blog to find out how.

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