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Key Performance Indicators (KPIs) are success metrics that help a business define and measure progress towards its established goals. They are quantifiable measurements that the leadership team defines as the critical items that will move the organization forward and highlight areas that are not performing.
As quantifiable measurements, KPIs must focus on true numbers as a way to measure performance vs. the intangible “to be the best at customer service”. Therefore, it is important that you first create a standard or baseline from which to measure going forward. For example,
- A call center may have a standard on the amount of time a customer can wait on hold or how many rings a call must be answered by.
- A sales organization can measure against a sales quota
- Human resources can measure against profit per FTE and turnover rate
- Technology can measure against reducing labor hours
- Manufacturing can measure number of units rejected.
Bottom line, the target needs to be clear enough so everyone understands what they are being measured on but realize many things are measurable so you want to make sure to select measurements that are key to the organization’s success. So I recommend no more than five for the overall organizational health and each department or area will have three to five under that.
When defining KPIs first think about:
- What specifically you want to measure – including baseline or standard
- The calculation to measure in specific units or dollars
- Target you would like to achieve.
KPI: Employee Turnover – The total number of employees who leave the company for any reason: Termination, resignation vs. count at beginning of year
Calculation: Total # of employees who left divided by the total number of employees at beginning of year
Target: Reduce Employee Turnover by 5% per year.
Once you have good Key Performance Indicators defined, you can use them as a performance management tool to drive performance throughout the organization. KPIs give everyone from the leadership team down to the rank and file, a clear goal and picture of what is critical to the organization and what they need to do to make your business accelerate. Create a culture around KPIs, train on them, engage employees in conversations about them and make them visible to the entire organization.
Is your business losing money because of the tools your staff is using?
Ergonomics is the practice of fitting tools and jobs to people to prevent injuries caused by repetitive motion, awkward posture, force or vibration. Musculoskeletal disorders (MSDs), such as tendonitis, and repetitive stress injuries (RSIs), such as carpal tunnel syndrome, cause aches, pains and distress for workers and employers alike. Read the rest of this entry »