How to set your team’s KPI
Good KPIs must be relevant, focused, and measurable. Here, I share my simple framework to arrive at these goals for everyone in the team.
Outline clear job distinctions between the most junior and senior member of your team
When drafting your team’s KPI, always start from the bottom-most position you have in the team. Most positions within a team are formed as below:
You may choose to treat interns and juniors the same, as I tend to. After all, interns are junior associates who are really only here for a short term.
Now think of the lowest level. Operationally, this is where people learn how to do the job, whereas the highest level, the lead, is for people who can guide them at their jobs. The positions mentioned above are the two extremes and the differences in expectations are very clear and distinct:
- Juniors tend to require more learning and can be less skillful at their jobs. They should be able to do some work but you can’t expect perfection.
- Leads tend to be expected to do more guiding and are generally very skillful at their jobs. They should be able to work independently and reliably most of the time.
Keep the KPIs to a minimum and truly focused
Now start drafting the KPIs for these two extreme levels based on your expectations and nature of the work. The following example is closely related to software engineering but can be insightful to any manager.
- Implementing functions - Of course, essentially you’ve hired this person to write code. You should expect him to write code but on a low level such as specific functions and classes.
- Demonstrate passion, hunger to learn and want to improve - This person has to grow at some point, if you don’t see a motivation to grow then he has to go. Hence you need to measure his enthusiasm towards learning.
- Interpersonal skills and communication - As a fresh graduate or an intern, this person has little to no idea of how to communicate in a professional setting, how to write good emails, how to report his work to you as a manager, when to ask for help etc.. so you need to make that a requirement for him.
- Implementing features - Again, you hired this person to write code.
- Maintain the source code - This is your most senior engineer, you’re definitely expecting him to own and take good care of the code.
- Demonstrate teamwork agility and openness - This person is your right hand man. He should be the one leading your team. If he doesn’t lead then your team will grow apart.
- Demonstrate good leadership - you’ve spent a lot of time teaching and guiding this person, you expect him to lead and guide others below him.
Notice how I have limited the KPIs to 3 to 4 goals (can potentially grow to 5). Try keeping the number to 5 or below in order for people to be able to truly focus on their KPIs, and realistically have sufficient time to complete most if not all of them. Having too many KPIs will just confuse everyone.
Types of KPI should match the job description
KPIs should first be drafted in the context of the job description. Your main goal should be to benefit the organisation and carry out the workload in order to sustain the business. Hence, the most essential KPIs should relate to the nature of the business e.g. implement features for software engineers.
Financial KPIs do not sit well with engineers especially when they don’t have full control over product requirements or sales numbers. The only task that is within their control is to create high quality, well-planned codes that will hopefully translate to dollar value. However, if you operate from other parts of the organisation, you may add financial on top of these operational KPIs while keeping them equally targeted.
Once you’ve covered the core business objective, you can then start drafting KPIs related to growth. Growth can be business-related but it can also be personal or career-related. Things like communication, soft skills, leadership and teamwork - all of which are aspects that drive an individual to improve.
Lastly, you may include bonus KPIs that would gauge people’s willingness to go the extra mile. Note that not all organisations practice such KPIs. This includes cultural KPIs such as inter-departmental collaboration and ancillary activities such as hosting webinars or conducting trainings.
Note that all KPIs should be closely related to the nature of the business. For all the KPIs covered above, you may assign different weightage to them depending on where the business stands. Startup KPIs are highly focused on growth, whereas enterprise KPIs are more focused on sustainability and innovation.
Start filling in the gaps
Once you’ve figured out what KPIs matter to you and your business for the two extreme levels, you can then begin drafting the in-between levels. For mid-level associates, you may want to dial up the responsibility or complexity in their KPIs using the junior KPIs as a baseline. Instead of writing only functions, you expect them to write features, and instead of measuring only their communication skills, you start measuring their team-playing skills as well.
Similarly, for the level below the lead i.e. senior, you can draft their KPIs by dialing down your expectations of them. Perhaps asking a senior to write code perfectly may not be feasible yet, however, you should at least expect seniors to write good code that complies with your standards, along with proper documentation and test cases. Asking a senior to lead the team is a bit of a stretch but you can expect him to demonstrate some traits of leadership that indicate whether or not he’s ready to move to the next level.
Measure these KPIs quantitatively
By now, you should have a complete list of KPIs for all levels. The final piece of the puzzle is to review your drafts and ensure all points can be quantified and measured.
Some straightforward KPIs can be easily measured e.g. complete all sprints on time without spillovers. Your success criteria can be defined as 25%, 50%, 75% and 100% of the time. Other KPIs (most fall in this category) are much more subjective in nature and don’t generally make sense to be measured in percentages. Here’s a quick formula that you can use to quantify such subjective KPIs.
- 25% = Not able to do (No no, can’t do)
- 50% = Can do some, but needs a lot of hand-holding (Errr.. maybe)
- 75% = Can do a lot, with some hand-holding or guidance (Yes, but..)
- 100% = Exceptionally great. Can do without guidance (Of course)
Take a leadership KPI, for instance:
Demonstrates strong leadership skills and guides others
Not able to lead or guide anyone.
Able to lead some team members but requires a lot of coaching 50% of the time. Seeks for help almost all the time.
Able to lead most of the team members and require little guidance. Knows when to seek for help.
Able to lead the entire team independently. Requires little to no coaching and guidance. Knows when to seek for help and is able to demonstrate results.
Finally, make sure these KPIs are clearly understood by the team members. Spend some time with your team members to explain how and why their performance is being measured as such.
It’s important to seek their feedback too. KPIs do not move in a single direction, cascading from managers to subordinates. The team members have a say too in what motivates them. The least you can do as a manager is to ask them if they are agreeable to the KPIs assigned to them.
When the time comes, be objective and fair to everyone. Evaluate on a case-by-case basis and make sure you provide your feedback to your team so they know what they should maintain or improve the next time around.