How to Set KPIs
KPI stands for Key Performance Indicators — essentially, how we measure an employee’s success at work.
From my experience, the most effective approach is when employees set their own KPIs. Here’s how this process works:
Explain the Organization’s Goals
Start by sharing the company’s annual, quarterly, or monthly objectives with the employee. Encourage them to think about how these goals can be achieved within their area of responsibility.Gather and Discuss Proposals
Ask the employee to suggest their own KPIs. Discuss these proposals together, explore the reasoning behind each one, and share your own perspective.Finalize the KPIs Together
Review the final version of the KPIs proposed by the employee and agree on them collaboratively.
If the proposed KPIs are too low, discuss what can be done to raise them. It’s important to talk about why these targets are being set and to reassure the employee that missing a target won’t result in being fired or losing a bonus — fear is a poor motivator.
If the KPIs are unrealistically high, suggest lowering expectations. This helps avoid a situation where employees are chasing numbers for the sake of numbers, which can lead to burnout and disappointment.
In my practice, I’ve actually encountered the second scenario — overly ambitious KPIs — more often. To judge whether a KPI is too low or too high, you need to have a good understanding of what your employees do.
This approach gives employees a greater sense of ownership over their work, making the achievement of results a personal goal rather than just a race to hit arbitrary numbers handed down from management.
