The HR operation and their responsibilities are continuously increasing day by day. The evolution of the HR industry was relatively slower but since last two decades and especially the last eight to ten years have rapidly transformed the HR industry. This also created a lot of opportunity to introduce technological solutions to meet the modern day demands and expectations. The HR department in every business or organization is a key player in the success. It is their responsibility to hire right staff, maintain their motivation and growth, and keep improving their performance and skills to enable them to deal with the challenges of future. For that the HR department implement various strategies and methodologies, sometimes the technology is also deployed to enhance the impact and capabilities of the HR department. Here in Dubai or anywhere else in UAE the markets are very competitive, the job opportunities are in abundance and it is very difficult to keep employees engaged and motivated to achieve higher performance and to reduce the employee turnover rate.
In this blog we will discuss the KPI System and what features or tools you must have in KPI system to make it most impactful for your HR department and for your overall organizational performance.
What is a KPI System?
The KPI stands for Key Performance Indicators. By definition the KPI system is a system devised to monitor, measure and track performance in form of a measurable and quantifiable metricsfor a specific objective over a pre-defined period of time. The KPI system provide targets and set goals for individual employees and teams, it provide milestones to track progress and it also provides valuable performance insight data. The UAE is a very competitive market where the market trends and customer demands are always changing, in fact an ordinary customer in the country is more tech savvy than anywhere else in this region, which means the businesses will have to ensure great service, quality products and satisfactory customer experience. Regardless of your business type, whether you are a B2B or a B2C business or you an entirely online-based business, the customer satisfaction is a key to success. That can only be achieved when businesses utilize their resources at maximum potential and achieve highest efficiency and productivity. That is what makes KPI system so crucial and necessary for any business.
What is Performance Management and what is the Role of KPI in it?
Every business or organization have a long term vision, under the directive of that vision businesses set their goals, and as per high-level organization goal, managers set goals and strategic objective at individual, team and even department levels. In order to achieve the goals all objectives and milestones should be achieved and to do so managers make plans device strategies and assign tasks to maximize the outcome of whatever human and non-human assets they have in hand. But how one can ensure the optimum level of efficiency and productivity is met in order to achieve the goals from individual level to all the way up to organizational level. The performance management is the answer to all those questions. A performance management system is a complete framework based on technology solution and methodologies which measures and monitors performance of the employees in a regular and measurable manner. The performance management sets expectations, assigns goals, help improving various business processes and communication and it also help identifying flaws and road-blocks preventing your employees from performing well.
However, the KPI or key performance indicator is a tool which measures the actual performance and without it neither manager nor the employees can understand if the performance goals are met or not and if the progress is in right direction or not. The KPIs provide a scale to measure the actual efforts of the employees and assess the outcome they produced during a certain period of time. The goals are relatively broader outcomes, it is the KPIs which provide a comprehensive framework to measure the performance and progress in quantifiable manner. For example, if an organization have a goal to improve its finance, then they must have to focus on new sales and recovery of pending payments. Traditionally these two are handled by two different departmentshence two different KPIs will be assigned to teams to ensure the broader outcome achieve your goals. The KPIs can also be modified or completely changed during the performance cycle to ensure the high-level organization goal is achieved. That is what makes KPIs essential for performance management.
Features of a Best KPI System to Strengthen your HR Department
When it comes to the features of a KPI System, there are two different aspects, one is the features based on the capabilities of the KPI system which means what it can monitor and measure and the other is the technical aspects, such as the technology used to develop the system, the system implementation methods, and other such specs.
Features of a Best KPI System: Functionalities
From the functionality stand point, the most important is what a KPI System can measure and how user-friendly it is. This will determine the impact and usefulness of the KPI System. Here are the core functionalities that make a KPI System best fit for modern businesses:
- Absenteeism or Employee Engagement:The absenteeism rate is a great indicator for employee engagement, it is measured as the percentage of the total working days of the entire staff/workforce. If it is higher than the all-time high then you must investigate to find and rectify the problem.
- Productivity:The employee productivity or effectiveness is a very sophisticated and a multi-dimensional concept. Usually it measures the number of sales and number of saleable products produced by the employee, but it includes several other factors such as availability, quality, employee working time, the number of delivered product, etc.
- Employee Satisfaction:The employee satisfaction is usually associated to salary and financial benefits, however, that is not all. The organizational environment, work-life balance, flexible working model, and corporate culture, etc. have a vital role in employee satisfaction. The NPS (net promoter score) feedback is a great measure of the employee satisfaction.
- Employee Turnover Rate:Another great metric to measure the success of your retention efforts is to measure employee turnover rate. The low turnover rate is always good and it shows employee satisfaction and success of your employee retention efforts. It also help HR to plan for talent replacement.
- Training Cost: The employee training cost is a great measure of understanding how much you have spent on onboarding, training and upgrading the skillset/knowledge of your employees. A short knowledge test could help you evaluating the training program which is very helpful to make employee development strategies for future and making other smart decisions.
- Workload/Overtime: The overtime hours will always be very helpful in understanding the workload of your employees. The overtime or workload metrics will tell you the effectiveness of your operations, process and even resources and it will also help you preventing and rectifying the impact of permanent long work hours, as it is bad for motivation, morale and productivity.
- Hiring Cost: The hiring cost or cost per hire is a very important HR metric and it measures the amount of resources you have invested in finding the best fit for your each need. The hiring cost includes everything from advertising and onboarding cost to the time spend by other stakeholders in hiring the new employee. Higher hiring cost always indicates problems.
- Employee Rating: The employee rating or talent rating is a very important KPI for the HR department, it will help evaluating the employee quality and help HR department to highlight flaws in their recruitment processes and mechanisms. The individual employee evaluation, rating and quality will also help you identify the deficiencies in your workforce.
- Turnover Rate by Employee Group:The turnover rate by employee group is a very simple and straightforward KPI. It tells if any particular group of your workforce is unhappy and it measures the voluntary leave in percentage. For example, people from the IT departments, or people belongs to a particular age group, etc. have high turnover rate.
- Employee Dismissal: The employee turnover rate can have multiple factors, such as resignation, expiry of contract, retirement, resignation, and several other factors. It will help you identify different aspects of employee turnover and if the employee dismissal is due to in capacity of full filling their job then the recruitment process should be improved to avoid such incidents.
These are some of the most important and essential features of a KPI System. Obviously these features and KPIs are not limited to the above list, but if a system have all above mentioned features then you can confidently say it would be very helpful in achieving your HR goals and objectives.
Features of a Best KPI System: Technical Specifications
A good KPI System must have sufficient technological advantage to ensure your success. There are several factors that you should consider while developing or selecting a KPI System. Here are the most important technical specification which makes a KPI System the best for your business.
- User-Friendly UI: The user interface or UI is one of the most important aspect of any software solution. The KPI System must be design in a way that it meets all the needs of the user and offer them a simplified information structure and functionalities which makes it easier for them to perform required task within the KPI System such as setting up goals, objectives, KPIs, communication, data collection and compilation, analysis and reporting, etc.
- Easy Accessibility: Another great feature to have in your KPI System is the easy accessibility, it should be accessible from both mobile and regular computers and it should also have capabilities to facilitate off-campus employees. Most of the time the employees who are working off-campus are unable to have access to various HR services, which is why it is important to provide them access even if they are working in remote locations.
- Multiple Data Collection Modes: For any KPI System or performance management system the key is to enable multiple data collection modes, it should be able to log all the meetings and their discussions and conclusions, the automatic data collection should be enabled and it should also allow manual data upload/entry features to ensure maximum data can be collected. More data means more accuracy, multiple data collection modes help improving the accuracy.
- Third-Part System Integration: The third-party system integration is an important feature for any corporate tool. The modern businesses and organizations are developed on a centralized information management system and allow data flow between multiple systems. The KPI System should be able to integrate with other business tools, software and system via APIs and enable a bi-directional data flow which will maximize the efficiency and it will help improving various performance management processes.
- Customization & Scaling: The markets in Dubai and all around the UAE are very competitive hence businesses need to gain advantage over their competitors. The best way is to opt for custom software development instead of going for a commercial off-the-shelf software which most probable your competitors might be using too. The customization allow businesses to focus on their main areas of interest and avoid unwanted complexity in the system. The scalability allow businesses to further improve the capabilities of their software over the time and scale it up as per their needs.
- KPI System Deployment: That is a bit more technical rather functional aspect, but it is very important. Businesses and customers are very cautious about their data and any data breach could greatly harm a business by jeopardizing its operations and compromising its reputation. Hence it is important that the KPI System you are implementing should match your IT team’s security requirements and deployment protocols. A good KPI System should be able to deploy in in-premises data centers, online hosting, or cloud as per the needs of the customer. The data protection and security features should be in place to assure privacy and protection.
- Cost & Maintenance: The cost is surely one of the most important aspect of any project, it is important that the deployment, operational and maintenance cost of the system is according to your budget. Furthermore the customized solutions are more superior in terms of offering higher ROI, minimizing the maintenance and operational cost. As the custom KPI System will be exclusively developed for the business hence the ownership rights belongs to the user. It means there would be no monthly or annual fees, and there would be no hefty price tags with the customization, upgrades and scaling up the software solution.
Here I have mentioned some important technical specs and features which you should consider while choosing a right KPI Software solution for your business needs.
Conclusion
The markets in Dubai and all around the UAE are very competitive and the competition is rising day by day. The market is very attractive for new investors and global players in several industries. In such environment if you want your business to thrive and grow you must have to increase your competitive advantage. Your workforce is not only the backbone of your business or organization but it can also help you gaining a great competitive advantage. The prime responsibility of the HR department is to ensure that you always have the right skillset which is needed to complete your next project. In order to achieve this goal, the HR department implement several methodologies, fool proof recruitment strategies and what not. The KPI System is one of the most important tool for the HR Department. It not only help them perform several of their routine tasks, but it also help them evaluate their strategies and processes. The performance management is a key to long term and sustainable success.
The KPI System help HR to improve the impact and scope of their performance management strategy and help them achieving the success which surely translates to the overall success of the entire business. In this blog we have discussed what a KPI System is and what features can make it the best KPI System for your business. If you still have doubts, you can contact us through the comment box below and if you want us to help you design and implement a customized KPI System as per your business needs, please feel free to contact us through our Contact Us page and someone will get in touch with you soon.
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