How to Make Sense of KPIs
It’s funny how KPIs can become so confusing when it comes to measuring performance on an individual level. Say for example, $10 million could be clear as an organization sales target. But in contrast, it would not be so clear for a sales person. It could motivate the sales team to reach that goal but often it doesn’t communicate exactly what a person has to do individually in order for the team to to hit that $10 million target.
不思議なことに、個人レベルの業績を図るとき、KPIがなぜか分かりにくいものになってしまうことがある。例えば、1000万ドルという額は組織の売上目標としては明確なものだろう。だが、それに反して、その額は営業マンにとってはそれほど明確ではないかもしれない。売上目標は営業チームがその目標を達成するための意欲を起こさせるが、チームがその1000万ドルの売上目標を達成するために個々の営業マンがいったい何をするべきなのかを正確に伝えていないことが多い。
At a recent startup conference at Ho Chi Minh, Vietnam, I had the privilege to learn from some very experienced entrepreneurs. One of them is Pawoot Pongvitayapanu who runs Tarad.com, and he shared a little bit about his experience of having his company acquired by Japanese e-commerce giant Rakuten.
Rakuten brought much discipline into his company. He mentioned repeatedly that one of the most important lessons he learned from Rakuten was to set key performance indicators (KPI) and make them understandable and actionable at individual level. So let’s take that $10 million sales target as an example. This organization target could be broken down into groups and then down to an individual level. For example, if John is set to hit $300,000 worth of sales, then what would it take for him to hit that target? To illustrate my point, I have assumed some numbers below:
・His deal/close rate is five percent
・The target per deal is at $10,000
・Each work day, he can speak to a maximum of three potential clients
・Johnの販売契約成約率は5％
・取引ごとの目標額は1万ドル
・1日の営業でJohnが可能な売り込み件数は最大3社
・ジョンの成約率は5パーセント
・契約1件あたりの目標額は1万ドル
・1勤務日あたり、ジョンは最大で3人の潜在顧客と話すことができる
According to the figures above, we can calculate that each month John can pitch a maximum of 60 times. So if he does that, he should be able to achieve $30,000 worth of sales (60 x 5% x $10,000). That means John should be able to hit his sales target in ten months if he works hard enough. With the figure broken down to an individual level, the numbers have now become actionable.
John now knows he is required to make a total of 600 sales pitches to hit his $300,000 KPI for the year. Anything above 600 sales pitches will give him a better chance to outperform his KPI. Most importantly, John can now see in more tangible terms that the figure is achievable.
Johnはその目標から、年間目標の30万ドルを達成するために合計600回の売り込みをしなければならないことを理解している。Johnが600回を超える売り込みをすれば、彼自身のKPIを上回る業績を残せるチャンスは大きくなる。最も重要なことは、Johnが目標数字が達成可能だということを、より現実味のある形で見ることができるということだ。
今やジョンは、彼のKPIである1年の目標30万ドルを達成するため、600回セールストークを行う必要があることを知っている。600回よりもたくさんセールスチャンスがあれば、KPIを超える可能性も高くなる。最も重要なのは、より明確な基準に基づいて目標が達成可能である、とジョンが理解できることだ。
Sometimes, goals are set unrealistically and it could be mathematically impossible to achieve them. For example, if John’s KPI is $500,000, then it’s practically mathematically impossible that he could hit the numbers. Based on his statistics, John can hit a maximum of $360,000 of sales in a year. Of course, along the way his closing rate or sales total could go higher, but from a management point of view, it’s better not to account for those chances.
Lastly, from a startup CEO point of view, breaking down KPIs to individual level can help you understand if you have enough manpower to hit the organization’s KPIs, and that’s a good way to avoid over-promising and under-delivering to your shareholders. The same principle can be applied across all kinds of KPIs which you might be measuring. Good luck!
From all of us here at TechInAsia, we hope you have a Merry Christmas, and that you achieve all your KPIs in 2013!
最後に、ここにいるTechInAsiaの関係者すべてから読者の皆様へあいさつを。すばらしいクリスマスを過ごすことができますように、そして2013年にはあらゆるKPIを達成できますように！
申し訳ありません。訳抜けがありました。「例えば、Johnが30万ドルの売上目標を〜」の前に次の文を追加します。よろしくお願いします。追加文「このチーム全体の目標からまずグループごとの目標を設定し、その後に個人レベルの目標へと落とし込む。」
いつも素晴らしい翻訳ありがとうございます。了解しました。今後ともよろしくお願い致します。