1.

Definition:
To become successful, it is necessary for businesses to set a goal for each
new year. A new year means new goals and typically bigger goals than
the year before.
In organizations, it is crucial to have a good understanding of what is
going on at any point in time. This can take many forms and there are
countless approaches to do this. The implementation of so-called KPIs –
key performance indicators - is one of them.

Do you want to know how KPIs can elevate business success?

KPIs can generally be defined as “specific measures of the

performance of an individual, team or department.” (Law, 2016).
They reflect critical success or failure that can be used to understand
current performance and better prepare for future performance.

A good KPI is SMART: Specific, Measurable, Achievable, Realistic,

and Timely. 

2. Benefits:
KPI quantifies the status quo of a particular thing. It is a metric that helps
identify, measure, report and manage key developments. In business, this
is incredibly useful: KPIs reduce the complexity of many different
processes and boil down what is happening into a single number. This
can shed light on past developments and future directions.

a/ KPIs help quickly understand complex statuses

There are two things many organizations can probably agree on:
efficiency is important, and time is money. KPIs are incredibly useful
for assessing the many intertwining processes and activities going on in
organizations. They can help save time and increase efficiency in
management.

I will take Vinamilk as an example:

In a certain period of time, the production department of Vinamilk must

work efficiently to meet the set KPIs. The measurement criterion is
whether the number of products manufactured can meet the needs of
customers, whether the production level is consistent with the target KPI.

KPI in production of Vinamilk is an important indicator for managers to

be able to combine with other indicators to develop plans suitable to
production capacity, to meet operational efficiency of the company.

b/KPIs can be used to formulate goals and to measure their

implementation
Goal setting is an important management tool. Goals only make sense
when their implementation and progress can also be measured. This is
why KPIs are the tool of choice for goal-setting and progress monitoring:
they help define the steps that are needed to reach particular goals and are
ideally embedded into broader strategic considerations. Some enterprises
in Vietnam has successfully implemented the KPIs to their manage
system. According to an EVN article in 2017,

One of the successful enterprises applying BSC - KPI in Vietnam is

Searefico. In 2005, after undergoing corporate restructuring and
equitization, Searefico developed a business strategy and applied BSC-
KPI in management. After only 2 years, the Company's labor
productivity (profit/per capita) has increased by over 50% and the
Company is officially listed on the HOSE stock exchange.

c/ KPIs provide a sound basis for decision-making

One of the biggest issues in decision-making is bias. This is particularly
evident in the area of management. When properly formulated, KPIs can
help minimise bias and focus on facts and figures. This form of evidence-
based management helps increase the quality of decisions and reduces
uncertainty by managing risks. To fully appreciate KPIs and use them to
make informed decisions, it is best to take others into consideration. Say,
for example, you notice the number of visitors to your website has
dropped substantially. Instead of jumping to the conclusion that you
aren’t creating the right content or implementing SEO techniques, it’s
important to look at the bigger picture such as time
on site,
Google ranking and page views per visit. After
examining these, you might notice that the issue stems from your Google
rank, which has dropped significantly due to spammy backlinks. A single
KPI can be the trigger that a decision needs to be made, but to make the
most informed decision, it is best to consider other metrics. 

1)   Improve employee engagement and morale 

Setting KPIs for individuals can drastically boost morale, create
accountability and improve overall performance. It can be encouraging
for employees to have a goal to work towards and know that they have
met their goals at the end of each month or year. In some organisations,
KPIs are often linked to incentives, such as monthly bonuses being given
to those who secure the most sales or bring in the most revenue. Other
examples could be team lunches, days off or non-monetary incentives
like gift cards or vouchers. Having these incentives can empower and
encourage employees to hit their goals and is a great way to develop a
culture that celebrates and encourages success.