KPIs are a way of measuring personal performance. This post explores their limitations and benefits, and suggests methods, combinations and usage.
Evaluating the performance and progress of the individual is as important as assessing those of the team or company. However, there’s no quick answer on how to measure these factors efficiently. Including simple metrics indicators, such as the number of bugs logged or % of test cases run, have their limitations and side effects which will be listed below.
What is a KPI? Benefits and restrictions of using KPIs
When you set out towards your goal, you’ll need signposts to mark where you are on the route, until you’re established enough to deviate from the charted course. Performance indicators are these signposts on your working path, which can serve as a way to monitor and control your progress and are also helpful to direct efforts towards the defined areas.
These indicators are often known as Key Performance Indicators (KPIs), and are used in the Performance Evaluation process as a tangible part of a person’s Career Development Plan (CDP). KPIs are a measurable value that can show how effective certain activities are in helping you to achieving your goal. They help to evaluate progress towards key objectives set for a person and should be regularly revisited and reevaluated to maintain consistent and relevant improvement.
However, several points need to be considered. First, it’s possible for certain types of metrics to be manipulated. For example, introducing a ‘Number of bugs logged’ as a KPI would lead to an increase in reported bugs to the detriment of their quality. These statistical side effects are known as a ‘measurement dysfunction’ (refer to “Measuring and Managing Performance in Organizations” by Robert D. Austin). So, you need to be very careful in selecting KPI, as, in the end, you’ll get what you measure.
Additionally, if personal KPIs affect the reward directly, employees start to compete with each other in reaching personal metrics, which can be less efficient than them trying to achieve the common team or business goal. At the same time, without metrics, the evaluation of the employee’s progress would become too subjective. Thus, we have a challenging task of using measurements that are objective and specific, to encourage the right activities and relevance to the goals of the business.
How KPIs are used
If we refer to KPIs as guideposts that light our way, keeping the end goal in view, then defining the KPIs should start with stating the key objectives. There can be several types or levels of them.
One type is business goals (the goals of the company / product / customer).
Another one is personal goals, e.g. the goals listed in the Career Development Plan.
Ideally, the KPI should be consistent with the goals of both types, and should be a task of the manager to show how a carefully selected KPI can help in reaching personal goals that are also stated in CDP. In other words, if you are a manager, you should find a way to map business goals that you see as key for the employee with his or her CDP.
Another source that can be used for KPIs (along with Business Goals and CDP) are KRAs – Key Responsibility Areas, or Key Result Areas – i.e. the responsibilities which are expected from an individual fulfilling a certain position. KRAs generally describe an area where the results are expected. They are usually derived from the job description or requirements of the current position, taking into account project, team and organization needs. KRAs are usually based on the business’ values and should be consistent with them. So, KRAs can help you in formulating the key objectives of the employee.
After the goals have been defined and stated, you are ready to set the KPIs. Decide how you will determine whether the desired progress is achieved for the selected objectives in a set period of time (usually 3,6 or 12 months). Develop a criteria that is measurable and achievable.
Tips for effective KPIs setting
To use KPIs effectively, several rules of thumb need to be kept:
1. Tie your KPIs to the key objectives. Basically, each KPI is just a reflection of a key business goal, and that’s what it should remain.
2. Make your KPIs SMART (and even SMARTER). Once you have outlined each KPI, verify that they satisfy each of these criteria:
- Specific
- Measurable
- Achievable
- Relevant
- Time-Bound
- Evaluated
- Reviewed
3. Pick KPIs that are relevant to personal goals and CDP, so that the individual feels personally responsible and interested in reaching those KPIs.
4. Select just a few goals that are really key for the context of the company, product, project and employee.
Examples of the KPIs
The evaluation of an employee’s input, progress and performance shouldn’t rely solely on numerical metrics, as they can’t provide the full picture. The most essential and informative sources of information are regular communication (including one-to-one meetings), feedback from other stakeholders and engagement from the manager to the team/project activities. Also, it is important to keep focus on the team- and project-level KPIs to evaluate the total performance, which is not equal to the performance of all team members summed up.
Based on this, I would suggest the following example of KRAs and KPIs as a part of Performance Evaluation for the upcoming period.
* Column 1 contains KRAs relevant to the business goals and CDP.
Column 2 contains examples of general criteria that could be used to evaluate the progress.
Column 3 contains more of the figure-based KPIs for this KRA, which I’d use very carefully in order to avoid them being gamed and misused.
| KRA | General KPI criterion | Example of more detailed/ measurable KPI for this area |
| Proactiveness in following-up issues | Action taken on issues raised to QA team | Number and complexity of tickets assigned / Total number of tickets that need follow-up |
| Feedback from Testing Team Leader and other stakeholders | ||
| Initiative in maintenance and updating the testing documentation | Suggestions and practical actions to keep the documentation updated | Number of test artifacts updated/ Total number of test artifacts that need review or update |
| Quality of test cases created | Coverage of requirements by test cases for the given functionality item/user story | Number (%) of uncovered requirements detected on the review phase and during the execution of test cases |
| Conformity of created test cases with the standards used by the project/team | Number (%) of unconformity issues detected during review or execution of test cases | |
| Feedback on the maintainability and ease of understanding of test cases from the colleagues | ||
| Contribution to the testing community of the company | Suggestions and actions as to the development of the testing community | Carry at least one knowledge sharing meeting for the testing community inside the company by the end of the quarter |
| Feedback from the community on performed activities | ||
| Being responsible for the testing of the key functionality of the site (a branch project) | Quality of testing of the defined functionality | The number of Critical and Major post-release bugs found in production within the defined functionality |
| Regular test results and reports concerning the defined functionality are provided to the Testing Team Leader in a timely manner | ||
| Mentoring of the newcomers (junior- to middle-level specialists) | Introduce the newcomers to the project, provide them with basic training and share knowledge on the product and process | The newcomers are able to carry basic testing tasks on the project without supervision after 2 weeks of training |
| Feedback from the newcomers and Testing Team Leader |
You can also use weight coefficients for the KPIs if you feel the need to. Some managers use weightage to balance the type of skills, e.g.:
Technical Proficiency – 60%
Soft Skills – 30%
Project Management Skills – 10%
Conclusion
KPIs as a way to measure individual performance have their restrictions and benefits. Used carefully, within context and in combination with other methods, they can be an effective and convenient tool to evaluate individual progress and performance.
