This article is a crosspost from Nuwait.

Key performance indicators (KPIs) is a type of measurement that aims to help human resources personnel manage teams. They rely on many indicators, such as the desired outcome employees want to achieve, how to achieve them and how to measure the effectiveness of their work in progress.

They are also a way of  encouraging employees to set their own targets and measure their progress. Ideally the goals need to be shared with stakeholders, reviewed on a weekly or monthly basis, and checked to see if they are actually achievable. They should also be updated to match employees changing tasks.

To make sense of how KPIs can actually serve employees, especially in small and medium enterprises, rather than forcing a micromanagement approach, we chatted with Talal Almuhanna, who is head of strategy unit at Shiraa, a closed shareholding Islamic company, where he monitors and establishes KPI reports to help in decision making.

They can lead, or lag. Leading KPIs are specific and target-oriented. They often describe the required tasks that are needed to achieve an employee’s goal. They are like inputs. Lagging KPIs are like outputs and they measure the end result.  

There is a difference between evaluation and measurement. Some team members fail to meet their KPIs while others use the same approach and get good results from employees. If you have a well-balanced evaluation, rather than grading system in your company, that matches the company’s goals and some of the employees’ personal goals, and you embrace all of this in a coherent methodology, then employees shall be motivated. In other words, individual KPIs should match the company’s bigger values and missions so that everyone can have a sense of entitlement and ownership.

They are not micro-managing tools. In smaller companies, startups and SMEs, setting KPIs and goals for a small number of employees might be viewed as micro-managing. To ensure this doesn’t happen, you need to show that KPIs are part of the company culture, showing employees their benefits. Your best bet is to educate them about KPIs and commence integrating this management style into their brains and then install the lean management concept, where you delegate and give small span of decision making for smaller employees in the organizational structure.

They don’t require an HR person. SMEs should invest in building best practices in HR from day one, but that doesn’t necessarily mean hiring a dedicated person for that. You can hire or outsource such a service and learn as you grow. In other words, the owners must have the tendency and the audacity to keep on learning.

It’s not about the tool. If KPIs are viewed as an evaluation tool, versus measurement, then it should lean more towards learning from previous practices and growing. In evaluation, you tend to learn from your mistakes and grow; not to reprimand employees – in the case of measuring. Additionally, business owners should learn to create a culture from day one and choose one effective evaluation tool they want and need.