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According to studies on motivation conducted by Harvard Business Review, about 5-7% of the staff is always working well, 5% of the staff is always working poorly and 88-90% of the staff needs clear definition and setting of tasks and goals.

Many textbooks on management claim that every employee must have a clearly set target, and he should be encouraged to reach it through the system of stimuli.

Key Performance Indicators - KPIs. This term refers to some measurable indicators of staff performance. Built on these same terms “method to determine the results and create mechanisms for determining remuneration is referred to as KPI-based motivation system”.

Key performance indicators, in their turn, are based on the Balanced Scorecards (BSC).

The philosophy of KPIs is based on the following principles:

• “If you are trying to manage something, you have to be able to measure it!”
• Areas of responsibility for employees are distributed in such a way that each employee is responsible for achievement of one of the company objectives (a "one process - one owner” approach)
• Continuous monitoring of the company strategy implementation.

The essence of KPIs methodology is in the fact that after having analyzed the business processes the company management or outside consultants identify areas of activity significant for the company and for these areas they prescribe a set of indicators that should be regularly measured on the basis of data obtained from the accounting system.

In deriving KPIs it is very important to identify indicators that will be understood by all people involved in these processes: by those who install them and those who directly affect them.

After all KPIs is a way of mutual understanding and measuring effectiveness by several categories of people. If these categories of people equally understand the nature and meaning of the indicator, it is only in this way they can control it. Only when all the parties involved understand the logic and nature of the indicators and what they indicate, then these parameters can be influenced by understanding what needs to be done to improve them.

KPIs are certain way to introduce some common frame of reference for different people working on different parts of the process.

Work on the KPIs allows professionals to better understand what they need to do to be effective. The term "efficiency" means here not only the amount of work done per unit of time, but the benefits received by the company from the activities of the employee.

In every department general KPIs of the company are subdivided into smaller ones – personal KPIs. Each person should not have many KPIs. From three to five well-defined KPIs will do. The main thing is to ensure that the workers have the opportunity to objectively measure their effectiveness.

Of course there are some difficulties in KPIs-system implementation, same as with implementation of any new system: the time and costs (software, attraction of experts to train managers working with KPIs), dissatisfaction of employees and adaptation of the system.

At the same time such a system of indicators has proved very successful in Western companies, in the first place for the employees themselves - which accurately and clearly spells out the objectives and results that the company targets and expects them to achieve and what remuneration will follow on achievement of these objectives.

For the manager of business KPIs provide opportunity not to focus on individual pieces of business but to see the strengths and weaknesses of the company. And not only see but also analyze the factors that affect the growth of the company positively and negatively.

Another significant advantage of KPIs is that they make it is easy to trace the effect of any given process within the company on the end result. 

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