Research On The Design Of Enterprise Key Performance Indicator Systems

With the trend of economic globalization and information era, intense competition for enterprises arise both in domestic and international markets. In the fierce competition, enterprise performance mainly depends on the performance of employees. Therefore, more and more enterprises attach great importance to human resource management. Many enterprises commit to exploring effective ways to improve organizational performance. As the core of human resource management, performance management will affect employees'contribution to organization. There are many advantages of performance management: assessing and improving the employees'performance effectively, helping to build enterprise culture, promoting the entrepreneurial spirit, enhancing enterprise cohesiveness. Finally, performance management could enhance the enterprise performance and form enterprise's core competence.Key Performance Indicators (KPI) is widely used in performance management as an effective tool. The combined application of KPI, MBO, AHP in performance management could achieve the following goals: guiding employees to work towards organizations'strategic objectives, reducing the subjectivity of performance management, improving the reliability and validity of performance management, assessing employees'performance effectively, and improving the performance of both employees and organizations. KPI is already widely used in corporations abroad. Since the introduction of KPI to China by McKinsey in 1999, a growing number of domestic enterprises have tried to bring KPI into application. However, some survey shows that many of them haven't made any significant improvement of performance. A very important reason is that the key performance indicators are not designed scientifically.This thesis uses both theory and empirical research. The design of KPI is researched in-depth and systematically. The framework of the thesis is as follows: First review the literature of basic theories of performance, performance management and key performance indicators, and extract the essence of the research on how to design KPI. The following part analyses the problems in the design of KPI, as well as the causes of those problems. On the basis of the previous two parts, the thesis conducts an in-depth study on the design of KPI.The conclusions of this thesis are as follows: In order to find organizations'key success factors and key performance indicators, strategic objectives of an enterprise must be clear. On the basis of a clear strategy, fishbone diagram is widely used in finding key success factors. While implementing fishbone diagram to decompose strategy objectives, critical success factor (CSF), key strategy object (KSO), key result area (KRA), key business area (KBA) are also used. The other way of finding enterprises'key success factors is using market chain to find how to meet customers'demands. According to the key success factors, key performance indicators (KPI) are scientifically designed. In order to fully implement KPI in performance appraisals, we should also decide both the assessment standard and the weight of each KPI. Key performance indicators should also be decomposed and systematically implemented.