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Building KPIs and MBOs

To gauge the effectiveness of a business or department, measurements must be taken and progress must be tracked. There are several models that can be used to measure success. In this part of the course project, you will focus on Key Performance Indicators (KPIs) and Management by Objectives (MBOs).A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets. Management by Objectives (MBOs) are the “objectives” of the organization and the company, or department goals that must be achieved to reach the objectives. The management’s focus and concentration is on reaching the objectives–hence the term Management by Objectives.The KPIs and MBOs work hand in hand. For a sales team, the KPI might be the volume of monthly sales and the MBO might be to sell 1,000 widgets a month.For this project piece, you will create a systematic approach that the new operations manager can use to measure a department’s effectiveness and outline the KPIs. Create four MBOs for the new operations department and set goals for “Exceeding expectations,” “Meeting Expectations,” and “Below Expectations.” An example follows.MBOExceeding expectationsMeeting ExpectationsBelow ExpectationsSell an average 1,000 widgets per month in a calendar yearSell an average of <1,100 widgets per month in a calendar yearSell an average of 991 - 1,099 widgets per month in a calendar yearSell an average of >900 widgets per month in a calendar yearTo complete this assignment, use at least two credible sources to prepare a 4-5-page document that you will present to the new operations manager. Include the following in your paper:Provide an example of how HR measures the effectiveness of a department or team member.Discuss the benefits of KPIs.Explain how you would go about measuring and evaluating employee engagement, turnover, community involvement, and profit margins for this company. State your ideas for an evaluation plan in these areas.Discuss the benefits of Management By Objectives (MBOs).Create four MBOs for the new operations department and set goals for “Exceeding expectations,” “Meeting Expectations,” and “Below Expectations.”Evaluate how these measurements align with Chip’s Widgets, Inc.’s business objectives.