Treatment of KPI in China
The widespread application of KPI has forced China to adopt a similar practice into its modern management systems. Since its introduction into China in the 90s, KPI has become an essential area of public as well as enterprise management. However, despite the benefits of KPI, problems remain in the KPI assessment of Chinese enterprises.
Use of OKR instead of KPI
Giant companies such as Huawei and Alibaba regarded the OKR (objectives and key results) method instead of KPI as a more superior management tool. In OKR, the autonomy of employees is given more emphasis rather than their work completion rates. Chinese companies are increasingly using OKR that focuses more on long-term results, allowing employees to enable performance in the process. China’s enterprises are said to be evolving toward an innovative stage where it becomes unattainable by using KPI. Furthermore, KPI depends on the metric component of success while OKR quantifies the value and meaning behind a goal.
Problems in understanding KPI in China
- KPI as a tool for reward and punishment
KPI is a goal-oriented system where goals, plans, and processes of the company are set, otherwise, it cannot work alone. However, most enterprises in China treat KPI as a “carrot-and-stick” system which compensates their employee accordingly. This way itself will not only fail to guide and motivate employees. But it can also cause a psychological burden from which employees focus more on achieving the KPI metrics instead of working toward the goal of the company.
- Lack of a complete appraisal system
The lack of communication and democratic awareness during performance appraisal leads most companies to experience an imperfect use of the KPI system. Top managers make evaluations at their own will, resulting in conflicts among employees. Thus, the absence of employee feedback or complaints brings a negative effect on employees, leading to confusion and dissatisfaction with the system.
- Insufficient use of assessment results
Some enterprises use the KPI assessment to increase wages for employees. Thus, it points back to the problem of simply treating KPI as a reward and punishment method. While the reward system is not often obvious, some punishment measures simply deduct a poor performance from the employee’s monthly bonus.
In a nutshell, key performance evaluation is in the heart of enterprise management. Although China has picked up the fundamentals of the KPI system, problems still occur in the understanding of its application. Therefore, it restricts the further organizational structure development of many Chinese enterprises. It is suggested that communication within the appraisal system must be strengthened. Moreover, enterprises need to optimize their KPI evaluation and improve the overall usage of the system.
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