What is KGI?
KGI is a shortened form of "Key Goal Indicator", which in Japanese translates to "重要目標達成指標". It is a numerical target that a company ultimately aims to achieve.
In general retail stores, "sales budget" and "profit margin" are often the indicator for KGI. By setting goals using numerical values, such as "achieving the sales budget of a certain amount of yen for this fiscal year" and "increasing sales by a certain amount of %," KGI can be used as a more precise indicator.
Advantages of setting KGI
KGI is set in order to make employees always aware of the goals that a company (or a store) should achieve and to promote the company's growth. Therefore, by setting KGI, you can obtain the following benefits.
(1) Show employees the company's (or store's) goals
By setting KGI, it is possible to show the company's goals to employees.
Employees who are given numerical targets will find their own pace, value and be able to work with motivation intact.
2) Clarify what needs to be done
By setting KGI, it becomes clear which tasks should be focused on.
In addition, by having evaluation indicators (KPI) related to KGI, you will be able to review the results of your focused efforts on a numerical basis.
If you want to know more about KPIs, please refer to this article.
3) You can see the progress of each store.
Since KGIs use numerical values, they are not subjective. Therefore, by setting KGIs for each store, you can see the progress of each store at a glance.
How to set KGI
When setting a KGI, it is advisable to include all of the following five elements.
1) Clarity (Specificity)
The KGI should be a concrete number that anyone can understand.
(2) Measurable.
The KGI should be measurable (aggregate) values.
(3) Realistic (Achievable)
The value must be ”realistic”.
(4) Relevance
It must consist of numerical values that enable KGI to be achieved as a result of achieving KPI.
(5) Timeliness (Time-bound)
Target values with a set period of time.
Key Points for Achieving KGI
1) Set KPIs
KPI is a shortened form of "Key Performance Indicator," which is translated as "K重要目標達成指標" in Japanese. Therefore, KPI and KGI need to be considered and set as a set.
Using KPIs to have store employees understand the actions to be taken to achieve KGIs will clarify the tasks to be focused on.
2) Make a plan
After setting the necessary KPIs, let's build a rough plan for achieving KGIs.
Since the conditions required to achieve KGI in actual stores change significantly from time to time due to changes in the external environment, it is recommended that the plan should be based on past trends and be used only as a reference.
(3) Periodic evaluation
It is necessary to periodically evaluate the progress of both KGI and KPI to confirm whether you are taking appropriate actions.
At this time, it is important to be aware of the fact that "evaluation is conducted in order to achieve KGI”.
The pattern that often happens is, KGI is set to achieve the sales budget and even though the budget progress is going well, the store loses track because of one KPI going downhill. Keep in mind that KPIs are just one indicator for achieving KGI.
(4) When things that can be improved are found, take action immediately.
In the course of regular evaluations, it is expected that deviations from the general plan (2) made in advance will occur, and when factors that affect the achievement of KGI are identified, take action to improve immediately.
If it is difficult for you to make decisions on your own, do not hesitate to consult with your supervisor.
Since achieving the KGI is a mission for the company, your supervisor should be able to provide you with friendly advice.
* This article introduces an effective conversation method that accurately conveys the requirements when consulting with your boss.
Conclusion
KGI is an important target indicator for the growth of a company.
By aligning with KPIs and managing them properly, you can greatly increase your chances of achieving your goals.
We hope you found this article helpful and thank you for reading!