Keep an Eye on the KPI

Key Performance Indicators (KPIs) are a crucial company management tool. However, we found that defining KPIs that provide a useful view of a company’s performance is not an easy task.

Our Translation Management System proved very helpful here. As a rule, TMS software offers a large number of built-in KPIs. But, in my opinion, the most important feature of a sophisticated Translation Management System is its ability to define custom KPIs based upon your best experience. Your TMS database contains a tremendous amount of data and only your creativity sets the limit for producing useful KPIs.

In order to create a KPI, you need to produce a report which will be generated by your TMS software. In general, there are 3 types of reports:

  1. Quantity reports answer the question “how many?” For example:
    • How many projects were started last month by project manager XX?
  2. Value reports answer the question “how much?” For example:
    • How much are all the projects started last month by project manager XX worth?
    • How much do these projects cost in production (cost of all translators and proofreaders involved in these projects)?
  3. Ratio reports answer the question “what is the proportion?” For example:
    • What is the proportion of profit to cost (ROI – Return on Investment) of all projects started last month by project manager XX?

Modern Translation Management Systems allow for the periodic production of such reports. It means that the required reports will be generated automatically at a predefined time (day, hour, minute) and can be delivered to your mailbox – you do not need to take any action.

Similar KPIs were used in our company to create a sophisticated bonus system for our 11 project managers (PM). Of course, rewarding a PM based solely upon the number of projects managed in a given month would not be fair. Some projects are extremely small and simple to handle (few sentences, one language combination), while others are very time-consuming (big volume, short deadline, several batches of files, necessary pre-processing caused by different formats of source files, several target languages, co-operation with teams of translators and proofreaders in each language combination, etc.). Therefore, we included ca. 10 different KPIs in our bonus system. For example: monthly turnover per PM, average ROI per PM, number of projects processed in certain (more difficult) CAT tools, time spent in the office (including overtime), number of projects delivered automatically, etc. We assigned different weights to each KPI (some aspects of a PM’s efforts are more significant than others),
KPIs gave us the ability to influence the behavior of our PMs to increase their performance.

For example, we were sure that the so-called “auto-delivery” (automatic delivery of target files after final approval by the QA department) will save our PMs time. Therefore, we forced the PMs to use this autodelivery workflow. We also set a higher weight to the number of autodelivered projects. After some time, all the PMs started using the autodelivery workflow wherever it was possible.

From my own perspective, KPIs are a very important tool for managing a company. The right information gives you the power to make the right decisions.

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Jurek Nedoma
Jurek Nedoma has worked in the language industry for over 25 years. He is the founder and former manager of LIDOLANG Specialist Translations, which in 2015 was ranked the 16th translation company in the CEE Region (CSA Report 2015). In the period 2013-2015 Jurek was Treasurer of the European Language Industry Association (ELIA).

Jurek Nedoma is also co-founder of the professional TMS software development firm XTRF Management System.

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