In such a scenario a performance measurement system can help track the progress of your business. It not only helps you track the current situation but can also prove to be a starting point for setting targets which can help you implement strategies for growth.
How to set useful targets for your business The importance of measurement and target-setting Performance measurement and target-setting are important to the growth process. While many small businesses can run themselves quite comfortably without much formal measurement or target-setting, for growing businesses the control these processes offer can be indispensable.
The benefits of performance measurement Knowing how the different areas of your business are performing is valuable information in its own right, but a good measurement system will also let you examine the triggers for any changes in performance.
This puts you in a better position to manage your performance proactively. One of the key challenges with performance management is selecting what to measure.
The priority here is to focus on quantifiable factors that are clearly linked to the drivers of success in your business and your sector. These are known as key performance indicators KPIs. See the page in this guide on deciding what to measure.
While financial measures of performance are among the most widely used by businesses, nonfinancial measures can be just as important. For more information about financial measurement, see the page in this guide on measurement of your financial performance.
In this way, targets form a crucial link between strategy and day-to-day operations. Deciding what to measure Getting your performance measurement right involves identifying the areas of your business it makes most sense to focus on and then deciding how best to measure your performance in those areas.
Focusing on key business drivers Your performance measurement will be a more powerful management tool if you focus on those areas that determine your overall business success. This will vary from sector to sector and from business to business.
So put some time into developing a strategic awareness of what it is that drives success for businesses like yours. A manufacturer producing and selling low-cost goods in high volume might focus on production line speed, while another producing smaller quantities using high-cost components might focus instead on reducing production line errors that result in defective units.
Finding your specific measures Once you have identified your key business drivers, you need to find the best way of measuring them. Again, your priority here should be to look for as close a link as possible with those elements of your performance that determine your success. For example, you may decide that customer service is a strategic priority for your business and to therefore start measuring this.
But there are many ways of doing so. You might consider measuring: The challenge is to find which specific measure or measures will enable you to improve your business.
This type of measurement unit is often referred to as a key performance indicator KPI. The two key attributes of a KPI are quantifiability i.
See the page in this guide on choosing and using key performance indicators. Using standardised measures There are standardised performance measures that have been created which almost any business can use. Examples include balanced scorecards, ISO standards and industry dashboards.
Choosing and using key performance indicators Key performance indicators KPIs are at the heart of any system of performance measurement and target-setting. When properly used, they are one of the most powerful management tools available to growing businesses.
First, they should be as closely linked as possible to the top-level goals for your business. Second, your KPIs need to be quantifiable.
Third, your KPIs should relate to aspects of the business environment over which you have some control. Getting the most from your KPIs The purpose of performance measurement is ultimately to drive future improvements in performance.
There are two main ways you can use KPIs to achieve this kind of management power. The first is to use your KPIs to spot potential problems or opportunities.
If the trends are moving in the wrong direction, you know you have problems to solve. Similarly, if the trends move consistently in your favour, you may have greater scope for growth than you had previously forecast.The ultimate aim of implementing a performance measurement system is to improve the performance of the organization.
If you can get your performance measurement right, the data you generate will tell you where you are, how you are doing, and where you are going. Labor productivity is a measure of economic performance that compares the amount of goods and services produced (output) with the number of hours worked to produce those goods and services.
LEARN HOW TO IMPROVE YOUR HEALTH AND PRODUCTIVITY PROGRAMS WITH EMPAQ ®!. EMPAQ ® (Employer Measures of Productivity, Absence and Quality™) is an employer developed and driven measurement tool. It was created by employers to provide other employers credible metrics that they can use to assess the performance of their health, productivity .
Productivity measures the efficiency of production in macroeconomics, and is typically expressed as a ratio of GDP to hours worked. Operational Performance Measurement: Increasing Total Productivity [Will Kaydos] on attheheels.com *FREE* shipping on qualifying offers.
Mention the phrase bottom line, and the immediate thought tends to focus on a company's financial performance.
Think again! There's an equally important factor that carries tremendous impact on that final total: operational performance . The final metrics I'll address in this series are for productivity.
This is a slippery slope. Frankly, I can count on one hand the plants I've seen with an effective measure .