Measures of Performance
A business cannot be sustainable if it does not meet its goals. However, meeting and remembering those goals can often get lost in the chaos of managing and completing daily tasks. This is why it is important to establish specific measures of performance that an individual business can use to determine if they are meeting their goals. A measure of performance (MOP) should be a quantifiable process by which the progress toward a particular goal can be measured. A common term for performance metrics is Key Performance Indicators, or KPIs.
A MOP can be rather useless if there is no way to quantify it. Knowing this, it is important for a business to select easily identifiable, yet specific items to measure. For example, it is (obviously) the goal of a business to make a profit. But there are many ways to consider profit, so it may be useful to create a MOP that measures quarterly profits, or even quarterly profits per department. Further still, it is often useful to set a goal for the MOP on profit. It could be easy to quantify a quarterly profit MOP and say that the business achieved its goal of ?make a profit? even if the profit is very small. A more useful quarterly profit MOP would include a target, say, increase profit in every department by 5% every quarter. This MOP sets a specific target for each department and helps clearly measure the performance of the business in a quantifiable way, all while pushing a business to its overall goal of generating a profit and staying relevant and viable in its market.
Measuring the performance of an organization can truly help it meet its goals. Quantifiable goals are easy for managers, employees, and the public to understand. It is much easier, and more satisfying, to say that the business is growing if a MOP focused on increasing departmental profit by 5% each quarter is quantified and met. Employees are able to take pride in their work as they see targets and goals met, and managers can more easily pinpoint areas that are lagging in performance. A business that quantifies and evaluates its performance is better set to adapt for the future and sustain its success.
Revisit the organization?s goals. Make sure that the goals are still relevant and identify those that can support a quantifiable measurement device. Establish a measurable target for these goals.
Implement strategies to reach and record the performance metric. Announce to the business the new targets and means of measurement.
Analyze and evaluate the success of the metric tool. Adapt the metric or target to new circumstances (market factors). Identify points of quality performance and those in need of assistance, and formulate plans to improve those areas that did not meet the target. Establish whether the metric should remain consistent, or if a new metric is needed.
- KPI Library is an organization that brings together the professionals to discuss and compare performance metrics and indicators. Their website can offer advice and connections.
- This whitepaper discusses the importance of performance metrics.
- This slideshow offers a selection of potential performance metrics for businesses.
Measurement of Performance (MOP): A quantifiable tool that analyzes the performance of a specific aspect of a business.
Key Performance Indicator (KPI): Same as an MOP, a quantifiable tool that analyzes the performance of a specific aspect of a business.