Hi-Fella Insights

101 Business Performance Measure: Metrics and  Practice

Every business expects profits and long-term sustainability. But these two things cannot be achieved just by working hard. One of the strategies is the business performance measure. 

Let’s read the full information below for those who have never known what a Business Performance Measure is!

What is Business Performance Measure?

Business performance measure is a metric for measuring the efficacy of commercial operations, encompassing the ability of an organization, department even individual to successfully attain the objective and projected results set forth by the company. 

Retrieved from WallStreetMojo

Furthermore, business performance measures also show when a company or organization should increase its commercial efficiency or even decrease it (although this is not the case). Business performance measures are also very much needed if you have a growing company and want to improve business performance en masse.

Why do you need a Business Performance Measure?

The business performance measure is a step for the company to achieve its goals. Here is the diagram.

Retrieved from Skillmaker

Of course, to achieve the goals of the company, there are many metrics that must be considered.

Starting from suppliers, customers, distributors, investors, employees in the company, the company’s financial capabilities and so on. Of course, keeping all of the above stable will be difficult, therefore a standard or measurement is made through Business Performance Measure. 

The Business Performance Measure has at least 3 purposes, namely as an analysis, measurement and improvement tool. 

1. Analysis Tools

The importance of business performance measures as a tool for analyzing is that the company knows the strengths and weaknesses of the business, pinpoints areas that require improvement, and makes informed decisions based on data to enhance the company’s overall performance. 

Furthermore, this analysis can be utilized to monitor progress over time, benchmark the company’s performance against its competitors, and assess the efficacy of new strategies and initiatives.

2. Measurement Tools

After the pertinent data has been gathered and narrated, an evaluation of the business performance can be conducted, and decisions can be formulated based on the findings to enhance the overall performance of the company.

3. Improvement Tools

Only after correctly identifying the problem, and quantifying the problem, can you make improvements. These improvements can be from various aspects, ranging from pricing, products, organizational or management issues to your own business team.

How to do Business Performance Measure?

Well, planning and conducting business performance measures take more time at the beginning. But with business performance measures you will save a lot of time for the future and be the first alert for when your business is not running smoothly as expected.

For those of you who still find it difficult to plan and use business performance measures, here are the steps you can use.

1. KPI (Key Performance Indicator)

Key Performance Indicators (KPIs) typically comprise a combination of quantitative and qualitative metrics. These indicators serve as concise targets and navigational tools that are closely aligned with the overall business strategy. 

2. Budgeting

It is recommended to create a comprehensive financial plan for the upcoming year that outlines the strategies and measures to be taken in order to attain the business’s financial goals, while also keeping track of progress and outcomes.

3. CRM (Customer Relationship Management)

The business performance measures in question monitor the various interactions and relationships that a business has with its existing or potential customers. 

These measures provide valuable insights into customer satisfaction levels with regard to sales activities, customer service, and customer support.

4. Benchmark

This tool is commonly employed by businesses to assess their performance in relation to a benchmark metric that is often established by industry associations, research companies, and government agencies.

5. Team Matric

Team KPIs are great for making sure everyone is accountable. When each person has a specific goal to meet, it’s easy to know what’s expected. 

Having assigned KPIs shows that each team member plays a unique role in the business, and makes it clear what everyone is doing. This helps create a culture of honesty.

By now, can you imagine what business performance measures will be used in the future?

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