Business performance measurement is an essential component of the business management process and when carried out correctly, can help you to achieve consistent business growth. In this article, we’ll tell you all about the tools you can use to effectively measure business performance and create a competitive advantage with the information you gather.
What is business performance measurement?
Business performance measurement involves using data analysis tools to initiate improvements and to help management focus resources on achieving the key targets and objectives.
Measuring your business performance is important as reviewing your progress will help you assess your current market, access new customers and find new business opportunities. When you know how well the areas of your business are performing, you can then assess the areas where your business is strong and where it is weaker and needs improving. Business performance measurement is essential for evaluating employees’ progress and overall company behaviour.
Why are business performance analysis and measurement important?
Business performance metrics are quantifiable measures, used to track a business’ progress. Whereas, business performance analysis involves using this data to assess the organisations’ current position. The findings of this analysis often form the basis of the business’ next steps or overall corporate strategy.
There are different business metrics that you can use in every area of the organisation. The main benefit of using business metrics is that they provide a quantifiable measure to apply to your organisational performance. This provides you with a better understanding of what’s working within your business (and what isn’t.) The advantages don’t stop there, effective business performance analysis and measurement help to:
Align with organisational goals
Utilising business performance measurement tools allows organisations to clearly see how the company’s position currently aligns with established organisational goals. Outlining clear business goals is an essential part of the business performance measurement process. They act as a motivator and provide a concise objective for all in the organisation and you’ll then implement tools to measure track progress on your objectives along the way.
When analysing, measuring and monitoring business performance, it’s easier for an organisation to hold its employees accountable. You can use software and tools to assess employee performance based on a variety of metrics. You can then link these to the wider company objectives to ensure all aspects of the business are in alignment. This gives employees a chance to recognise their responsibilities and clearly see what needs to be done to improve.
Some further benefits of business performance measurement include:
- Focuses on results
- Produce meaningful measurements – useful for benchmarking
- Helps you think about the results you really want
- Performance is seen as an ongoing process
- Redirects attention from a bottom-up approach, to a top-down approach
How to measure business performance
If you wanted to, you could assess business performance in all areas of your organisation. However, it’s best to prioritise and stick with the elements that are going to provide the most value for your long-term business goals. 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).
It’s important to bear in mind that quantifiable isn’t the same as financial. While financial measures of performance are among the most widely used by businesses, nonfinancial measures can be just as important.
For example, if your business succeeds or fails on the quality of its customer service, then that’s what you need to measure – through, for example, the number of complaints received.
Essential business performance measurement tools
OKR metrics tie in nicely with business metrics – making the process even more efficient and detailed. Business metrics don’t work without context – so it’s important to be clear on your overarching objectives before breaking those down into smaller goals.
OKR metrics are business metrics broken down to accompany OKRs. Key OKR metrics include outlines of your main objectives, along with the key results that enable you to reach each one.
How can we help your business performance measurement?
At TBG we’ve seen first-hand the positive impact OKRs can have. That’s why we’re so passionate about helping businesses to implement the OKR method, whilst utilising the business metrics that will help them achieve sustainable business growth. Speak to us today for support and advice.