Business Performance Measurement
Business Performance Measurement is concerned with measuring performance relative to some benchmark, be it a competitor’s performance or a preset target. A typical performance measurement helps businesses in periodically setting goals and then providing feedback to managers on progress towards these goals. The time span for these goals is normally a year or less for short-term goals and may extend up to several years for long-term goals. Hence, specifically, business performance measurements are formal, information-based routines and procedures managers use to maintain or alter procedures and practices in organizational activities.
The primary reasons that may be attributed to this exercise of Business Performance Measurement are to synergize profit and growth, and, consequently, decide upon extents of control to be exercised for favorable and justified outcomes. This will also enable you in measuring and redefining your short-term and long-term goals by offsetting them against opportunities and capabilities as you move along. These strategic goals and plans then peter down to operations, human resources and other day-to-day management practices. As an ongoing exercise, it will ensure monitoring and control to drive growth and improvement.
Obviously, to achieve this, a business has to spell out the parameters and subsequently, the scores or ratings to gauge performance vis-à-vis these parameters. The outcomes of such collated data will be very strong indicators of the business health of your enterprise. And this, will, no doubt, reflect on the performance of the top management which mainly drives such business activities. As an entrepreneur, you can then have a holistic view of your business. Such data-based information will empower you with indices with which you can fast-forward your business towards betterment and growth. But do make sure the data are honest and dependable. Check out the IT support practices and tools which collate this data and generate reports as it can make or break your strategic decisions. And always remember that efficiency and effectiveness are central to your business performance measurement, the challenge being to strike the right balance between them.
You can now review performance at all levels, identify improvement areas, set new benchmarks for improvement and then again review the impact of these actions. And, not to forget, reward excellent performance to sustain motivation which always runs the risk of falling by the wayside if ignored. This is what shouldering responsibility is all about, after all.
As an entrepreneur, you must be aware that these parameters of business are being continually researched upon and these indicators have evolved over the years to suit the needs of the present times and different natures of businesses and industries. And even within a business entity, there are various indicators for different aspects of business, including the financial perspective, the manufacturing/operations perspective, the customer perspective, etc. For small enterprises, the financial perspective by itself is crucial. A balanced business scorecard will help you to study and gauge the financial framework of your organization.
FINTEL can be helpful in the process of gauging and managing business performance by providing tools and data designed just for that purpose, including reliable and insightful industry comparisons and trends.
The iconic Brazilian soccer player of the 1960s and 1970s, Edson Pele, was once caught smoking by his father when he was a child. His father advised, “ Listen, if you want to play sport, you have to be in good health”.
This applies to your businesses’ health too. Check out what you need to smoke out! Go, get the barometer.