Systems to monitor business performance
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In order to set goals, it is first necessary to clearly define what the goals are:
- Goals determine where you intend to go and tell you when you get there. They help improve your overall efficiency as a company. The important thing is that the more carefully you set your goals, the more likely you are to do the right thing and achieve your goals.
- Goals are the specific steps you and your company need to take to achieve each of your long-term plans. They specify what you need to do and when.
There are several ways to achieve your goals:
- Link goals to your mission
- Use ACES to set goals
The SMART method is used to design specific goals ensuring they are specific, measurable, achievable, realistic and time-traceable. Without these components, it will be difficult to monitor the goal and to know if it has been achieved.
SMART is a mnemonic aid used in business to evaluate the quality of business goals or personal development goals. SMART goals are often used in performance management. The goals include the parameters to be evaluated.
- S - Specific - the goal should be specific, concrete, clearly defined
- M - Measurable - when the goal is specific, it is also measurable. This is important to clearly demonstrate that the goal has been achieved.
- A - Achievable / Acceptable - the goal should also be achievable (within the set time) or acceptable to those who are responsible for it
- R - Realistic / Relevant - the goal should be realistic and relevant (given the resources needed to achieve it)
- T - Time Specific / Trackable - the goal should be time specific, i.e. with a clear deadline that can be monitored.
What is a KPI?
- Key performance indicators in human resources are used to measure employee performance.
- Key business performance indicators can be assigned to any activity or process. However, it is important that they are measurable and that they are key to running a business.
KPIs vary depending on circumstances. Important considerations are:
- Who will monitor and evaluate the KPI? The more senior a person's position in the company, the more significant KPIs they will monitor. For example, a CEO seldom evaluates the average bounce rate on a website; he will be more interested in KPIs such as turnover, costs or e-shop traffic.
- The function of the company. To create a KPI, you need to consider the industry in which your company operates, ensuring the KPI is specific to that business. Different companies will want to monitor different results.
- Company goals. KPIs should reflect the company's goals. If your goal is to increase website traffic from PPC (pay per click) advertising, there is no point in measuring the bounce rate in email marketing. A company that has set itself the goal of increasing work efficiency will, in turn, be far more likely to evaluate output rather than customer conversion ratio. KPIs can be used to measure and evaluate performance and success, but always consider the company's goals.
How to create KPI indicators?
- Define the company's strategy and goals on which the KPIs will be based. KPIs will always be based on your business strategy as they are part of it. KPIs then result from the goals that are defined within the strategy. If you haven't set any goals yet, do so. (Don't know how to do it? You'll learn everything you need in our article How to set SMART business goals.)
- Determine how you will measure the goals. Once you have defined business goals, determine they will be measured. For example, if your goal is to expand into a foreign market, then the number of branches abroad or the number of foreign customers may be a suitable metric. If you want to improve communication with customers, you can monitor, for example, the level of engagement on Facebook or the speed of responese to e-mails.
- Determine the KPI evaluation frequency. Finally, decide the frequency with which you want to evaluate KPIs. Monthly evaluation is usual, but quarterly or even annual evaluation is also common. However, if you do not set a frequency in advance, it is easy to forget about them let other matters take priority.
Process performance monitoring and measurement
We measure and monitor performance at the organisation, process, and employee levels, and evaluate three performance factors: goals, structure, and management.
The performance measurement system must:
- Measure the right things
- Be a comprehensive measurement system
- Use the measurement results correctly
It quantifies and enables the evaluation of the process's ability to deliver products according to customer requirements in relation to quality, time and cost.
It provides objective and accurate process information so that the process owners can take control.
The process owner does not control or measure performance, but uses the results of monitoring and measurement top make objective decisions. The monitoring and measurement process can be divided into two subprocesses:
- Planning and preparation
- Execution of measurements
The logic of the model lies in the continuous process of repeating activities, the initial letters of which form the abbreviation RADAR:
- Define Results
- Plan and develop Approaches
- Deploy approaches
- Assess and Refine approaches and deployment
Balanced Scorecard is a management method that creates a link between strategy and operational activities, with an emphasis on performance measurement.
The set of tools provided by the balanced scorecard thus measures the company's performance using four perspectives:
● Finance and financial indicators
● Internal business processes
● Learning and growth
- The virtual assistant
- Developing a Business Plan
- Sustainability and Business Improvement
- Innovation and Product Development
Finance for Enterprises
- The importance of financial management for a business
- How to identify financial requirements to support an enterprise
- The importance of accurate bookkeeping to financial management
- Evaluating financial options to fund a business
- Monitoring income and expenditure against business objectives
- Conducting a financial analysis
- Marketing and Networking
- MYVA Resources