Performance Management

Business Performance Measurement ( E )

How do you measure business performance? What are measuring tools? What reporting system should you use for business performance measurement? Who should have access to reports?

Posted: Nov 2007

Business Performance Measurement has the purpose to get the right information to the right people at the right time – in order to provide control over business process. Performance measurement is giving the right insight into current situation. Therefore, it gives a chance to Manager to take advantage of opportunities and to solve problems in time.  

Performance measurement means observing the execution of targeted goal, in specific timeframe, on regular basis. Such measurement enable proper information to the top management, it gives control over business process, represents early warning system, meaning that through active control it enables the system to be proactive instead of reactive.

This means that if the certain KPI is not performing as planned in the first half of the month, there is time left in that period for specific actions, that are about to remedy situation. The Fishbone Diagram ( or Ishikawa Diagram ) can help in analysis of underperformance.

In the following example of performance measurement you see that from the table it is visible that in first two weeks in the month results of KPI were below expectations. That represent indication that the action plan should be made...

How to use performance measurement system? There are several ways of reporting and distribution.

REPORTING:

- Extraction of data form Information Systems, done by Sales Analysts
- Collection of data by Sales Supervisors / Managers
- Reporting of KPI results by Salesmen

The best way is to combine more than one method, because if you rely solely on your info database, it can be incorrect, but you will not be able to identify it clearly. Your Sales Managers can observe and record development of KPI achievement, but their scope is limited, since they have several Salesmen to observe and to control, so it is impossible for them to verify all results. Finally, Salesmen are the most involved in contact with customers and bringing the result, but their written report should be checked on ad hoc basis.

DISTRIBUTION:

- Billboard tracking of KPIs, regularly updated, large letters, simple and understandable form.
- E-mail distribution in excel, PowerPoint or other file type, sent on regular basis ( e.g.) daily or as per request from manager.

FORMAT:

- Table
- Chart
- Textual report
- Software application pre-made report.

TIMEFRAME:

- Daily, on the billboard for Salesmen and Sales Supervisors.
- Weekly to Sales Managers
- Monthly for Top Managers and CEO.

During the creation of business measurement reports,  some rules should be respected. Information about KPIs should be timely and accurate. It should not be neither to deep or superficial. It should have sufficient analytical structure, but at same time not too complex to avoid the analysis-paralysis syndrome. What you can not measure - you can not manage. Therefore use Business Performance Measurement as a tool for business management.