What is not measured can not be improved. What is not improved, always degrades, is one of the phrases used by the British physicist and mathematician William Thomson Kelvin. And, as you will be able to read in this article, the phrase is not far from reality. Since currently, situating yourself in the business field, it will be of great help to you to understand that, in order to set objectives and evaluate the achievement of goals, all you need to do is define and pay attention to the performance indicators in a company.
In this new installment you will discover what are the types of performance indicators that will help you measure the productivity, efficiency and performance of those who make up your business.
What are performance indicators and what are they for?
As an owner or owner of a business, one of the most important points is to discover if what you are doing pays off, but can you know precisely? Yes, and for this, you need to resort to the KPI performance indicators, one of the topics that we will delve into later. However, and for now, the main thing is that you know in detail what and what is the real purpose behind the performance indicators.
Performance indicators, also known as management indicators, are used to measure and evaluate the performance of a company. Giving the possibility of comparing the results with the objectives and strategies previously, and within a time range, established.
Are they used in only one area? Not fortunately. Thanks to the fact that there are various types of performance indicatorscan be used in different areas of an organization, such as: communication, marketing, operations, support, among many others.
Can only one type of indicator be used per area? No. In fact, Various types of indicators can be mixed to visualize the current status of an organization at the sector, area, management or team level.
Types of performance indicators
Know the types of performance indicators and productivity measurement It will allow you to select the correct ones based on the specific characteristics and needs of your company.
Ready to discover them? Here we go! 🚀
- Productivity indicator;
- Efficiency indicator;
- Efficacy indicator;
- Effectiveness indicator;
- performance indicator;
- quality indicator;
- Profitability indicator;
- capacity indicator;
- Return on investment indicator.
productivity indicator
Crucial and effective for measure the amount of resources needed to accomplish a given process. Resources can include the number of people, the amount of time and money spent, and more. Something very important at this point is that, it is necessary to know the efficiency in both human and mechanical performance.
💡How is productivity achieved? taking advantage of the company resources without deteriorating production levels of either goods or services.
Efficiency indicator
Productivity is closely related to this indicator, by taking care of measuring both the attitude and the ability of a person to carry out a task in the shortest possible time.
💡How is efficiency achieved? Having clear and well-defined goals, as well as applying the resources in the best possible way so that these goals are achieved quickly.
Efficacy indicator
this indicator measures the achievement of the proposed results. In other words, it allows you to compare what was delegated to a person against what this same person delivered in response to the initial request.
💡 How is effectiveness achieved? Prioritizing the objectives so that the person in charge can carry out in an orderly manner those tasks that will allow him to quickly achieve the objective.
Effectiveness indicator
The purpose behind this indicator lies in to achieve the results with the least amount of resources possible. In other words, it measures the degree of fulfillment of the objectives and, beyond this, how the expected impact was achieved.
💡 How is effectiveness achieved? Taking into account, at all times, the proposed goals, as well as seeking a greater benefit in terms of products or social group.
performance indicator
Used to monitor the performance of a company in terms of productivity and pursuit of goals.
💡How is performance achieved? Knowing the jobs, their needs and the tools they receive from the company in question. Likewise, knowing the trajectory of each collaborator and how he carries out the tasks that correspond to his job.
quality indicator
Effective to measure the level of satisfaction related to a specific service, product or process.
💡 How is quality achieved? Focusing attention not only on the people performing a task, but in the tasks they perform. As well as training and standardizing processes.
Profitability indicator
Related to the . That is, with the investments made by a company compared to the profit obtained.
💡How is profitability achieved? Making the calculations that allow a company to see how profitable its processes are.
capacity indicator
Essential for measuring both the amount of work that a company can perform during a given period of time, and the quality or operational excellence. In addition, it allows you to obtain a broad overview of how resources are being used.
💡 How is capacity achieved? A good practice would be check those tasks that tend to be repetitive, which usually steal a lot of productive capacity, and make the necessary adjustments to make them more effective.
Return on investment indicator
Better known as ROI, this indicator will It allows evaluating if a particular project or a specific company reports a profit.
💡 How is the return on investment achieved? Defining the expected or achieved benefits and contrasting each of them with the investment that has been previously made to obtain them.
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Examples for each performance indicator
Applying the indicators is an easy task when you manage to discover when to apply them. Here are some examples that They will help you visualize their application in each situation that arises in your project or in your company.
productivity indicator
Use this indicator when you want to measure the time it takes to close a sale.
Efficiency indicator
Use this indicator to measure the number of resources that were used, for example, during the production of a product. For greater precision, use the following formula:
🧮 Efficiency = x
Efficacy indicator
use this indicator to know if the performance of your team, or your collaborator, is as expected. Use the following formula and consider that a number close to 100 indicates how efficient the process is.
🧮 Effectiveness = x100
Effectiveness indicator
Imagine you have a greengrocer. If your goal is to sell 50 apples per week and you manage to sell 60, it means that the process has been effective. However, if to achieve this goal you had to allocate a greater number of additional resources, then the process to obtain those sales was not entirely efficient.
With this you can see that effectiveness largely depends on efficiency and effectiveness.
performance indicator
Apply one of the most used indicators by those companies that are dedicated to online business, better known as: rejection rate. East, It is responsible for showing the percentage of the number of visitors who enter a website, but who leave after a short time without continuing their navigation within the page.
For this reason, and to avoid this type of behavior, it will always be important that you carry out a .
quality indicator
Use this tool when you want to assess customer satisfaction. this regularly done through a survey taking into account their own satisfaction in relation to the service, product or purchase process.
Profitability indicator
Test this indicator when you want to attract your business. To use it, just use the following formula:
🧮 Cost effectiveness = x100
ROI Indicator
Use this indicator to determine if investing in a new business is really profitable. To do this, use the following formula. Taking into account that, if the indicator is less than 0, then your investment is not profitable. On the other hand, if it goes above 0, it means that it will be possible to report profits.
🧮 ROI =
Differences between KPIs and OKRs
While it is true that both fulfill a purpose within your company, it is also true that they have their differences and their ideal moment to put them into practice.
Performance indicators or KPIs
Also known as Key Performance Indicators, are used to interpret the information available in your company and set short, medium and long term goalsas well as to evaluate compliance with them.
Objectives and key results or OKRs
Recognized in English as Objectives and Key Resultsrepresent a management methodology that It allows aligning those involved in a company in relation to objectives and results that are expected to be obtained in a specific period of time.
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What makes one different from the other?
While the first (KPI) is a measurable value, the second (OKR) focuses on achieving a goal. If we return to the example presented in the performance indicator, you can see that, while the abandonment rate of a website is a KPI, the objective behind it is to retain more customers, an OKR.
Roughly we can say that both are complementary. Since the performance indicators and productivity measurement they focus, precisely, on performance, while an OKR’s main function is to determine what those objectives are that a company must achieve.
Now, if what you need is to obtain important data about your business, what I recommend first is to work on your .
Importance of implementing management indicators in companies
One of the most important points behind the different types of performance indicators is that your company manages to convert all the data collected into useful information.
If your intention for 2022 is to make an accurate diagnosis in relation to the performance of your collaborators, the use and implementation of all the previously shared KPIs is an action that, without a doubt, you should take into account as it is not only necessary, but essential.
Summary
To recapitulate, the use of the various performance indicators in a company They help you measure basic aspects such as productivity and efficiency. In addition to helping you obtain the results you expect in certain periods of time.
What are performance indicators and what are they for?
Performance indicators, also known as management indicators, They are used to measure and evaluate the…
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