Performance metrics are frequently used for employees in their annual reviews to establish mutual expectations and performance evaluations. But what about organizations? Who sets those expectations? And more importantly, how are the performances measured?
A business metric is a quantifiable measure that is used to track and assess the status of a specific business process. Every area of business has specific performance metrics that should be monitored. For instance, marketers track marketing and social media metrics, such as campaign and program statistics, and executives look at big picture financial metrics.
Business performance metrics are crucial in keeping teams, executives, investors, and customers informed and aware of how a company is performing. To be effective, business metrics should be compared to established benchmarks or business objectives. Some organizations outline business metrics in mission statements, which require buy-in from all levels of the company, while others simply incorporate them into their general workflows.
The easiest and most effective way to stay on top of your company’s performance is by having your key metrics on a comprehensive business dashboard that allows different departments to monitor their metrics.
A frequent criticism of performance metrics is that when the value of information is computed using mathematical methods, it shows that performance metrics professionals choose have little value. This is referred to as the measurement inversion.
Business metrics, by definition, monitor and evaluate how your business processes are doing through concrete, quantifiable data. By analyzing this data, you can tell whether or not your business is on the right track towards achieving its goals. Think of it as holding up a mirror to your business to see how your expectations match with reality.
While it is mostly true that a majority of business owners only care about two things – meeting payroll and generating sales, there are some of us that know that there are a multitude of moving parts to a business. However, we have been so involved in solving the technology and operational efficiency factors, that the importance of the business outcome may have been pushed to the side.
Not tracking performance with quantifiable metrics, is like doing surgery without diagnostic testing. How do we know we are on the right path and that the intended results are even possible?
Melody K. Smith
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