Surely you've heard of it, but you know what is a performance indicator?
Also called KPI (Key Performance Indicator) the performance indicators are a metric that quantifies a company's performance, according to your organizational objectives.
The efficiency of the main factors that determine its success is evaluated, having as reference the goals strategic planning.
As important as the actions that inspire them, performance indicators must be closely linked to a business purpose important to bring efficient contributions to the control of the business.
A common mistake is to adopt indicators without any strategic logic, which do not reflect the reality of the company and do not offer information that effectively promotes positive transformations.
To facilitate these choices, we created this post with detailed explanations of what performance indicators are and how it guides the success of your business. Follow us!
What is a performance indicator?
Performance indicator is a metric management tool which presents quantitative and qualitative data on the company's performance. They are able to measure whether the actions performed are fulfilling the objectives foreseen in planning.
Roughly speaking, the concept of what performance indicators are is related to the fact that they are communication mechanisms that inform Dice essential to enhance business success.
It is worth mentioning that alignment with organizational objectives is essential for these indicators to be functional. Otherwise, they are just numbers that add little or change some condition.
If the measurement is carried out properly, managers will have information that will guide them in making decisions, both in identifying problems and in guiding solutions. And so, the goals compliments become more assertive.
How effective is the performance indicator?
Having explained what performance indicators are, now we need to put them into practice. As stated before, a KPI must be linked to an important organizational objective. Not just a general objective, but one that has the potential to influence the business profitability.
Otherwise, the evaluation work will guide an action that, at best, will not have an impact on the organization. In other words, it is of little significance.
Precisely for this reason, the management of organizational goals needs to be well aligned, allowing the leaders involved to be able to pinpoint their main market demands with precision.
What are the types of performance indicators?
There are performance indicators for the most diverse organizational objectives. The company's performance can be assessed by:
- projects;
- sectors;
- even as a whole.
However, all indicators serve a single purpose: results.
Some of the most common KPIs are:
- efficiency;
- profitability;
- sales capacity;
- quality;
- customer loyalty;
- productivity indicators;
- strategy;
- competitiveness;
- turnover;
- internal satisfaction, among countless others.
How to define a performance indicator?
Now that you know what performance indicators are, it's time to apply the concept.
It is your planning that defines what are efficient performance indicators.
Make one study criterious about the business strategies of your company and align with the managers and leaders of each sector what your main efforts are.
To give a “north”, ask the following questions:
- what is the result I seek?
- why is this result important to the company's success?
- how can i measure the progress of this action?
- how can i influence this result?
- who is responsible for this result?
- How do I know that my action plan has achieved the result?
- how often should this action plan be reviewed?
Thus, defining an efficient KPI for your company's reality is easier.
How to analyze the results of the indicators?
With the data exposed and the flaws identified, a corrective plan should be strategically developed, considering time and investment to remedy such problems and, mainly, to prevent them from occurring again.
Gather the workforce, share the situation, explain clearly and objectively the measures that will be taken. With that defined:
Managers are charged with continually assessing the impact of the corrective plan, ensuring that the approach and work are generating good results.
Why use performance indicators?
Knowing what performance indicators are is indispensable for any management. The data analyzed by him are guides, which guide the making major decisions considering the present moment of the company.
Corrective actions can be created by managers to solve problems in the medium and long term. That is, the indicators measure:
- the performance of each project;
- in different areas;
- collecting information relevant to the company's success.
How can indicators unite the workforce?
For KPIs to bring about effective change, it is essential that the organization's main instrument of value, the employee, be part of this transformation process. He needs to feel like an essential part of the game, and not just a “pawn”.
It will be a challenge to encourage employees to strive for a purpose if it is not present in their organizational culture. However, it is not impossible. If the notion of “team” is solid in your company, reinforce it. If not, start developing that concept.
First of all, locate the employee, explain what are performance indicators and what is their importance for the corrective plan, which they are trying to implement.
Clarify how these metrics can improve productivity at work of the organization, and why employees are essential.
Create debates about strategy, allow the employee to feel part of the process. And, even if it is not, present the solution as a product created by everyone.
Regardless of size and sector, all organizations, which have a goal in mind and seek to achieve it, must unite and motivate their workforce.
Now that you understand what performance indicators are, apply to your company for this:
- make an analysis of the real situation that she goes through;
- define your most important KPIs;
- stipulate a corrective action plan;
- compare.
The optimization is certain, the performance is enhanced and your team is strengthened.
Engaged in the same goals, without wasting time and resources, your workforce operates at maximum power. And what is better, satisfied with the advances achieved by the company, as a result of its efforts. The change that can happen in the organization, by simple understanding of what is a performance indicator, is extraordinary.
To evaluate your practices, access the article; “COMPLETE GUIDE | Performance evaluation: what it is, how to do it and what types ”.
And does your company generate performance indicators? Tell us here in the comments.
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