MeasureProductivity

Higher productivity of business is something everyone is interested in. The key goal of business is making profits. It is a well known fact, that in order to make profits one should invest certain amount of money. So, the magic begins when you invest little money and get huge profits. It means that your business has a high level of productivity.

But of course, it is not only money and profits that indicate excellent performance of a business. There are many factors and indicators that show the business is doing OK or experiencing some problems. They are called key performance indicators (KPI). It needs saying that KPI is a key term in evaluation of business performance. If you want to evaluate your business you should certainly establish KPIs and evaluate them to get the whole picture.

Along with KPI, Balanced Scorecard (BSC) system is another commonly used term. What is BSC? This is a tool to evaluate KPIs. As a result you will be able to analyze many aspects of your business. Balanced Scorecard is a tool that helps you detect the problem early, before they cause major problems.

Balanced Scorecard as a key means to evaluate your business performance

Use special metrics to evaluate business cycle

Business productivity depends on numerous factors. These factors differ from business to business, i.e. depend on the business type. Although every business type has just one goal of making profits, they use different methods and ways to earn money. Thus, these factors differ greatly. Of course, if you summarize all of them, it is possible to group them, as many of them look pretty much alike.

To prove these words, let’s take several examples. For instance, one of the major KPIs in retail sales business is conversion number, i.e. number of potential customers who have become real customers. In call center business this is cost per call. In logistics on time shipment and delivery is considered to the main indicator. This list is truly endless. There are hundreds of business types which require different approaches.

As an experienced manager you are obliged to evaluate performance of your department of a company. Please note that your company may have several departments. The above example vividly illustrates necessity of using Balanced Scorecard system. It may happen that your company has both logistic, sales and customer support department. Thus, you are interested in all KPIs concerned with these areas. You business productivity will be not as high as expected in case some of departments have poor performance. This chain should work perfectly to yield perfect results. Otherwise, you will be quickly wiped out by competitors.

Sure, there old fashioned ways of identifying business productivity. These are manual calculations, questionnaires etc. However, these methods cannot fully represent performance of the company. Even a minor aspect or factor can spoil indicators of the whole department. So, it is really important to know what you should work at.

Balanced Scorecard positively affects personnel. There are several reasons here. Let’s name two of them. Firstly, Balanced Scorecard system can be used to evaluate personnel itself. Usually, this is the task of HR department. With the help of HR metrics it is possible to evaluate organization climate, emotional state of employees, their attitudes etc. Is emotional state important in work? Of course, it is. Some managers disregard this aspect, which is a huge mistake. If an employee has a positive attitude and he/she know how he/she is being evaluated, such employee will certainly work better and in a more creative way. Your business is your employees. Do not forget about it.

Secondly, business metrics is used to find weak points in the work of a company. Thus, employees will get to know what needs to be done better or in a different way. It is important to be aware of own mistakes to be able to correct them. With Balanced Scorecard every employee will know weak own weak points and those of the company which certainly contributes to higher business productivity.

Balanced Scorecard system offer analysis results in figures, percents and with the help of graphs. It is possible to track development of the company in historic perspective. So, if you see the cost per call in your call center has grown by 5,8% as compared to last month, you should look for reasons which cause such an increase. If freight cost per unit in your shipping company has decreased then your logistic department is working efficiently.

Balanced Scorecard system provides personnel with great motivation. Firstly, people know how their work is evaluated. They know exactly which figures and factors make they bosses happy and unhappy. In other words, they know rules of the game. Secondly, employees know exactly what to do. If a manager found a serious problem he would offer a solution to the whole department with detailed instructions. Motivated employees work better. Besides, you can introduce a special bonus system. For instance, if a call center manages to decrease cost per call by 5%, the entire department gets 1% from the company overall net profit (for example). What would a motivated employee do? Of course, he/she would work better.

An efficient manager should always keep his nose to the wind. Balanced Scorecard is a perfect tool to be always informed on advantages and drawbacks of your company/department. You do not have to waste long hours to perform calculations and draw graphs. The program will do that for you, given that you have all relevant figures (sales numbers, net profit, customer increase rate etc). In you perform evaluation once a month, it is possible to see growth dynamics (if your business is doing OK). Thus, you can see the most important KPIs improvement of which contributed to total net profit most of all. For instance, you may be paying too much attention to some secondary KPIs, while major factor lack proper attention.

Evaluation results of balanced Scorecard software can be used at meetings, presentations and sessions of management board. Armed with figures, percents and graphs you will be able to give a comprehensive explanation for business KPIs and business metrics used in evaluation process.

Business metrics is widely used all over the world

Find weak points in the company structure

There are generally four phases of the benchmarking process. These involve planning, analysis, integration and action. Read below:

Phases of Benchmarking

1. Planning Phase

It is an error-free phase. Any mistakes could lead to the subsequently phases being exaggerated, as the efficiency may not be in control. The recognition of the benchmark itself will be executed in this phase.

Top administration ought to recognize processes that are pertinent to customer requirements. The critical to quality (CTQs) factors must be premeditated appropriately to prioritize procedures and benchmarked to a number of organizations.
After appropriate learning, the one that suits your targets most will be required before assortment of the benchmarking. Advanced procedures must be acknowledged and the key procedures, top upgrading areas, functions and critical success factors.

During this stage, you ought to be able to answer a variety of questions as to the effectual use of the new procedure, the costs involved required to make transformations and the probable benefits when changes are put into practice to get to benchmark levels.

2. Analysis Phase
This involves scrutinizing information gathered in the planning phase. Analyses based upon the composed data engross appraising various factors for the improved results of benchmarked methods.
This examination forms the foundation for expansion of improved processes. The purpose should be to build up a superior process for your association. This point must be made as good a procedure or build up an even better one than the one being considered a benchmark.

3. Integration Phase
It involves connecting the planning and analysis steps towards the action phase.
Only subsequent to senior administration accepts the application for the enhanced procedure from management and the chief of segment can the initiative move ahead.
The obligation of organization has to be recognized, in addition to new functional goals.

4. Action Phase
This is where the genuine accomplishment happens. It involves training of plan for performance involving a variety of factors for instance the timetable for the execution, development owners, targets that are obligatory for execution of the venture.

Senior corporate executives must also be involved, plus responsible for, synchronizing activities, supervising progress of plans and taking out blockades to the accomplishment process. When the newly intended process is ready, an account that lists out the pros of that course has to be created.

Benchmarking must be used for process enhancement taking into consideration the organization’s performance administration system. Incessant process improvement can help bring a change in the mores of corporation, so they can subsequently endeavor to become the paramount in their field.