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 more than a few methods on how to create and build up key metrics. Most business entities build metrics in tandem with other tools and methods used for holistic management, for example, balanced scorecard and business KPI, to differentiate to it that set commercial goals and objectives are effortlessly met. Although different kinds of methods are used, the foremost matter human resources managers will scrutinize will be the KPIs and metrics. These have been time and again used by a range of business organizations worldwide for quite a few times. One of the most essential types of metrics will indisputably be efficiency metrics. The course of action of building and creating efficiency metrics helps settle on how professionally and capably work processes are implemented in the company.

Any major uncertainty or silliness that will appear between the expected efficiency metrics and the tangible metrics can reveal mammoth problems that will require a definite deliberation. These may absorb staffing problems, for instance, understaffing, over staffing, and the assignment of the professions to forged people, amongst others. It is, clearly, understood that the business manager will keep in check these concerns by addressing and straightening out each of the risk factors that caused pitiable metrics results. Metrics building and creation becomes straightforward and painless, on condition that all significant data being presented are straight and precise.

All pertinent data and information has to be presented specifically, regardless of the type of operation being used. For case in point, how can an employee accurately sort the time required by business continuation recruits to restore a out of action electrical wiring? Research is the priority that would decide the exact timeframes of each of the given assignment. Therefore surveys enter. These can without doubt decide the standards of work in a practical manner. The difficult task exerted on how to put up and develop key performance indicators and metrics must stay in touch with ideal monitoring systems.

If not, all of these would just wind up of no value. Efficiency metrics cannot work as they must without constant and clear-cut monitoring. This is something that no easily reached business association could ever carry out without. The extension of schedules for examining the execution metrics system must also be set in place.

Submission of reports on the measurement of the worth of dissimilar key performance areas should go in common with the other mandatory forms. Bearing all of these impressions in mind will undoubtedly do wonders when it comes to the construction and improvement of the metrics system. By fixing on to these, a business association is sure to create the metric system that will work sufficiently and flawlessly for them.