Understand how to track performance so your business and team can flourish!
We all want to do well. As professionals, it's in our nature. In a job situation, most of us will aim to be the best we can be. There are exceptions, of course. You might be in a new role, and not completely certain of how things work. Or you're just starting out in your career, and are still finding your feet in the world of work. But essentially, once you're ticking along nicely in a job, you strive to achieve, to perform well. Not only can this help with your future career and where you're headed, but it also means the business you work for, your colleagues, and your superiors can thrive.
So, how do you know if you're performing well in your particular role? You might get a literal pat on the back from your mentor or boss when a project you've been running goes smoothly, or a team certificate for a job well done.
But those don't track your performance. You need key performance metrics, not only for staff performance, but also for other areas of a business. Not to be confused with KPIs (key performance indicators) or KRAs (key responsibility areas), key performance metrics are designed in such a way that companies can use them to measure the growth and development of their business, across all different areas, including how staff are performing, how projects are progressing, how sales are going, and how the business is doing as a whole.
What are key performance metrics?
Key performance metrics are ways in which companies can see how well they're performing across various parts of the business, from marketing and customer satisfaction to lead generation. Business metrics are benchmarks indicating how well your company performs on various scales. Having a working knowledge of these various measurements is a cornerstone of holistic business intelligence. Tracking business metrics gives you data that you can use to improve project management and business processes, direct your marketing efforts, assess the company's financial performance, and increase sales. These quantifiable metrics help you to set goals and achieve them.
The 4 types of key performance metrics
To set you on the road to success in any business, you need to keep a close eye on measurable strategies to check if you're on track to achieve targets. These key performance management strategies cover different parts of the business, with the four major ones being staff, business performance, projects, and sales. With each part, there are commonly used metrics that look at different areas.
Let's delve a little deeper into each one and discover how they can be used and enhanced to benefit an organisation.
The key performance metrics that measure staff performance look at how productive employees are, the quality of their work, and how efficient and effective they are in attaining certain targets that can affect the rest of the business. Adjusting aspects or improving ways of working, such as spotting a skills gap, can make all the difference to an employee's work. Usual staff metrics that companies monitor are:
Productivity: How productive are your staff? This is a vital metric that can lead you to alter procedures and staff behaviour in order to hit targets more efficiently.
Quality: If it's not up to scratch, it won't do. Quality can be measured by the number of complaints received, returned goods, or customer loyalty, where the product or service is so good that customers are compelled to return again and again.
Quantity: This can be measured by the amount of sales achieved or the items made by each individual employee.
Efficiency: This is where workers complete the correct tasks without wasting any time or effort, due to strong organisation skills and no procrastination.
If a business is failing, it might be because measures aren't in place to account for any adjustments when moving with the times, or certain targets are too out of reach. By tracking the three measures below, businesses should be able to move closer towards securing set objectives and achieving professional goals.
Profit: If you're not making a profit, you're not succeeding in business. It's as simple as that. To check your profit margin, you'll need a metric that tracks outgoings and revenue. If your outgoing expenditure is greater than money received in, profit is going to be hard to come by.
Productivity: Metrics that calculate productivity measure the ratio of work generated to resources used. A factory worker who's producing 50 items an hour, for example, is more productive than one producing 20 items in the same time frame.
Return on Investment (RoI): This does what it says on the tin. It's a measurement tool that gauges how successful a business has been in achieving specific objectives, and if any type of investment that the company makes is worth it. For example, if you buy stock for £10 a share and then sell it 10 years later for £20 a share, the RoI is 100%. But if it's sold just two months later, it's a better return as it's a much quicker turnaround.
Project management performance
Project management makes up a major area of most companies. Key performance metrics are used here to measure how profitable and effective a project is. Measuring the stages from conception to handover involves many processes which need to be monitored and assessed as to whether they meet certain criteria.
Cost: Being able to show that costs can be kept within budget is vital, as it can inform on whether a project is viable or not and has the legs to continue.
Scope of work: The scope of work details out all the tasks, assignments, and deliverables involved within a particular project, so the key performance metrics here can assist with scoping the timeline and cost required to finish a project.
Productivity: Here, the aim is to calculate the resources needed and effort required to meet productivity requirements.
Satisfaction: Last, but by no means least, satisfaction metrics take into account the high standard of the project and also include data which is centred around customer satisfaction.
Key sales performance metrics relate to sales of products or services that a company offers. They can cover both team and individual performance. Keeping an eye on all of this, and then looking at like-for-like, should keep sales on track or provide the information needed to make adjustments.
Sales prospecting: If you're not growing your customer base, you're going to find it a struggle. Prospecting for sales can be tracked with key performance metrics, such as the percentage of conversion of prospects to actual sales.
Sales activity: This is all centred around what the sales team are doing on a day-to-day basis and how active they are in closing deals. It can be measured by how many calls they make in a day, for example, or how long they spend in seeking out new customers.
Sales productivity: If a member of the sales team is meeting those revenue goals every time, productivity is going to shoot right up! Measuring information such as how long is spent on selling and the amount of tools used during that time are ways in which sales productivity can be monitored.
What is the difference between key performance metrics and KPIs?
It can be confusing, mixing up KPIs with key performance metrics, but there's a big difference. Metrics monitor and provide key data on the standard business processes that make up the organisation. KPIs, on the other hand, help to define the strategic direction of the business, giving it clarity to decide which direction to take a company in the future. In a nutshell, key performance metrics are the BAU (business as usual) measures, while KPIs help move the business forward by providing insight into what's required to achieve any long-term goals.
As for KRAs, mentioned earlier, they're a set of objectives that have to be accomplished for any type of job, with KPIs being the criteria set by which the accomplishments of the KRAs are measured.
It's worth updating your CV with any performance-related achievements you've acquired, even if you're not looking for a job at the moment. If you are, however, it's time to get your CV into shape. Start the process by exploring TopCV's free CV review, where you'll receive valuable advice and suggestions on ways to spruce up this vital document ready to apply for new positions.