The 6 Essential Performance Indicators for Effective Business Management

Commercial performance indicators (sales & marketing)

The mandate of these performance indicators is to identify and monitor your company’s business activities. This type of performance indicators can gather data allowing you to explore several strategic axes while validating several hypotheses referring to your commercial strategy such as :

• Measuring the revenues generated according to the production lines;
• Calculate the productivity of your production lines;
• Evaluate the production capacity of new products on your assembly lines;
• Estimate your potential to acquire new market shares;
• Identify the match between your products/services and its price on the market.

Organizational performance indicators

These measures are mainly mastered by those responsible for human resources. They are mainly used to facilitate the control of payroll costs and production capacity. However, it is still possible to formulate performance indicators to highlight issues that concern the workforce and to identify areas for improvement involving the management of your staff:

• Absenteeism rate;
• Cost of integrating new employees;
• Level of performance;
• Turnover rate;
• Etc.

Financial and accounting performance indicators

With reference to the main financial ratios established according to the sector of activity operated, the financial performance indicators provide the necessary indications to evaluate the financial health of the company. Thanks to this type of performance indicator, it is possible to evaluate several components involved in the solidity and financial potential of your organization:

• Return on investment;
• Return rate;
• Working capital requirements;
• Cash flow plan;
• Management of accounts receivable;
• Etc.

Internet and social media performance indicators

If you are a company that uses the Internet and social media in its marketing strategy, you are probably already familiar with this type of KPIs. The question remains to know to what extent you use them to diagnose your results. When used properly, these performance indicators help bridge the gap between the efforts invested in the digital promotion of your products and your sales performance. These metrics become the voice of your target market by highlighting different audience behaviours and their level of engagement with your brand. Here are a few examples of performance indicators found in this category:

• New visitors Data;
• The average length of a visit to your website;
• Volume of traffic at cost per click;
• Click-through rate of online advertising campaigns;
• Number of abandoned shopping carts;
• Most viewed products;
• Etc.

Performance indicators for supply chain, inventory and logistics

79% of companies with an optimized supply chain achieve revenue growth above the average for their industry. If you manage a manufacturing or distribution company, the use of performance indicators, which ensure increased control of your inventory and the turnover of your merchandise, will become your best friend. Analyzing the key measures of your supply chain will allow you to target the problems that a company may experience in its inventory management and logistics:

• Inventory turnover;
• Warehousing;
• Delivery;
• Order production;
• Etc.

IT performance indicators

The purpose of these indicators is to measure the performance of your organization’s technology activities. For a company that wants to make its business processes profitable and optimize them through technology solutions, it will be able, using these indicators, to calculate the total cost of its technology solutions and compare them to the gain they bring in terms of productivity or revenue (KPI strategic alignment). These indicators are also used to measure :

• The security of your IT systems;
• IT impacts and issues;
• IT infrastructure performance;
• System availability;
• Etc.

Remember that the performance indicators that you intend to implement in your management strategy must be in line with the company’s strategy. For this reason, it is quite possible that some of the performance indicators that you will have identified as relevant will come directly from cases specific to your organization. If this is your case, the following point will be useful.