Business Performance Metrics

You can’t improve your processes until you know what to measure.Today most of organizations are struggling to get appropriate metrics.

Balanced Scorecard, a term coined by Robert S.Kaplan is an important concept for the understanding business measures, basically separate organizational metrics in four perspectives

Financial Perspective: organization with insight into how well its goals, objectives, and strategies are contributing to shareholder value and the bottom line.

Customer Perspective: organization’s value proposition and measures how effective the organization is in creating value for its customers through its goals, objectives, strategies, and processes.

Internal business perspective: organizational processes designed to create and deliver the customer’s value proposition

Learning & Growth Perspective: capabilities and skills of an organization and how it is focused and channeled to support the internal processes used to create customer value.

Key Performance Indicator: KPIs are both financial and non financial metrics reflect an organization's key business driver.KPI is measurable value that demonstrate how effectively a company is achieving key business objectives. KPI can be derived from strategic goals driven by senior management which must be aligned with mission and vision of the organization.Further drilled down to department wise and follow SMART acronym.

• Specific: Check if objective is specific
• Measurable: quantitative and easily determined
• Achievable: set regards to benchmark level
• Realistic: aligned with organization goals and objectives
• Time Bound: reflect specific period of time

Some examples for the right KPI are mentioned here:

Financial: Return on investment, Economic Value added etc.
Customer: Retention Rate, Referral rate etc.
Internal Business Process: Throughput rate, Turn around time(TAT), Service Level agreement(SLA), Defect Rate, Yield etc
Learning & Growth: Absentee rate, Percentage of internal promotion,Employee satisfaction etc.