Performance metrics help keep businesses moving smoothly along
October 29, 2014
How do you set human capital performance metrics for your organisation? For most companies, it starts with the organisation goals that are then translated into business goals. Then from business goals, they are translated into departmental goals. And from these departmental goals, they are translated into individual performance behaviours. In a similar fashion, a company’s performance starts from organisation goals. But from there, it splits off and we focus not simply on financial outcomes but the means to get there. This requires value-chain thinking.
Value chain thinking
Your value chain is the flow of activity from the start of business through to the delivery of your product or service. In order for any company to produce its service, it needs to marshal resources, both from within and from outside. Suppliers are key components in the value chain, and getting them on board to produce value for your customers creates a win-win ecosystem. This article is not about value chain thinking but as we identify the metrics to measure our business’ performance, we take a page out of value-chain thinking to get there. Here are 4 key organisation performance metrics:
1. Fulfillment time (or speed)
This is the total time taken to bring service/product from order receipt to delivery. This is to be measured against the optimal cycle time so that the business knows if processes are within accepted bounds or not.
In conjunction with fulfillment time, delays are a symptom that your processes are not optimized. That there are elements within the whole system that are not in sync with the rest of the process. If delays are not systemically addressed, it would grow wider and wider, impacting service quality and ultimately, customer satisfaction. So identify your metrics that measure delays because these show if your system is performing optimally or not.
3. Supplier quality
Managing your suppliers is a very important element of running a high-performing organisation. As key drivers in your value chain, they need to perform at the level that can support your performance goals as well. And at the right price. Sample metrics include service quality level, on-time correct delivery, cost, and response time to unexpected demand changes.
4. Warranty claims
The first assumption here is that you do offer warranties. All products and services should come with a warranty to give your customers confidence in dealing with you. But that is not all that warranties do for you. It is a channel for your customers to reach out to you to tell you that your product/service is not working well. I am sure you would rather them come to you about that than go out to the market and air their grievances there. You then can make restorative action and recover your service. So track the number of warranty issues that come up each month. This will indicate the quality of your processes.
Running a business can be complex. But it does not have to be complicated. Metrics allow you to identify what isn’t working well and help you zero in on the areas of concern. This can help you align your processes to the optimal level, balancing between cost and quality. Do this consistently well and you can maintain a tight and even keel.
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