Some businesses know exactly how they performed in 2020, in January and February of this year and year-to-date. Unfortunately, many others are possibly not quite sure of their last year or year-to-date performance. Some do not even know whether their revenues are adequate to cover their expenses.
Many are unaware of their break-even point where these revenues and expenses are equal. Others do not know whether this year’s performance is better than last year’s.
How is your business performing? What indicators are you using to measure your business' performance? What performance targets did you set for the year? Are you on track to achieving these targets? What are you doing to improve your business performance this week, this month, this year? Performance targets and measurements support businesses in gauging if they are growing or not and the rate of expansion.
I had an opportunity to work in a business that measures its daily performance in terms of sales. Besides, a comparison of the sales performance on the same day of the week the previous year would also be made.
The following day, all staff would be informed of the performance. As workers, all we needed to know was whether we were doing better than the previous year. It was exciting to witness growth day in day out. It motivated us to put in some extra effort.
How many of your staff members know how your business is performing? As an organization leader, why are you not communicating business performance to your staff? I believe that leaders in that business were intentional about communicating to staff the sales performance. We believed that performance tracking in other areas was happening, though it was not necessarily communicated. Year in year out, we witnessed the business grow in terms of total sales.
Customer retention rates
Measuring performance is crucial to managing growth. There are many ways to measure performance. Besides evaluating the financials, businesses can identify the number of new customers, level of customer satisfaction, customer retention rates, growth in the number of employees, public reputation etc.
Above-average business performance is seen if there is general well-being in the business. For the business to grow or simply survive, its well-being needs to be both financial and operational.
At the core of any performance management system, is defining the financial and operational targets. Once targets are defined, it is much easier to measure performance. Performance information is then fed back to the business to guide further improvements.
Business performance is dependent on many variables internal and external to the organisation. These variables include the leadership style, the strategy, people, the market forces, the regulatory environment etc. Despite the many variables, I believe that improved businesses performance is achievable by focusing on the people.
Improving business performance should be the final expected outcome of any strategy, policy or practice. Therefore, businesses hoping to sustain improved performance over the years have no option but to better the level of competence and motivation of their people.
Connect via Twitter @KiruthuLucy