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According to Peter Drucker, “what gets measured gets improved.” Many business owners follow this statement when making decisions within their companies, using indicators.
Periodically, our managers request indicators to analyze the performance of their teams and verify if they are on the right track according to the planned strategy. It is during these analyses that corrective actions arise based on the alignment.
The problem is that organizations often accumulate many indicators that simply won’t bring them any benefits. To better understand this issue, check out this article. And enjoy your reading!
Process Performance Indicators
We can divide indicators, or more specifically “process performance indicators,” into 4 main types:
- Strategic: related to critical success factors and the company’s vision.
- Productivity: the relationship between resources consumed and process outputs.
- Quality: verify if the process’s customer is receiving the expected value.
- Capacity: show how many outcomes a process delivers in a specific period of time.
There are several advantages to having process performance indicators, such as:
- Providing data and information about each of the process stages.
- Supporting managers’ decision-making.
- Increasing process efficiency.
- Facilitating the communication of results to external and internal clients.
- Measuring the company’s results in a tangible way.
To benefit from these advantages, the manager has to identify which ones make the most sense, strategically speaking, for their business. Avoiding an excess of indicators is crucial because our desire to “monitor” all operations often complicates analysis and directly interferes with decision-making.
So, what is the ideal number of indicators within a company? Each manager will have to evaluate this by analyzing their process and conducting necessary tests to determine the ideal quantity.
At the very least, it is necessary to have an indicator that provides reliable data on the efficiency of the processes being executed.
How should we create our indicators?
The first step when creating an indicator is to identify what exactly needs to be “measured.” To do this, we must be fully familiar with the processes or information that will be analyzed.
The second step is to relate the indicator to the processes that are directly linked to its management. This allows for prioritizing what needs to be measured and monitored.
The third step is to measure the indicators periodically. In case any corrective action is needed based on the information presented in the indicator, action plans can be linked to address the necessary corrections.
In conclusion
Indicators help monitor actions within companies. However, it is important to know the correct and necessary quantity of indicators to avoid wasting time on irrelevant information for monitoring.
