Discover the meaning of performance indicators and learn how to use them to drive the success of your business.
More important than setting goals is knowing how to achieve them!
In this sense, monitoring the performance of activities and actions to find out if the imposed targets can be achieved is essential to keep up with the pace and progress of the company.
In this article we will talk about what performance indicators are, what they are for and how to use them.
What are performance indicators?
Performance indicators are metrics used by companies to measure the performance of decisions and actions taken in order to achieve established goals.
These indicators serve to know if the company is going in the right direction. When collecting or presenting positive or negative results for the team, it is fundamental to be based on facts so that the feedback is realistic. Performance indicators stand out as exceptional allies in demonstrating actual results.
Thus, they allow you to make more assertive decisions and intervene quickly when identifying flaws in projects.
One of the greatest benefits of performance indicators is that they turn results into numbers, thus enabling a real view of the progress of processes and a plausible evaluation.
Importance of performance indicators
Understanding what performance indicators are for is essential before using them in business management, so we'll show you which features make them so important.
Direction
Through the performance indicators it is possible to measure the mistakes and successes within the project, knowing if the company is moving towards the established goals or if the activities are not satisfactory in relation to the goals.
Improvements
Knowing the successes and errors within the project, it is possible to develop improvements and optimize results.
Recognition
With the performance indicators, it is possible to recognize which team, activity or sector is being effective in relation to the goals, which is behind schedule and where it is necessary to establish improvements.
Basement
When demanding or presenting positive or negative results to the team, it is essential to be based on facts so that the feedback is realistic.
Performance indicators stand out as exceptional allies in demonstrating real results.
Decision-making
Performance indicators are extremely reliable sources for decision making. In this sense, its numbers and information indicate strengths and weaknesses and provide a clear vision for assertive decisions.
Types of performance indicators
To have results through the performance indicators you need to know which indicators your company needs. Therefore, it is necessary to carry out an analysis and identify where are the areas that need more attention.
Some of the most common performance indicators are indicators of:
- Productivity;
- Quality;
- Capacity;
- Strategic;
- Profitability;
- Profitability;
- Competitiveness;
- Value;
- Turnover.
Productivity
Productivity indicators indicate the performance and efficiency of each employee based on data on their productivity in relation to deliveries. If they indicate low productivity, problems such as employee demotivation or lack of quality resources may be the cause.
Quality
Quality indicators go hand in hand with productivity indices. For this reason, they understand all non-conformities and deviations in the process, evaluating points for improvement in the production process.
Capacity
Capability indicators indicate the responsiveness of a process. They assess how much a machine can operate and deliver in a given period, for example.
O Gantt Chart can be used as an indicator of capacity.
Strategic
The strategy indicators help to locate where the company is in relation to the established goals.
In this sense, these indicators compare the reality in which the company is with the expectation that was defined.
profitability
Profitability indicators are the percentage ratio between the company's profit and sales.
Thus, these indicators help to understand the company's financial return, costs and how the general situation is, making it possible to create strategies to improve results.
Profitability
Profitability indicators represent the percentage ratio between profit and investment. They analyze the absence or presence of profit.
Competitiveness
Competitiveness indicators measure the company's relationship with the competition.
This indicator is given by dividing the sales volume by the total market sales volume to analyze the corporation's competitive advantage.
Value
Value indicators assess the customer's added value, that is, how much he is willing to pay for what you deliver and the amount effectively borne by the company, with costs and expenses.
turnover
Turnover indicators measure the relationship between the average length of stay of each employee in the company.
How to choose performance indicators
To have successful use of performance indicators you need to use the correct indicators for what your company needs.
Below you will read some tips on how to choose your indicators. Look:
1 – Choose indicators that are consistent with the company’s objectives
To choose the ideal performance indicators, the company's objectives need to be well defined, so you list the indicators and evaluate which ones are consistent with the company's strategic objectives.
Invest in what makes sense and adds value to the results.
2 – Keep a malleable amount of KPIs
As mentioned above, keeping only the necessary KPIs is a good way to get results through performance indicators.
On the other hand, maintaining a large number of indicators makes their handling and analysis more difficult to follow.
3 – Analyze the company profile
Choose indicators consistent with the reality of the company. Big companies use different KPIs than small companies even if they have the same objective.
Check your performance indicators
Now that you know what performance indicators are, how to identify which ones you need and how to use them, don't forget to carry out frequent monitoring to evaluate the results and identify strengths and weaknesses in your company.
And if you're reading this article, you're certainly interested in knowing and increasing the performance of your production, team or other areas, and to accomplish these goals you can count on the most complete platform on the market, the Manufatura 360!
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Through it you can measure the increase in productivity of machines and equipment, identify production bottlenecks and make improvements. OEE is also a tool to increase profitability and reduce costs.
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