Category Archives: Performance Management

Simple Model of Business Management of the Organization

The main function of any industry is to transform resources including raw materials and components into a finished product that is delivered to the end customer. A first-rate organization wants to provide the best quality at the best price and at the right time.

model of bussiness managemant organization

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Examples of KPI’s for specific measurement areas

Examples of KPI’s for specific measurement areas include:

Customer Service

The significant points that needs to be measured are

  • Price
  • Delivery
  • Support
  • Satisfaction

Examples of KPI’s (Price comparisons to competition, number of on-time deliveries, response times, customer complaints, number of product returns, customer survey results, service awards, etc.)

Internal Operations

  • Efficiency
  • Costs
  • Production
  • Inventories

Examples of KPI’s are ( Cycle times, inventory turnovers, defect rates, plant utilization, targets met, unit cost compared to competition, overhead trends, etc.)

Innovation

  • ┬áNew Products
  • Technology
  • R & D

Examples are Number of new products, number of patents, new technologies adopted, system improvements implemented, etc.

Financial

  • Profitability
  • Growth
  • Value

Examples of KPI’s ( Return on Equity, growth rate compared to industry growth rate, EVA, levels …

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Key performance Indicators (KPI)

Definition:

Key performance indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors (of the company, department, project.) .It is a performance indicator, i.e. the performance of the process it is measuring should be clearly indicated by the Key performance indicators.

Also known as KPI, Key success factors (KSI).

KPIs focusing the employees’ attention on the tasks and processes that executives view as most critical to the success of the business. KPIs are like levers that executives can pull to move the organization in new and another directions,that are good for the company. Without KPI an organization will not perform to its level best.

Types of KPI:

There are two major types of KPIs:

  • Leading indicators
  • Lagging
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Use of Performance measurement

The use of performance measures is split into two main subdivisions.

  1. The measures come from the strategy; the initial purpose for which they had better be put is that of assessing and evaluating the success of the implementation of that strategy.
  1. The information and feedback from the measures should be applied to challenge the suppositions and examine the validity of the strategy.
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Performance measurement and improvement framework

An effective performance measurement model will concentrate on the customer and measure the suitable things.

There are five significant steps in a performance measurement and improvement model – the strategic aims of the organization are turned into suitable measures of performance, metrics are built up to compare the suitable performance with the effective attained standards, gaps are discovered, and improvement activities are started. These steps are continuously carried out and reexamined:

  1. Establish key goals
  2. Establish Matrices
  3. Understand performance
  4. Initiate improvement
  5. Implement and Review

It’s of significant importance that the performance measurement systems practiced by employees in the organizations be revised and improved continually as the environment and economy alters. If they failed to establish, then the necessary modifications can inhibit …

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