Business readiness

Key Performance Metrics and Reports

What is Key Performance Metrics and Reports?

Key Performance Metrics, also known as Key Performance Indicators (KPI), enable your company to measure performance in relation to strategic goals and business targets.

KPI are a set of quantifiable criteria that a company will use to track and benchmark its performance against own metrics, the metrics of peers and industry, at any given point of time or over a certain period.

These metrics depend on your company’s current objectives and may change over time as your business evolves.

Key performance metrics vary between companies and industries, depending on their priorities or performance criteria. There are two types of key metrics:

  • Financial Metrics: Measure the overall financial performance of your company.
    • Examples include Revenue, EBITDA, Profit and Cash Flow
  • Non-financial Metrics: Measure the operational performance of your company.
    • Examples include Number of Customers, Number of Sellers or Suppliers, Geographic footprint and Number of Manufacturing Units

Why are Key Performance Metrics and Reports important for business today?

Key performance metrics enable your company to:

  • Track past and present performance of your company and measure performance targets
  • Define future targets and goals of your company and formulation of strategies to achieve those targets
  • Create a learning development environment
  • Align employees’ performance targets with those of your company’s strategic objectives
  • Encourage accountability for both employees and employers as responsibilities are divided based on these metrics

Why are Key Performance Metrics and Reports important for an event tomorrow?

Key performance metrics are important for an event tomorrow, as they help:

  • Identify and analyze the financial and operational performance to estimate the future earning potential of your company
  • Assess the reasons behind any volatility in the performance of your company
  • Analyze the health of your company; successful offerings, capital requirements, cash flow and liquidity and benchmark performance against industry peers
  • Accelerate decision-making as the data required for due diligence is readily available across years
  • Assess the strategies formulated by your company to achieve business objectives

Pros of addressing Key Performance Metrics and Reports

  • Strong competitive advantage in the market, achieved by recognizing trends, tracking the company’s progress in relation to its goals and redefining strategy to boost performance
  • Improvement in efficiency as these metrics indicate areas that may require corrective action
  • Formulation of future growth strategy with a detailed analysis of past performance
  • Up-to-date performance reports allowing for easier communication with key stakeholders

Cons of not addressing this topic

  • Over-utilization of resources, as future goals and targets are not backed by quantifiable metrics
  • Difficulties in taking immediate corrective action due to lack of real-time and time series data
  • Impediment to growth as business performance is not benchmarked against peers or industry standards
  • Lack of accountability as no particular division or employee can be held accountable in case of subdued performance.

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