Corporate Performance Measurement: Your Metrics and Why They Matter

Most organizations understand the importance of regularly measuring its actual business performance against its intended goals. But accurate corporate performance measurement requires you to track both your relevant metrics and key performance indicators (KPIs) against your actual results. This is an ongoing process that includes gathering data from all areas of the organization to gauge its positioning and progress towards objectives.

Despite being fairly complex, it is a vital part of the strategy of any successful organization.

What is corporate performance?

Corporate performance is the blended analysis of how well a particular organization accomplishes its goals. It entails measuring the actual performance of the business against set goals. These goals are highly dependent on the organization, but tend to fall within the set categories of financial, market, and shareholder performance. 

To begin, each organization sets their own corporate performance targets and KPIs. Once set, they then implement a system to track, assess, and measure those targets. This is where corporate performance measurement and corporate performance analytics comes into play. 
 

Why is corporate performance measurement important?

Regular corporate performance measurement (including corporate performance assessment and corporate performance evaluation) is vital to the success of your organization’s GRC plan and to understanding how your organization is progressing more generally. 

Corporate performance measurement ensures that you maintain key metrics that allow you to understand and improve your revenue, and grow your profits. In addition, it gives you the insights that you need to undertake strategic financial planning, budgeting, forecasting, data reporting and analysis, and make solid decisions around revenue, expenses, and inventory. Finally, it protects your organization against financial and organizational problems, helps lower process costs, and improves productivity and effectiveness.

Measuring corporate performance

There are four steps for measuring corporate performance in a continuous feedback loop.

1. Setting your goals

Setting your goals is the first step to measuring corporate performance. Every organization will have its own set of goals. To narrow down into its unique goals an organization simply needs to ask itself what it is trying to achieve. 

These goals could be based around customer acquisition or customer retention. They could relate to profit margin or production efficiency. They could be macro or micro. Or they could be focused on market share and sales. Whatever goals your organization sets, however, should be measurable.

2. Developing your KPIs 
 

KPIs are standard ratios that give you insight about your corporate performance. These are based around your goals and give you a measurable number that you can analyze. For example, one of your business KPIs may be “targeted new customers per month”. Another may be “revenue generated per employee”. Both of these targets are easily understood via capturable data.

The KPIs you set for your organization will be different from those set for other businesses even in the same industry. They simply must be meaningful and relevant to you, and, of course, measurable against outcomes.

3. Defining your metrics
 

The third step is defining your metrics. Business metrics are quantifiable measures that track your business performance. They are often considered one and the same with KPIs, and they are not mutually exclusive – a KPI may also be a business metric – but they are not definitively the same.

The difference between KPIs and metrics is that KPIs are solely focused on your objectives and targets. They measure very specific goals. On the other hand, metrics can be anything that measures progress. For example, the amount of visits to a product’s landing page is a measurable metric that has value and may even be tied to business outcomes. But without a specific goal, it is not a KPI. 

It’s important to have both KPIs and metrics within your corporate performance measurement process because they provide different motivations within an organization. While KPIs act like destinations or goalposts along a journey, your metrics can provide you with an overall map of the progress of your business. 

4. Tracking and measuring
 

The balanced scorecard is one of the most common systems used to track and measure corporate performance. This system combines financial, customer, process, innovation, and organizational learning metrics to track and measure an organization’s performance from a long-range and broad performance perspective.

This management system helps to identify measures that should be taken by providing feedback about outcomes related to organizational processes. This means that organizations can easily align their daily, weekly, monthly, quarterly, and yearly activities with the overall goals of the organization.

Measuring long-term performance

Historically businesses have focused on financial metrics in order to determine corporate performance. But there’s a growing focus on combining non-financial and financial metrics to achieve a broader overall view of the long-term performance of an organization. This is done via the balanced scorecard approach.

The balanced scorecard approach is a great way to evaluate long-term performance because research shows that non-financial metrics give a longer view into financial performance.

See also: Financial risk management