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The success, or otherwise, of strategy implementation can be monitored by the use of performance measures. These are often referred to as key performance indicators (KPI) or key success indicators (KSI) and they enable managers to track the progress of strategy implementation in order to highlight any problems at an early stage.
Much of the data gathering and data recording that occurs in organizations feeds directly or indirectly into the production of performance measures. Helping employees to see the links between what they do and the organization’s performance can be a powerful motivator and performance measures are a useful mechanism for clarifying what those links are.
For example, a salesperson may be required to report the number and value of sales they have achieved on a daily basis. Those sales will be collated with the sales of other salespeople and eventually feed into an organizational performance indicator. By sharing the organizational performance score and illustrating the team’s and individual’s contribution to it, a manager can help show the employee how their contribution to the organization is measured.
There are many different ways to measure performance
The tables below list over 50 performance indicators for a range of different organizational disciplines. Some of these will be familiar to you, while others may not. Read through all of the tables since performance measures for seemingly unrelated disciplines may help you to understand the kind of issues that drive other departments.
Many of the measures listed in the tables attached can be used for any time period. Traditionally, these time periods will be monthly, quarterly or annually but you should select the duration that is most appropriate for your organization/area of responsibility.
Financial
These financial measures provide an indication of how much monetary value is being generated by an organization. Managers tend to use these as an indication of overall organizational performance since all an organization’s activities have an impact on the bottom line.
Name of measure
How is it calculated
How is it presented
Useful Notes
gross profit
Sales - costs directly related to those sales.
Expressed as an amount of currency.
The higher the value the better the performance.
net profit
Total revenue - total expenses (including tax).
Expressed as an amount of currency.
The higher the value the better the performance.
profitability
Net profit / net sales x 100.
Expressed as a percentage.
This metric can be applied to particular business units, products and product lines as well as the whole organization.
net profit growth
(Net profit this period - net profit last period) / net profit last period x 100.
Expressed as a percentage.
This metric can be applied to business units, products and product lines as well as the whole organization.
return on investment (ROI)
(Financial benefit - amount invested) / amount invested x 100.
Expressed as a percentage.
Also referred to as return on capital (ROC). This metric can be used for a wide range of situations such as projects, products, marketing activity, training, etc.
Facilities
The provision of building space is a necessary cost for all organizations. Facilities management aims to provide the optimum working space for the minimum cost. These measures provide a focus on cost management and service delivery in the support and maintenance of an organization’s buildings. Often organizations will have a specific person or department responsible for managing their facilities.
Name of measure
How is it calculated
How is it presented
Useful notes
occupancy cost per square meter
Total cost of building or accommodation / number of square meters available.
Expressed as an amount of currency.
Often used to help organizations benchmark their accommodation costs.
maintenance costs
Total cost of maintenance (electrical, plumbing, air conditioning, general maintenance costs).
Expressed as a value in currency
Often used to help organizations benchmark their accommodation costs.
number of maintenance calls
Established through a straightforward measurement process.
Expressed as a number.
Can be used to identify seasonal and general trends.
number of outages for air conditioning/ heating/ electrics/water, etc.
Established through a straightforward measurement process.
Expressed as a number.
Can be used to identify seasonal and general trends.
air conditioning/ heating/ electrics/water outage
Total length of time that service is not available / length of time service is required x 100.
Expressed as a percentage.
The lower the percentage the more reliable the system.
space utilization
Amount of space used / total amount of space available x 100.
Expressed as a percentage.
Can be used to identify waste and also potential shortages.
recycling
Amount of material recycled / amount of recyclable material x 100.
The amount of material is most often measured by volume or by weight.
Generally, organizations will aim to increase the amount of material recycled.
energy usage
Amount of energy used.
Expressed as an amount of kilowatt hours.
Often used to identify seasonal trends and potential wastage.
Human Resources
Many organizations recognize that their most important asset is their people. The human resources measures listed below provide managers with an indication of how well their people policies and procedures are working.
Name of measure
How is it calculated
How is it presented
Useful notes
staff costs
Salary + National Insurance contributions + value of benefits such as pension contribution, health insurance etc.
Expressed as a value in currency.
Often used by organizations to benchmark their staffing costs.
staff attrition
Number of staff choosing to leave the organization / total number of staff x 100.
Expressed as a percentage.
Often used to anticipate recruitment needs and identify potential retention issues
absenteeism
Total number of days lost / number of employees.
Expressed as an average of the number of days lost per employee.
Organizations will aim to reduce absenteeism so the lower the average, the better.
average length of service
Sum of the length of service for all employees (in months or years) / number of employees.
Expressed as an average length of time.
Used by organizations as one measure of employee engagement and to help predict recruitment needs.
employee satisfaction
Established through an employee survey.
Normally expressed as a percentage of employees with a favorable view of the company and their position within it.
Often an employee survey takes a snapshot of employee satisfaction. A number of surveys over a period of time can be used to establish a trend.
training spend as a percentage of turnover
Total training spend (including the salary cost of having staff away from their jobs) / total turnover x 100.
Expressed as a percentage.
Many organizations set their training budget as a percentage of turnover.
recruitment cost
Amount spent on recruitment (including pro-rata salary costs of those recruiting, advertising costs, etc.) / total number of employees recruited.
Expressed as an average of the cost of recruiting an employee.
Often used by organizations to benchmark their recruitment costs.
average length of recruitment
The sum of the length of time it has taken to recruit each employee from initial notification to start date / number of employees recruited.
Expressed as an average length of time.
Can be used as a measure of efficiency for an organization’s recruitment system.
number of disciplinary/ grievance cases
Established through a straightforward measurement process..
Expressed as a number.
Can also be used to measure the number of cases at a particular stage of the disciplinary/grievance process.
Technology
Technology is often a significant business expense and many managers are responsible for ensuring that their staff have sufficient support for using technology and that the technology used is adding value.
Name of measure
How is it calculated
How is it presented
Useful notes
application downtime
Time application is not available / total time available x 100.
Expressed as a percentage.
The lower the percentage, the better the application reliability.
number of faults reported
Established through a straightforward measurement process.
Expressed as a percentage.
Can be used to benchmark standards and as a predictor for resource requirements.
faults resolved within X number of hours/days
Number of faults resolved within X number of hours or days / total number of faults x 100.
Expressed as a percentage.
Normally X will represent a service level agreement. The closer to 100% the measurement is, the better the level of service.
average IT spend per employee
Cost of IT services / number of employees.
Expressed as an average cost per employee.
Often used by organizations to benchmark their IT costs.
efficiencies achieved
Time saved on task resulting from new technology / time spent on task before access to new technology x 100.
Expressed as a percentage.
The higher the percentage the better the efficiency achieved.
Marketing
Marketing aims to anticipate, identify and satisfy customer requirements in the most effective and profitable way possible. The measures listed below help managers to understand how effective the organization’s marketing strategies are.
Name of measure
How is it calculated
How is it presented
Useful notes
market share
Amount of market captured / total market size x 100.
Expressed as a percentage.
The higher the percentage the larger the percentage of the market captured. Organizations will normally set a target for market share.
marketing cost per sale
Total cost of marketing / total sales resulting from the marketing.
Expressed as an average of currency per sale.
The lower the average value the more efficient the marketing.
leads generated
Number of leads generated from a particular marketing campaign.
Expressed as a number.
Number of leads generated from a particular marketing campaign.
level of brand awareness
Established through a consumer survey.
Normally expressed as a percentage of people who recognize the brand image or name.
When taken over a period of time, this metric can be used to measure the success of brand marketing.
product development time/cost
Total time or money spent on product development / total number of products fully developed.
Expressed as an average time/amount of money per product.
Can be used to plan the budget for future product developments.
profit margin
Sale price of the product or service - total cost of producing product or providing service.
Expressed as an amount of currency.
Used to benchmark similar and competing product lines.
Sales
For organizations whose ultimate aim is to generate money, sales is a key process. The measures listed below help managers to identify where their sales are coming from and evaluate their sales performance. For most of these measures, managers will want to compare performance over time intervals (for example, performance last month/quarter/year versus this month/quarter/year) and also compare the performance of different individuals or teams.
Name of measure
How is it calculated
How is it presented
Useful notes
conversion rate
Number of sales / number of opportunities x 100.
Expressed as a percentage.
The higher the percentage the more effective the sales person/team, etc.
average revenue per sales person
Total value of sales / number of sales people.
Expressed as an average amount of currency.
The higher the value, the better the performance of the sales team members.
sales per channel
Total value of sales / total number of sales.
Expressed as an average amount of currency.
Used to set targets.
value of pipeline
Amount of potential sales based on current leads and opportunities.
Expressed as a value in currency.
Can be used to anticipate future sales cash flow.
percentage of multiple sales
Number of customers buying more than one product or service / total number of customers sold to x 100.
Expressed as a percentage.
A higher percentage, generally indicates better performance. Can be used to benchmark sales performance.
repeat business
Number of sales from existing customers / total number of sales x 100.
Expressed as a percentage.
This is a useful indicator of how reliant an organization is on existing custom.
canceled orders
Number of cancelations / number of orders x 100.
Expressed as a percentage.
A high percentage of canceled orders would indicate problems in the sales process.
Production/Operational
Production/operational performance is measured on the basis of output and quality. The measures below are common ways that organizations quantify these two key areas.
Name of measure
How is it calculated
How is it presented
Useful notes
employee / operational facility output
Total amount produced (expressed in number of items, transactions, value etc.) / number of employees, operational facilities etc.
Expressed as an average number of items / transactions / value per employee / operational facility.
Generally used to set targets and identify fluctuations in output.
defects per unit (DPU)
The number of defects found / number of product units inspected.
Expressed as a number.
This metric is often converted into the number of defects per million units (DPMU) by multiplying the result by one million.
defects per opportunity (DPO)
The number of defects found / (the number of units x the number of opportunities to create a defect when producing one unit).
Expressed as a number.
The lower the number the better the quality control processes.
cost per unit
The total cost of producing a number of units / the number of units.
Expressed as a number.
Used to benchmark performance from one time period to another.
capacity utilization
Current output / maximum output x 100.
Expressed as a percentage.
Usually, capacity utilization in the region of 90% is aimed for. Lower and there may be efficiency issues, higher and there may be problems meeting demand increases.
Customer Service
In any industry it is important that an organization delivers the level of customer service that its customers expect. When customer service falls below expectations, customers are more likely to look elsewhere for their products and/or services. Listed below are common measures of customer service performance.
Name of measure
How is it calculated
How is it presented
Useful Notes
customer satisfaction
Established through a customer survey.
Normally expressed as a percentage of customers with a favorable view of the service/product they have received.
Used as a measure of service quality. Can be used to benchmark against other organizations.
service quality
Number of late, on time or early deliveries / total number of deliveries x 100.
Expressed as a percentage.
Used to set and measure service level agreements.
customer churn
Number of customers who stop using the products or services of the organization / total number of customers x 100.
Expressed as a percentage.
The lower the percentage, the better the retention strategy.
service volumes
Number of requests dealt with, interactions or calls.
Expressed as a number.
Often used to identify service demand trends.
average request time
Total amount of time dealing with customer requests / total number of requests.
Expressed as an average amount of time.
Can be used to set targets and identify trends over a period of time.
self service percentage
Number of customer transactions carried out online or via automatic phone response / total number of customer transactions x 100.
Expressed as a percentage.
Many organizations aim to increase the self-service percentage because of reduced costs.
number of complaints or goods returned
Established through a straightforward measurement process.
Expressed as a number.
Used as a measure of service or product quality.
