Measuring business performance is crucial. It allows businesses to analyze its performances and progress toward business targets. It is so important that Peter Drucker, dubbed as the founder of modern management, was attributed to write, “What gets measured gets managed.”
Unfortunately, this has been misconstrued to mean “what cannot be measured is not worth managing”. As a result, various KPIs are formed, often adapting standard measurements without factoring in the circumstances or understanding why it came about. Business units end up rationalising the measurement following management trends instead of weighing its relevance and rationale. Here are some areas where you can consider so you are measuring with meaning and purpose.
Employee Engagement and Employee Satisfaction
In the last decade, ‘Employee Engagement’ and ‘Employee Satisfaction’ entered our lexicon – especially in the field of human resources. A great deal of research have been conducted to study the relationship of employee satisfaction, employee engagement, and job performance. Well meaning HR practitioners then attempt to measure these in their companies with the hopes to identify ways and means to improve employee engagement and overall productivity.
So, most businesses will see encouraging participation, especially when the survey is pushed to the employees. That company may record high levels of employee engagement and satisfaction while still seeing high staff turnover, increased hiring cost, and inconsistent performance. During exit interviews, a defensive attitude by the human resource personnel may further deter the honest feedback which would help these businesses understand why so many talents are leaving them.
Here is an instance where the matrices and the results don’t seem to gel. Until that fact-finding effort is done, the results and actual performance within the organization will remain inconsistent. Thus, it begs the question: was it an earnest attempt to understand why, or was it an exercise aimed at rationalizing the phenomenon?
Various Marketing Matrices
Marketing is another area with an array of performance matrics. In order to help marketers access the impact of campaigns across multiple marketing channels, they use marketing metrics to measure the values received from the effort. Measuring business performance using metrics operates across both traditional and digital media. Hence, it’s crucial to track the right ones that are relevant to your specific business context.
More so in digital marketing, where almost anything and everything can be measured. This ranges from Pageviews to click-through-rate (CTR) to bounce rate. No doubt that the industry produces these measurements as standard. However, it is meant to answer specific businesses questions. And these questions should be related to your unit’s business objectives and functions.
Some organizations insist on measuring the a campaign’s Reach. It makes sense where the first level intention is to build awareness among the target audience. However, reach in itself is not enough to measure top-of-mind recall. It could be assessed together with bounce rate or behavior flow. This could help you understand what your visitors look for when they land on your digital asset.
It is very important for small businesses to not be persuaded by the ‘big numbers’ presented by their vendors. Sometimes, additional work needs to be done to understand the marketing-sales phenomenon. Especially when marketing and sales are two distinct business functions that appear to overlap, but at best merely co-relates with one another.
Correlate Two Different Matrices
Previously we mentioned a bit on marketing and sales. The function of marketing is to increase market share and leads; sales will then convert those leads, prospects, and opportunities into revenue. A third component to this customer journey is fulfillment and servicing. While businesses aim to compartmentelize these functions, a customer who had terrible experience would spread the word and affect the experience of those closest to them. It can potentially lead to a public relations and marketing nightmare for the business where there is enough volume. Regardless of how good one’s next marketing plan is, without the right intervention and corrective action by different business functions, the numbers will be affected later.
From here we can deduce that matrices sitting within different domains can contribute towards a bigger picture. Businesses need to take a step bank to evaluate the relevance of different metrics and see how they impact other matrices within the process flow or work flow. Only where the relationship is clearly identified – often through both experience and revisions – can the business match the relationship of these measurements. Avoid making enhancements or improvements in silos.
On top of internal performance, correlate and integrate marketing matrices with other data such as economic factors, seasonality trends, etc. Aggressive marketing and sales without appreciating underlying tones affecting consumer behavior and market conditions could be detrimental to the initiative.
Measuring performance is crucial in gauging your business’s direction and performance. It helps you raise flags before the intervention or correction becomes necessary. You will also be able to identify the business’s strengths and weaknesses, top performances, areas for improvement, and set benchmarks with historical data.
The smaller your business, the more precise you need to know why you’re measuring–what it means to the company and how it relates to the business functions supporting its realization. It would be best if you did not end up rationalizing KPIs that may not be compatible with where your business stands in its current stage.