Performance management, being a forward-looking ongoing process, tools for goal setting and regularity in progress checking are imperative to the efficiency of performance management software. In a typical organizational setup, performance measurement is done through collection, analysis and reporting back of the information processed relating to the performance of an individual, a team, a system or the organization as a whole.
The success of a business requires very careful management of the decisions relating to new investments that leads to growth and expansion. Strategies need to be in place so that owners or managers do not feel a lack of grip on the operations as the business expands.
The importance of performance management software can be understood in tracking business growth. Apart from providing information on current and ongoing activities within the business, it also helps in setting of a target so that the growth strategies can be implemented properly.
Below are few criteria for choosing key performance indicators for business growth:
- Deciding what to measure and keeping the ultimate business goals very closely linked with the indicators is crucial.
- Performance indicators should be measurable in terms of numbers. Inability to express the measurements as numbers may lead to varied results and lack of consistency if the measurements are carried out by different groups at different times.
- The key performance indicators should be able to relate to certain factors of the environment in which the business operates. Certain level of control over these environmental factors is crucial to business growth. For example, although the base rate of interest may be a key performance indicator for a certain industry, however, this indicator cannot be used, as businesses cannot have control over it. On the other hand, fluctuations in rate of interest can be controlled, and hence can prove to be a powerful indicator.
Key performance indicators are an integral part of any performance measurement system and is very closely related to target setting. They are powerful management tools to facilitate business growth and hence should be selected and implemented carefully.