Turn your data into decisions with business performance indicators

As management expert H. James Harrington wrote: "Taking action is the first step towards control and improvement. ".

Data is a precious asset for an organisation. It enables us to gain a better understanding of our situation, so that we can control it more effectively. Because without control, there can be no improvement.

That's why today it seems impossible to manage activities without relying on corporate performance indicators. Like compasses, these KPIs support you in reaching your finishing line: your business objectives.

But as these metrics encompass many realities, we'll help you to see them a little more clearly. What are the most commonly encountered business performance indicators ? What type of activity do they measure?

Follow the guide 👇.

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Why are business performance indicators important?

Making informed decisions

Every entrepreneur wants to prosper and lead their business to success 🚀. But to achieve their various objectives (increasing the number of customers, penetrating a new market, increasing loyalty, etc.), they still need to rely on reliable data!

Business performance indicators, also known as KPIs, are used to assess the health of an organisation and then make decisions in line with the actual situation. They make it possible to exploit precise information relating to various areas of the business, with the aim of identifying potential areas for improvement and re-engineering processes accordingly.

It is now essential for any ambitious company to adopt this data-centric mindset.

💡 Good to know: technological developments are encouraging this direction, as it would seem tedious to collect and then process all this data by hand.

Fortunately, there is software that automates these operations. Business intelligence solutions such as MyReport spring to mind. A tool like this can collect all your data for you from a variety of sources, centralise it and then display your KPIs via dashboards. Saving time, reducing errors... these platforms are proving to be an invaluable aid to the widespread monitoring of business performance indicators.

Positioning yourself in relation to competitors and the market

By analysing all this data, you can pragmatically compare your practices with those of other companies and with industry standards.

By determining where you stand in relation to sector averages, you can pinpoint areas for improvement and, above all, draw inspiration from the best in the business to move forward!

Stimulating employee motivation and commitment

Performance indicators are not only a way of measuring the company's success, but also of motivating your staff!

For a start, they serve to clearly define what the organisation expects of them. And when uncertainties are eliminated, employees are more focused on achieving their objectives.

What's more, KPIs ensure that performance is monitored objectively, and provide a solid basis for triggering recognition and reward (the award of bonuses, for example). And that clearly contributes to employee commitment.

Defining your KPIs: what about the SMART indicator?

However, to reap the benefits mentioned above, it is important to identify precisely which business performance indicators should be monitored as a priority, as it is difficult to observe them all with a magnifying glass 🔎!

💡 To select the most relevant KPIs, we advise you to use the SMART method. This involves choosing metrics that are both :

• Specific: they describe exactly what is being measured without leaving any room for ambiguity ;
• Measurable: they quantify progress so that you can check objectively whether it has been achieved;
• Achievable: they are realistic and achievable with the resources and time available, with the aim of motivating employees without discouraging them;
• Relevant: they are aligned with the company's strategy and have a direct impact on its success;
• Time-bound: they include a deadline for achieving the objective.

The 5 different types of business performance indicator

What are the main key performance indicators?

Every company has its own specific characteristics and ambitions. As a result, it will not track the same KPIs as its neighbour. Nevertheless, here are the most commonly found KPIs, classified into broad categories.

Financial performance indicators

These indicators enable you to assess the financial health of your organisation, with a view to profitability and future prospects. They are key data for managers, but also for partners and other investors wishing to assess the value of the company.

There are KPIs linked to accounting and cash management.

👉 Examples of financial performance indicators:

• sales ;
• net cash ;
• working capital requirements ;
• overall net working capital ;
• Break-even point ;
• gross margin ;
• sales margin ;
• gross operating surplus ;
• cash flow from operations ;
• EBITDA, etc.

💡 More details in our article dedicated to financial indicators!

Sales and marketing performance indicators

These indicators are essential for assessing the effectiveness of the sales and marketing strategies deployed within the company. In particular, they provide information on campaign performance, customer engagement and the profitability of products or services sold.

These days, these metrics are increasingly linked to the digital space, in which a large proportion of brands' activities take place.

👉 Examples of sales and marketing performance indicators

• customer acquisition cost ;
• customer transformation rate
• customer loyalty rate
• attrition rate;
• CLV (Customer Lifetime Value) ;
• marketing ROI ;
• NPS (Net Promoter Score);
• Cost per click ;
• click-through rate;
• average session length, etc.

💡 More details in our article dedicated to marketing performance indicators!

Organisational/HR performance indicators

These indicators, managed by the Human Resources department, are traditionally defined with a view to controlling payroll costs and productivity.

However, considerations relating to the well-being and commitment of employees are becoming more and more of a priority. It is now accepted that a happy employee is more effective in his or her tasks. What's more, too many new recruits due to staff turnover can be costly!

☝️ Note that it is possible to group these KPIs into sub-categories, as HR encompasses so many realities: recruitment, skills development, social climate, etc.

👉 Examples of organisational/HR performance indicators:

• turnover rate ;
• absenteeism rate
• average cost of recruitment ;
• average recruitment time;
• retention rate for new employees
• Employee satisfaction rate;
• Employee engagement score;
• internal promotion rate;
• return on training investment;
• average seniority, etc.

💡 More details in our article dedicated to HR indicators!

Supply chain performance indicators

In production and/or distribution activities, stock management and transport are key components of your profitability. By way of illustration, it's well known just how costly over-stocking can be!

What's more, the supply chain crystallises a number of issues relating to customer relations and satisfaction. In an increasingly competitive economic environment, late deliveries and stock-outs are not a good sign...

Finally, managing your supply chain means anticipating fluctuations in an increasingly fluid market as effectively as possible!

👉 Examples of supply chain performance indicators:

• total cycle time ;
• transport cost per unit ;
• stock turnover rate ;
• average stock ;
• percentage of orders delivered on time;
• storage time;
• Supply chain costs as a percentage of sales;
• return rate ;
• Order fill rate;
• supplier satisfaction index;
• total replenishment time, etc.

💡 More details in our article dedicated to logistics KPIs!

IT performance indicators

At a time when businesses are undergoing a digital transformation, IT is perfectly integrated into day-to-day processes, even when the activity is not particularly online.

For example, most organisations now use business software to automate their daily tasks. The efficiency of IT infrastructures therefore needs to be closely monitored.

Add to this the challenges associated with IT security, and you'll understand the value of IT KPIs in ensuring that the technologies used are aligned with the organisation's overall objectives.

👉 Examples of IT performance indicators:

• system response time ;
• network availability ;
• backup success rate;
• number of security breaches detected;
• average incident resolution time ;
• resolution time for critical problems;
• the percentage of uptime for critical systems;
• the number of open VS closed support tickets;
• the total cost of ownership of IT equipment;
• return on investment for IT projects, etc.

Performance indicators and dashboard

Focus now on the dashboard, the essential tool for effectively monitoring your business performance indicators 📊.

This device summarises all the selected KPIs within a single document, for better visibility. In other words, it transforms raw data into usable information, even for employees who are not data experts.

Generally developed using software such as the BI solutions mentioned above, these dashboards have the ability to provide real-time data updates, helping executives and other managers to quickly understand where the business is excelling and where improvements are needed. In short, they promote proactivity.

💡 Worth knowing: building a good dashboard follows certain rules:

• limit the number of KPIs to those most relevant to the company's strategic objectives ;
• design a dashboard that is visually clear and easy to understand, to avoid information overload;
• use appropriate graphics to quickly read the key data;
• update it regularly.

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Business performance indicators: what to remember?

You are now familiar with many examples of business performance indicators. As you have seen, there is something for everyone, from sales management to financial management, HR, supply chain and IT.

Faced with this vast choice, you need to choose the most relevant ones, based on the SMART methodology, among other things.

Of course, once the KPIs have been selected, it's time to analyse them, which is essential for rapidly identifying trends: what are your strengths, which you can capitalise on? And your weaknesses, which need to be addressed?

Finally, all this work is meaningless if you don't take corrective action. This is the ultimate aim of indicators: to transform data into decisions and then into concrete actions, propelling the company towards lasting success.