If you own a small business, you might consider incorporating performance measures to help it grow and become more successful.
Performance measures comprise aspects of your business that answer a basic question: “What key procedures or operations need to change to ensure our company’s continued success?”
Walmart is a good example of effectively using performance measurements. The company determined that to be competitive it had to streamline purchasing, lower costs and maintain top notch customer service.
The company started using satellite transmission technology to purchase directly from suppliers. That reduced purchasing costs and allowed Walmart to hold just enough inventory to serve its customers’ needs regularly without the cost of maintaining excess stock.
The company also created and hired the famous “people greeters” who welcomed customers as they walked into the stores. The tactics worked — the company successfully trimmed costs and improved customer satisfaction.
Take some time to review the processes that are critical to the success and continued operation of your business. Assess where your business operations can be improved. Most performance measures fall into one or more of the following categories:
|Effectiveness: How well does the product conform to company and customer requirements?
Efficiency: How well does a process produce the required output at a minimal resource cost?
Quality: How well does a product or service meet customer needs and expectations?
Timeliness: Are units of work done properly and on time? You will need to define timeliness for discrete units of work, typically based on customer needs.
Safety: How do you rank the overall health of the organization and the working environment of its employees?
You may need to develop additional or different categories depending on the industry your business operates in and its mission.
While this may sound complicated, the process starts out quite simply with these two steps:
Write down your observations. Many managers understand the direction the company should take but never take the time to record it. Documenting the vision clarifies what the business is for both the employees and the customers. A good company vision can be explained in one sentence. Beauty products company Avon, for example, states it this way: “To be the company that best understands and satisfies the product, service and self-fulfillment needs of women – globally.”
Being aware of the gaps between what the company is now and what you want it to be in the future is critical to determine what actions you need to take. The processes you need to focus on could range from sales through production, but you must know what they are before you can work on closing the gaps between current operations and the future you hope for.
Most successful companies use performance measurements to stay on track and meet their visions and goals. Consult with your managers and advisers to help you measure and monitor key processes and areas at your company.