Companies performances issue
Defining what a successful business is, is as complex as determining the meaning given to success. It is thus easy to run after such concepts without real knowledge of its level of progress or drift. However, if there is one thing that is clear, it is that between ambition and reality, there is action. But then, an action that bears. To this end, how could a company manage to dodge a slow decline or, capitalize on its key success factors and project itself more? This is the whole issue of business performance.
I- The performance concept
Company performance expresses the degree of achievement of the objectives pursued. However, a business that wants to be successful must be both effective and efficient.
A company is said to be efficient when it achieves the objectives it has set for itself. Moreover, we will say that it is efficient when it achieves the objectives it has set for itself with the minimum of resources. But to be sure, it is necessary to have evaluation tools.
II- Performance evaluation tools
Evaluating the performance of a company amounts to making measurements using indicators on various aspects that furnish its life. These include the financial, economic, social, organizational and societal aspects.
As previously mentioned, a successful business must be both effective and efficient. Indeed, the various aspects mentioned above can be assessed from these two angles.
Thus, the measurement of effectiveness will be done by means of an indicator which expresses a relationship between the result obtained and the objective sought. While measuring efficiency will go through the use of an indicator that expresses a relationship between the result obtained and the means implemented. To this end, various measurement indicators exist in order to inform the choice of any decision-maker according to the objectives pursued.
II.1. Measurement indicators
II.1.1. Financial performance measurement indicators
- Return on Investment (ROI: Return on Investment) is a ratio used to measure the economic profitability of the capital used by the company. It is the ratio between operating profit and invested capital.
- Return on Equity establishes a ratio between net income and equity. Equity is the money that shareholders contributed when the company was created or that is left at its disposal without being distributed in the form of dividends to potential shareholders.
- Economic Value Added (EVA: Economic Value Added): is a financial indicator that allows capital providers to verify that their investments generate a cash surplus. It is therefore an excess of profit due to the activity of an organization over the cost of financing the providers of capital.
II.1.2. Indicators for measuring economic performance
- Price competitiveness: this is the ability of a product to attract customers through its price instead of competing products.
- Non-price competitiveness: refers to the ability of a product to attract customers to the detriment of competing products through elements such as product quality, innovation, service, design, etc.
II.1.3. Indicators for measuring social performance
Yes, a business is also its social impact. Evaluating a company’s performance at this level can be done in various ways, including through the social report. The latter makes it possible to summarize the main figures allowing to assess the social performance and the social relations within a company. We can cite: the amount of remuneration, the number of work accidents, occupational diseases, etc.
II.1.4. Organizational performance measurement indicators
It is a question here of measuring the performance of the company at the level of production quality, flexibility, deadlines … Seen from another angle, we could say that it is a question of estimating the level of influence that the organizational structure has on other performance indicators.
II.1.5. Indicators for measuring societal performance
Such indicators provide information on the company’s commitment in the environmental, humanitarian, cultural fields, etc.
More and more, the tools of corporate social responsibility (CSR) are emerging that help to assess the level of performance of the company in this area.
II.2. The dashboard
The dashboard is a summary document of all the indicators used by the company to assess its performance. It is a tool that allows the easy visualization, monitoring and exploitation of data provided by these indicators in the form of figures and graphs.
Among other advantages, it is suitable for
- getting information quickly;
- checking the discrepancies between forecasts and reality;
- Facilitating communication between hierarchical levels.
This tool is intended for managers who can analyze the data collected and make decisions to act on it. In addition, it can also help to understand the reasons for failure, anticipate threats, etc. For this purpose, there are for all uses.
II.2.1. The strategic dashboard
Also called a balanced scorecard, it focuses, as the name suggests, on business strategy. It is therefore a long-term management tool.
In fact, it must make it possible to highlight the essential parameters that the company must master so that it can make the decisions necessary to achieve its long-term objectives. These parameters are called “key success factors”.
II.2.2. The budgetary dashboard
This type of dashboard consists of comparing budget forecasts and actual numbers.
In other words, it allows the business manager to highlight the discrepancies between forecast and reality, understand the reasons and thus make the appropriate decisions.
It is therefore a medium-term management tool.
II.2.3. The operational dashboard
Located at the center of the company’s activities, it monitors the progress of the action plans put in place by the head or management of the company. For its part, it is a short-term management tool.
It therefore allows the monitoring and control of the tasks delegated to operational staff because delegating means:
- provide resources,
- define aims,
- monitor and control its implementation.
From all the above, the performance of a company depends on its leaders who must set the course at a known deadline. Thus, with the help of performance indicators, they will be able to monitor the impact of their activities in relation to the objectives they have set for themselves. However, too much information may also obstruct the visibility of these leaders, hence the interest of dashboards. Whether they are strategic, budgetary or operational, they assist any boss as a real decision-making tool.
In short, the performance of a company can be designed, monitored and adjusted on a daily basis, but for that, you have to master the tools and SEAMS is one of them. Try it for free for 12 days.