Companies measure their performance using different methods and criteria. However, in many organisations, performance management entails examining the results generated by key business activities, using specific performance metrics (also known as Key Performance Indicators).

Question

Performance can be measured at company level; functional departmental level; and individual level.

Look at each of these performance measurement levels and complete the questions that follow.

1. How does your company measure performance at company level?

Answer 1

At the company level, performance can be measured using a variety of quantitative and qualitative metrics. Here are some common methods and criteria used to evaluate company-level performance:

1. Financial Metrics:

   • Revenue Growth: Examining the year-over-year changes in sales income.
   • Profit Margins: Assessing gross, operating, and net profit margins to evaluate profitability.
   • Return on Investment (ROI): Measuring the gain or loss generated relative to the investment cost.
   • Earnings Before Interest and Taxes (EBIT): Analyzing operating performance regardless of capital structure or tax situation.

2. Market Metrics:

   • Market Share: Evaluating the company's share of total sales within its industry to determine competitive positioning.
   • Customer Acquisition Cost (CAC): Calculating the cost associated with acquiring a new customer.

3. Operational Efficiency:

   • Productivity Ratios: Assessing outputs relative to inputs, such as revenue per employee.
   • Supply Chain Efficiency: Measuring metrics like inventory turnover and order fulfillment rates.

4. Customer Metrics:

   • Customer Satisfaction Score (CSAT): Gathering feedback from customers about their satisfaction levels.
   • Net Promoter Score (NPS): Evaluating customer loyalty and the likelihood of referrals.

5. Employee Metrics:

   • Employee Engagement Scores: Measuring workforce engagement and satisfaction through surveys.
   • Talent Retention Rates: Evaluating the percentage of employees who remain with the company over a specific period.

6. Strategic Metrics:

   • Balanced Scorecard: Integrating various performance measurements across financial, customer, internal process, and learning/growth perspectives.
   • Key Performance Indicators (KPIs): Establishing specific measurable goals related to strategic objectives.

7. Sustainability and Social Impact:

   • Corporate Social Responsibility (CSR) Metrics: Measuring the company’s impact on society and the environment, such as carbon footprint reduction and community engagement.

8. Growth and Innovation:

   • Research and Development (R&D) Spending: Evaluating the investment in developing new products and technologies.
   • New Product Launch Success Rate: Analyzing the performance and revenue contribution of new products.

By combining these various metrics, companies can gain a comprehensive view of their overall performance and make strategic decisions to drive growth and improvement.