A performance management system allows you to collect, analyse, define and make decisions based on how the business is operating through efficiency, effectiveness and cost performance indicators.

Implementing a performance system enables you to understand your business, where it is currently situated, what improvements have taken place, which improvements need to be made, acknowledgement of its processes, whether decisions are being made on facts and whether targets are being met or not.

Each department or business activity has a process such as, invoicing, getting products ready for delivery, etc which all have performance indicators which can be measured.  To identify these you will need to consider what product/s or services do you produce, who your internal and external customers are, what your processes are, what do you do and how do you do it and what is at the beginning and the end of the process.

Once you have determined this then you can identify the activities that need to be measured.

These could include

  • efficiency,
  • cost effectiveness,
  • productivity,
  • quality,
  • customer satisfaction,
  • safety,

These activities can then be given a performance indicator.

A performance indicator should be realistic, include any legislative information and requirements where necessary, clear and precise, economical, adaptable and of course measurable.

When you make your performance indicators measurable you will need to determine what it is you are actually measuring.

For instance is it time, money, number of sales, etc. 

You will also need to decide how and when you are going to make the measurement and how accurate or precise the measurement needs to be.

You should always compare your actual performance against you indicators so that you will have a clear understanding where items are failing or winning.  It should also be set so that it starts and finishes in the same month or year so that you have a clear period of time in which the performance indicators are being monitored and measured.

Performance systems are ideal for ensuring your business is on track and is going the direction in which you want it to go.  It is important however that you don’t underestimate the time or cost for implementing one of these systems.


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