Measuring Success

Metrics

Metrics are a models or ways of numerical assessment of a process.  Metrics define what is to be measured.  Metrics can be used to track trends, and productivity. Typically, the metrics tracked are key performance indicators.

Essential Metrics Criteria

Useful and meaningful metrics help managers track how well their objectives are being met. The best metrics focus on those that best meet the following criteria:

  • Metrics that drive business results.
  • Metrics that reflect business results.
  • Metrics of things you can influence.
  • Metrics that can be measured accurately.
  • Metrics that can be measured consistently.
  • Metrics that can be measured cost effectively.

General Business Metrics includes:

Metrics to compare the organisation to the competition: Based on factors that are important in the specific industry. Criteria may include:

  • Operations/Production: plant capacity, plant locations, age of plant and equipment, ability to expand capacity, skill of labour force, staff turnover, employee relations, quality control, supplier performance and retention.
  • Financial: profitability, cash flow, retained earnings, current assets, current liabilities, long-term debt ratio, inventory turnover, return on sales, credit line, debt/equity ratio, per share book value, stock price, return on investment, net margins.
  • Administrative: staff turnover, administrative expenses, age of facilities and equipment
  • Management: experience, depth and turnover of top, middle and supervisory managers, effectiveness of communication systems, access to information, cohesiveness of top management, compensation plan; decision making speed, strategic planning ability, and implementation record.
  • Technology/Research & Development: R&D facilities, production technology, innovation and engineering abilities, R&D budget.
  • Marketing: sales growth, market share, distribution methods, sales force size and composition, sales force effectiveness, training, selling expenses, prices, advertising effectiveness, advertising budget, inventory levels, delivery time, distribution expenses, gross margins, product quality, customer retention rates.

Some key performance metrics that are particularly useful as criteria for evaluation are as follows:

  • Return on investment (ROI)
  • Return on equity (ROE)
  • MROI – Marketing Return on Investment
  • Profit margin
  • Market share
  • Sales growth
  • Asset growth
  • Cash flow
  • Stock turnover
  • Expenses
  • Cost of Sales
  • Perceptions of Quality
  • Perceptions of Value (a good deal)
  • Customer Satisfaction
  • Service Satisfaction
  • Market Share
  • Brand Awareness/Preference
  • Brand Equity
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