How Small and Medium Sized Businesses could benefit from Performance Management

Businesses of all sizes can benefit from effective performance management systems or processes.

First of all let us clearly define what Performance Management is. Performance Management is measuring the output, efficiency and effectiveness of your business.

Measuring is done by using Key Performance Indicators, which are nothing else then Business Ratios, a count of something or any other specific number about your business.

Performance Management is also often used in monitoring the performance of employees. But here, we talk about measuring the performance of the complete business.

Thus measuring the performance of your business you would be able to have the following benefits:

Increase of Profitability
Profits will increase by focusing on the critical areas in your entire business that are targeted towards serving your customers. This could be done by selecting different Key Performance Indicators from different areas of the business.

These KPIs may represent the natural flow of a customer order through your business, as you might use a KPI for Prospective Client Contacts as well as Sales per Clients at the end of the process.

Customer Focus
By focusing on the benefits a customer is getting from your business services or products and using the right metrics to measure customer satisfaction, you might get the leading edge in your industry or local market.

Focusing on customers needs is the best way to improve your business performance. This will also include monitoring the quality of your business services and products.

Improve Operations
KPIs and the Performance Management therefore will assist you in making your business operations more efficient and productive. Actual measures should always be questioned: How could we serve our customers better? Measures will also help you to motivate your employees, if you are open minded.

If you like to discourage your employees just use your measures in a negative way, such as blaming your employees for not meeting goals. But if you like to motivate your employees, ask for reasons why measures are bad or good. Let them find solutions. Don’t blame anyone, that’s not fair anyway.

Furthermore, when you measure things in your business, you are able to see improvements. Thus, if you measure it, you could change it to a better. And if you are using target values or plan data as well, you could also see, where you are standing on the way toward achieving your goals.

A Performance Management System could be the operational tool to get your business vision into reality.

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