Can Companies Really Measure Performance?

Most companies today are measuring company performance solely related to sales or financial results. Does increasing sales from the previous period really show that our company is successful? What does making a profit really mean for a company?

Companies have to take a step back and really understand what their critical success factors are. Critical success factors of a company are driven by their strategic goals. Is the company a leader in its industry or is it a follower? Is the priority to increase sales or market share? Or both?

In order to measure performance and make use of the performance measures company management has to understand its strategic objectives. Understanding the strategic objectives most certainly is not enough. This understanding has to be cascaded down into inner depths of the company operations.

Sales, Production, Purchasing, Marketing, Accounting and all departments have to be aligned accordingly. Pinpointing the Critical Success Factors will enable companies to thereafter define and keep track of Key Performance Indicators.

Easier said than done companies obviously need to be able to measure and collect data from Accounting and Finance for financial results but also Performance Indicators have to be defined for operational data. In order to have a complete picture of company performance data needs to be collected on different fronts. These can be described as financial, operational and data related to competition.

Companies will require the following in order to be able to measure company performance properly:

• Processes aligned well with the organization structure
• Key controls are defined and in place
• Technological infrastructure has to be aligned with processes
• Manual tasks in processes limited to a minimum

Cerebra believes that companies that have a holistic approach to performance management will be much better positioned to gain competitive advantage and achieve high performance in today's economic environment.

Please refer to our services with regard to Management Consulting Services