key performance metrics

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One very important thing in designing dashboard is deciding key performance metrics, this article gives you understanding on what key performance metrics.

Performance metrics measure the selected dimensions of the organization to enable management to assess the position and take appropriate action to move towards the target. The main objective is to increase performance throughout the whole host of dimensions as selected by the organization's leadership. In addition, performance metrics to help management, increase organizational effectiveness, efficiency and internal controls.

To become the most value for management, performance metrics should ideally be specific, measurable enough, cheap, easy to communicate, and able to guide action. Various software packages are available to help management prepare, analyze and report data needed for the task.

Use of performance metrics requires four steps - select key issues, critical processes and customers that require the measurement results; develop relevant metrics; determine the target, and, finally, the performance moves toward the target.

Perhaps the most famous performance metrics are associated with financial performance. For this purpose, the management has been available all line items included in financial statements shall be added externally reported internal management reports. financial statement line item covering popular concepts such as total revenue, earnings before interest and taxes, interest expense, income after tax, total liabilities, and net cash flow.

This financial line item, in turn, is used for the analysis of financial ratios. This technique involves two or more related items of common lines in order to examine key areas of financial performance. These areas include revenue and cost behavior, balance sheet strength, capital structure, cash flow generation and profitability. The main audience for financial metrics is the management and owners of the organization, namely, the shareholders.

Early 1980s, the organization and various stakeholder groups they began to articulate the need for a set of broader performance metric, which reached more than financial performance. They called for the metric that measures the performance of the organization in connection with customers, employees, and society at large.

To fill the gap, the performance metrics framework known as the Balanced Scorecard emerged in the early 1990s. Its metric covers four areas - financial, customer, business process plus learning and growth. Balanced scorecard quickly adopted by many organizations in the private sector, government officials and non-profit sector. This remains an important performance management tool today.

Governance, environment, carbon emissions and climate change have all become areas of particular focus in recent years pushed the organization to respond by developing metrics to communicate performance in this problem.

Performance metrics are measured for an organization to routinely compared with the values of the past to ensure improvements are being achieved. In addition, they must be compared with metrics of peer group organization. This latter ratio is known as benchmarking and an important method for an organization to understand and monitor the relative competitive position.

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