PERFORMANCE INDICATORS

PERFORMANCE INDICATORS

Evaluating organisational performance highly important.

Performance Indicators - Specific criteria used to measure the efficiency and effectiveness of the organisation’s performance.

LSOs use Performance Indicators (also known as Key Performance Indicators - KPIs) to precisely evaluate performance.

Performance Indicators are also used for benchmarking (the process of comparing outcomes with similar work in other organisations).

EFFECTIVENESS & EFFICIENCY

Concepts of effectiveness and efficiency are a broad basis on which to evaluate organisational success.

Effectiveness – the degree to which an organisation has achieved its stated goals. Can be described as ‘doing the right things’.

Efficiency – how well an organisation uses resources (money, time, etc) to achieve objectives. Can be described as ‘doing things right’.

PERFORMANCE INDICATORS FROM STUDY DESIGN (YOU MUST KNOW THESE!)

Percentage of Market ShareNet Profit

Rate of Productivity

Growth

Number of Sales

Results of Staff

Satisfaction Survey

Results of Customer

Satisfaction Survey

Level of Staff Turnover

Level of Wastage

Number of Customer

Complaints

Number of Workplace Accidents

PROFITABILITY

The earning performance of the organisation.

It is the amount of revenue minus expenses.

Often expressed as a Net Profit ratio. This is calculated by dividing net profit by sales and is expressed as a percentage.

NUMBER OF SALES

Simply measuring the number of sales over a set period eg. monthly, quarterly, yearly.

This helps evaluate performance, particularly its marketing strategies.

PERCENTAGE OF MARKET SHARE

This indicator is similar to number of sales.

It is the proportion of the total market that as a business has, expressed as a percentage.

It is calculated by dividing an organisation’s sales by the total sales in that market.

Example: 2008 total vehicles sold: 1,012,164. 2008 Toyota sales: 238,983.

(238,983/1,012,164)*100 = 23.6% Toyota’s market share.

RATE OF PRODUCTIVITY GROWTH

Productivity: Amount of output produced compared to the number of inputs used.

Rate of productivity growth is the KPI NOT productivity.

Rate of productivity growth measures the change in productivity in one year compared to the previous year.

This indicates that the organisation is using resources more efficiently.

RATE OF PRODUCTIVITY GROWTH CONT... Productivity can improve in two major

ways.

1. Produce more output for the same number of inputs; or

2. Produce the same output for the LESS inputs.

CUSTOMER SATISFACTION

Customer satisfaction is the degree to which an organisation’s performance meets a customer’s expectations.

Two indicators of this are: 1. Results of a customer satisfaction survey;

and 2. Number of customer complaints.

RESULTS OF A CUSTOMER SATISFACTION SURVEY

Results of a customer satisfaction survey will indicate how satisfied or dissatisfied customers are with the performance of the LSO.

BE CAREFUL. The survey is not the indicator. It is simply a tool used to measure. The indicator is the RESULTS.

NUMBER OF CUSTOMER COMPLAINTS This indicates the number of customers who are

so unsatisfied with an organisations performance that they take time to complain.

Whilst organisations will not want any customers complaining, it is important to consider the total number of customers a LSO is dealing with.

Some LSO’s are also concerned with the number of customer complaints that are positively resolved.

STAFF SATISFACTION

LSO’s are concerned with the level of staff satisfaction for a number of reasons including:

- Reducing the costs associated with staff leaving an organisation eg rehiring and training new staff etc.

- Reducing the costs and productivity lost due to high absenteeism

- Improving the efficiency and effectiveness of employees.- Maintaining a positive culture in the organisation.

There are two main indicators of staff satisfaction:1. Results of a staff satisfaction survey; and

2. Level of staff turnover.

RESULTS OF A STAFF SATISFACTION SURVEY

Results of a staff satisfaction survey will indicate how satisfied or dissatisfied employees are with working at the organisation.

These results can identify overall feelings as well as highlight strengths and weaknesses in areas of the organisation.

The DEECD have a yearly survey that teachers complete which indicates how satisfied they are working for the school on which they are employed. School then use those results to improve in areas that they have performed poorly and celebrate the areas in which they are successful.

REMEMBER: The survey is the tool to measure, the results of that survey are the indicator.

LEVEL OF WASTAGE

This indicator measures the amount of waste created by the production process.

The more waste that a production process creates the greater the potential savings an organisation can make.

The goal of LSOs is to reduce the amount of waste to save on costs and reduce the impact they have on the environment.

NUMBER OF WORKPLACE ACCIDENTS Unsafe workplace practices impacts on productivity in a

number of ways.

Accidents can stop or slow production processes and workers that feel unsafe are often not motivated to work.

Avoidable accidents can also be costly to organisations through the payment of compensation.

The number of workplace accidents in a period indicates how safe a workplace is for employees.

BENCHMARKING

Many LSO’s utilise benchmarking.

Benchmarking occurs when an organisation measures its performance against that of other leading organisations known for their excellence.

Benchmarking is essentially a comparison of your performance against a leader.

Toyota is often used as an industry benchmark in car manufacturing.