Key performance indicators (KIPS) Flashcards
What is a business evaluation?
- All businesses should analyse their performance. Business owners and their managers set objectives and put strategies in place to achieve these.
- Therefore, it is important that the performance of a business is analysed regularly so that management can determine whether any changes need to be made to the original objectives and plans.
- Managers regularly review and evaluate business performance through the use of key performance indicators
What are key performance indicators?
- Key performance indicators are a set criteria that measures how efficient and effective a business is at achieving different objectives.
- All businesses seek to optimise their performance. Therefore, it is essential for a business to be constantly reviewing their performance. KIP’s provide data that can measure how well a business is performing in different areas.
KPI’s
- Percentage of market share
- Net profit figures
- Rate of productivity
- Number of sales
- Number of customer complaints
- Rates of staff absenteeism
- Level of staff turnover
- Number of workplace accidents
- Level of waste
Percentage of marketshare
Measures a business’s proportion of total sales in a specific industry, expressed as a percentage. Percentage of market share highlights how well a business is performing within their industry. It shows the business has a large share of total industry sales relative to competitors.
Net profit figures
Net profit figures is what the company has earned after all expenses are deducted. It is essential for all businesses to make a profit to survive and grow. A manager may examine a business’s net profit figure to assess whether expenses are too high or revenue is too low. A high net figure indicates that a business is performing well financially.
Rate of productivity
Is the increase in outputs produced from a given level of inputs over time. The level of productivity is how much a business can produce given a certain level of inputs. In contrast, the rate of productivity growth is the increase in the level of productivity from year to year. A high rate of productivity growth shows that a business has improved a lot on its efficiency from the year before.
Number of sales
Number of sales is the amount of goods and services sold by a business within a specific time period. A manager may examine the number of sales to assess how well the business’s goods and services are selling. A high number of sales indicates that customers are satisfied with the quality and price of the goods and services the business is providing.
Number of customer complaints
Number of customer complaints is the amount of customers who have notified the business of their dissatisfaction. A manager may examine the number of customer complaints at a business to assess the level of customer satisfaction. A low level of customer complaints indicates that customers are satisfied with the goods and service has being provided
Rates of staff absenteeism
The average number of days employees are not present when scheduled to be at work, for a specific period of time. A human resource manager would examine the rate of staff absenteeism as an indicator of staff morale. A high rate of staff absenteeism often indicates that employees are less motivated and are not completely satisfied with their working conditions
Level of staff turnover
The percentage of employees that leave a business in a year and have to be replaced. A HR manager can measure staff turnover to examine staff morale. High level of staff turnover indicated that the employees are likely dissatisfied with management styles, pay or working conditions.
Number of workplace accidents
Measures the amount of injuries and unsafe accidents that occur at a work location over a period of time. A HR Manager is concerned with a number of workplace accidents occurring at a business since it is their responsibility to ensure the safety and well-being of employees
Level of wastage
The amount of inputs and outputs that are discarded during the production process. And operations manager would be concerned with a high-level of waste at any stage of the production process. High levels of wastage often increases the amount of raw materials or time required to produce a product or service.
