What is performance?

What is performance? How to improve business performance

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What is performance?? How to improve performance effectively? How to both achieve high efficiency in work and save production and operating costs is certainly what companies and businesses are most interested in in the process of operation. When performance increases, when the work of each individual and department increases, this is the lever to promote the outstanding development of a company. All of those factors are collectively known as job performance. To better understand the concept of performance and how to increase productivity, let's Johnson's Blog Read through the article below.

Learn what performance is

Efficiency is the degree to which a desired result is achieved in a certain process or activity, relative to the resources and time used to achieve that result. Performance can be measured in a variety of ways, depending on the context and intended use, e.g. output/input weight ratio, work/no-work ratio, ratio return/investment ratio, defect/product ratio, and much more. Performance is also commonly used to measure and compare success between different individuals, groups, organizations or systems.

In the field of science, performance is a measure of required purposes, tasks, and functions. To make it easier for readers to understand, work performance is the ability to limit the waste in the process of working and living that we have to endure such as loss of effort, time, money... Therefore, a person's work achievements are valued with results. must meet job requirements and minimize waste as much as possible. 

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4 Types of Business Performance Measures

There are several types of performance metrics that businesses commonly use to gauge their performance. Here are four types of performance measures in business:

  • Measure financial performanceFinancial performance measures are metrics that focus on a company's financial performance, such as sales, profits, return on investment (ROI), or cash flow. These measures help gauge a company's financial health and profitability.
  • Measure customer performanceCustomer performance measures that focus on how well the company meets customer needs, such as customer satisfaction, customer retention, or customer loyalty client. These measures help businesses understand customer satisfaction and loyalty levels and identify areas for improvement.
  • Measure internal process performance: Internal process performance measurements focus on how well a company's internal processes work, such as the time it takes to complete a task, quality control measures, or energy employee productivity. These measures help businesses identify inefficiencies and areas for improvement in their internal processes.
  • Measuring learning and development performance: Learning and growth performance measures focus on how well a company is developing its people, processes and systems to support the long-term and sustainable growth of the company company. Examples of learning and development measures include employee training and development, innovation, and employee satisfaction. These measures help businesses assess their readiness for future challenges and opportunities.

Measure financial performance

Financial performance measures are metrics that gauge a company's financial health and profitability. These measures are important for assessing a company's financial performance and are used by various stakeholders, such as investors, creditors, and analysts to assess its ability to generate profits. profits and value of the company. Here are some common financial performance measures used by businesses:

  • Gross revenueRevenue: Revenue is the total amount of money a company earns from the sale of its goods or services. This measure is an essential indicator of a company's ability to generate earnings.
  • Profit: Profit is the difference between a company's revenue and expenses. It shows how much money the company makes after deducting expenses.
  • Return on Investment (ROI): ROI is a measure of the return a company earns relative to an investment in the company. It is calculated by dividing net profit by total invested capital.
  • Gross profit margin: Gross profit margin is the difference between a company's revenue and cost of goods sold (COGS). It shows how much money the company makes after deducting the cost of goods sold.
  • Net income: Net income is the amount a company earns after deducting all expenses, including taxes.
  • Earnings per share (EPS): EPS is the amount of net income a company earns for each common share outstanding. It shows the profitability of a company's stock.
  • Debt to ratio equity: This is a measure of a company's financial leverage, calculated by dividing total liabilities by total equity. It shows how much debt the company is using to finance its operations compared to equity.

Measure customer performance

Customer performance measurement is a metric used by businesses to gauge their effectiveness in meeting customer needs and expectations. These measures help businesses assess the quality of their customer service, identify areas for improvement, and build customer loyalty. Here are some common customer performance metrics used by businesses:

  • Customer satisfactionCustomer satisfaction is a measure of how well a company meets the needs and expectations of its customers. This metric is usually assessed through surveys and customer feedback.
  • Net Promoter Score (NPS): NPS is a measure of customer loyalty and satisfaction. It is calculated by subtracting the percentage of detractors (customers who would not recommend the company) from the percentage of supporters (customers who would recommend the company).
  • Customer retention rateCustomer retention rate: Customer retention rate is a measure of how effectively a company is at retaining its customers over a specific period of time. It is calculated by dividing the number of customers at the end of the period by the number of customers at the beginning of the same period.
  • Customer complaints: Customer complaints are a measure of how well a company addresses customer issues and concerns. This measure is usually tracked through a customer complaint and feedback system.
  • Customer churn rateCustomer churn: Customer churn is a measure of how many customers stop using a company's product or service within a specific time period. It is calculated by dividing the number of customers lost by the total number of customers at the beginning of the period.
  • Customer Lifetime Value (CLV): CLV is a measure of the total value that customers bring to the company during their time as a customer. It helps businesses assess the profitability of their customer base and identify areas for customer retention and growth.

Measure internal process performance

Internal process performance measurements are metrics used by businesses to evaluate the effectiveness and efficiency of their internal processes. These measures help businesses identify areas for improvement, streamline their operations, and increase productivity. Here are some common internal process performance metrics used by businesses:

  • Cycle Time: Cycle time is the time it takes to complete a particular process or task, from start to finish. It is a measure of process efficiency and can be used to identify bottlenecks and inefficiencies in the process.
  • Quality Control: Quality control measures are used to ensure that a company's products or services meet established quality standards. This measure may include defect rate, defect rate or customer complaints related to product or service quality.
  • Productivity: Productivity measures used to evaluate the output of employees or a company's production processes relative to the resources used. This measure can include metrics such as units produced per hour, number of calls answered per hour, or number of tasks completed per day.
  • Rotation inventoryInventory Turnover is a measure of how quickly a company sells its inventory. It is calculated by dividing the cost of goods sold by the average inventory value.
  • Delivery time: Lead time is the time it takes to complete an order, from the time it is received until it is delivered to the customer. This measure can be used to identify areas for process improvement and can help companies meet customer needs more efficiently.
  • Capacity Utilized: Capacity Utilization is a measure of how well a company's production capacity is being utilized. It is calculated by dividing the actual output by the maximum potential output. This measure can help companies identify areas where they can increase output and improve efficiency.

Measuring learning and growth performance

Learning and growth performance metrics are metrics used by businesses to gauge their ability to innovate, develop employees, and improve processes. These measures help businesses identify areas for improvement, develop their workforce, and drive innovation. Here are some common learning and growth metrics used by businesses:

  • Employee satisfactionEmployee satisfaction is a measure of how well the company meets the needs and expectations of its employees. This metric is usually assessed through surveys and employee feedback.
  • Employee leave rateEmployee turnover rate is a measure of how often employees leave the company. It is calculated by dividing the number of employees leaving the company by the total number of employees.
  • Training and developing: Training and development measures measure the number and effectiveness of employee training and development programs. This measure can include the number of training hours per employee, the percentage of employees who have completed the training program, or the improvement in the employee's skills and knowledge.
  • Renew: Innovation measures measure a company's ability to develop new products, services, or processes. This measure can include the number of patents filed, the number of new product launches, or a percentage of revenue from new products or services.
  • Knowledge management: Knowledge management measures measure a company's ability to capture, store, and share knowledge within an organization. This measure could include the number of knowledge management systems in place, the percentage of employees using these systems, or the improvement in organizational learning and knowledge.
  • Diversity of the workforceWorkforce Diversity Measures measure how diverse a company's workforce is. This measure may include the percentage of employees from different racial and ethnic backgrounds, genders or age groups. It can also include the diversity of skills and backgrounds in the workforce.

How to measure employee performance?

Measuring employee performance is important for businesses to assess individual performance, provide feedback, and identify areas for improvement. Here are some common methods for measuring employee performance:

  • Key Performance Indicators (KPIs)KPIs: KPIs are specific, measurable goals that align with the company's goals. They can be used to measure employee performance against specific goals or standards.
  • Performance evaluation: Performance review is a structured process for evaluating an employee's performance over a specific period of time. They can be conducted on a regular basis, such as annually or every six months, and may include feedback from managers, colleagues, and customers.
  • 360 degree feedback: 360-degree feedback is a performance review process that includes feedback from multiple sources, including managers, colleagues, subordinates, and customers. This method provides a holistic view of employee performance and can help identify areas for improvement.
  • Behavioral Observation Scale (BOS): BOS is a performance appraisal method that involves observing and recording specific behaviors that are related to job performance. This method is particularly useful for assessing skills and behaviors that are difficult to measure quantitatively.
  • Self assessmentSelf-Assessment: Self-assessment is a performance appraisal method that involves employees evaluating their own performance against specific goals or criteria. This method can help employees master their own performance and identify areas for improvement.
  • Performance metricsPerformance metrics are quantitative measures of employee performance, such as the number of sales, the number of calls answered, or the number of tasks completed. These metrics can be used to gauge performance against specific goals or benchmarks.

It's important to note that no single method is perfect for measuring employee performance, and businesses may need to use a combination of methods to get a complete view of employee performance. pellets. Additionally, it is important to provide feedback and support to employees to help them improve performance and achieve their goals.

Compare performance and efficiency

Efficiency” and “efficiency” are two related terms but have different meanings in business and manufacturing. Here is an explanation of each term:

  • Efficiency (Efficiency): The ability to perform a task or job with maximum saving of time, effort and resources. Performance is measured by the ratio between the product or service produced and the resources (time, labor, materials) used to produce them. Example: A company can increase efficiency by optimizing production processes to reduce lead times and use resources more efficiently.
  • Efficiency (Effectiveness): Is an assessment of the ability to achieve a goal or desired outcome. Efficiency is measured by achieving the desired results on time and with the best possible quality. Example: A company can achieve efficiency by producing high-quality products and bringing them to market at the right time to meet customer needs.

Performance is understood as when you achieve your goals with the lowest possible cost, done right and with a plan. Meanwhile, efficiency is only related to the results achieved when the goal is set and whether the results achieved are in line with the goal or not. 

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Methods to increase labor efficiency from the perspective of managers

Work performance is a topic of interest to many companies as all companies want to improve employee performance. If employee work efficiency change, the company's income and development opportunities also increase. Managers play a role in driving performance. So what do they have to do to increase employee efficiency? Here are a few performance enhancement method that the administrator should refer to.

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Create development opportunities to motivate employees to strive

Design financial leverage so that employees at all levels have the opportunity to develop their skills and roles. In order for them to reach their full potential, the manager must give each person appropriate feedback and encouragement. Recognizing their achievements and creating financial incentives is also a lever to boost employee morale. 

If you pay attention to these financial motivations and focus on them regularly, employee performance will increase dramatically. Besides, managers also need to learn to respect their associates. When employees are treated with respect and always feel their efforts are recognized, they will always find ways to go further, push boundaries and bring success to the company. 

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Set specific goals

Work performance management is a complete process. In which managers develop goals, pursue and control plans. Finally, they will evaluate the employee's performance as well as that of other employees. Good managers need to understand what their performance is and what they need to do to fulfill those roles well. 

Ensure managers are fully organized and methodical at all levels. Because in fact, the training and supervision of middle management of the company is quite poor, but this is the most important thing. Especially, the leadership style of managers will make a very important contribution to the working attitude and work efficiency of employees. 

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Effective employee engagement

The last important thing is to provide support when employees need it. This support can take many different forms, such as creating goodwill and loyalty among employees. Employee engagement and performance balance are also factors that increase employee productivity. do the job effectively. Developing and maintaining connections between employees in the company will be the key to improving work efficiency. 

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