Innovation & Business

Performance
ABE LEVEL 5
Element 1.4

Key measures of
business performance
for specific business
functions
Benchmarking
Benchmarking is a strategy that involves
identifying the leader in a particular industry
or market, and then attempting to emulate
this leader.
Sometimes the focus of the benchmarking
may be one particular aspect or area that
the leader does really well, e.g. distribution or
customer service.
Benchmarking cont’d

Types of benchmarking:
Strategic benchmarking
Performance benchmarking
Internal benchmarking
External benchmarking
Functional Performance Measures

For each functional area of a business (e.g. HR, Finance, IT, etc.),
there must be specific measures for measuring performance in that
area or department. The metrics used to measure performance in,
say, the warehouse department, will not be appropriate for measuring
performance in the IT department.
When devising measures for any particular functional area or
department therein, one must begin by identifying the business
drivers for that function and then come up with the KPI for each
driver.
Example: Driver – student enrollment
KPI – number of students enrolling per semester
Detailed KPI – number of students enrolling per subject
 Functional Performance Measures cont’d

Functional Area KPIs

Production • Number of accidents
• Average downtime
Finance • Cash flow
• Liquidity
Customer Service • Number of complaints
• Number of referrals
Human Resources • Average cost to hire
• Average cost to train
Marketing • Average daily visits on website
• Brand awareness percentage
THE END