Corporate performance measurement: Your metrics and why they matter

Understand how to effectively measure your corporate performance and why it's so important.

What is corporate performance?

Most organisations understand the importance of regularly measuring its actual business performance against its intended goals. But accurate corporate performance measurement requires you to track both your relevant metrics and key performance indicators (KPIs) against your actual results. This is an ongoing process that includes gathering data from all areas of the organisation to gauge its positioning and progress towards objectives.

Despite being fairly complex, it is a vital part of the strategy of any successful organisation.

Corporate performance is the blended analysis of how well a particular organisation accomplishes its goals. It entails measuring the actual performance of the business against set goals. These goals are highly dependent on the organisation, but tend to fall within the set categories of financial, market, and shareholder performance.

To begin, each organisation sets their own corporate performance targets and KPIs. Once set, they then implement a system to track, assess, and measure those targets. This is where corporate performance measurement and corporate performance analytics comes into play.

Why is corporate performance management important?

Regular corporate performance measurement (including corporate performance assessment and corporate performance evaluation) is vital to the success of your organisation’s GRC plan and to understanding how your organisation is progressing more generally.

Corporate performance measurement ensures that you maintain key metrics that allow you to understand and improve your revenue, and grow your profits. In addition, it gives you the insights that you need to undertake strategic financial planning, budgeting, forecasting, data reporting and analysis, and make solid decisions around revenue, expenses, and inventory. Finally, it protects your organisation against financial and organisational problems, helps lower process costs, and improves productivity and effectiveness.

Measuring corporate performance

There are four steps for measuring corporate performance in a continuous feedback loop.

1. Setting your goals

Setting your goals is the first step to measuring corporate performance. Every organisation will have its own set of goals. To narrow down into its unique goals an organisation simply needs to ask itself what it is trying to achieve.

These goals could be based around customer acquisition or customer retention. They could relate to profit margin or production efficiency. They could be macro or micro. Or they could be focused on market share and sales. Whatever goals your organisation sets, however, should be measurable.

2. Developing your KPIs

KPIs are standard ratios that give you insight about your corporate performance. These are based around your goals and give you a measurable number that you can analyse. For example, one of your business KPIs may be “targeted new customers per month”.

Another may be “revenue generated per employee”. Both of these targets are easily understood via capturable data.

The KPIs you set for your organisation will be different from those set for other businesses even in the same industry. They simply must be meaningful and relevant to you, and, of course, measurable against outcomes.

3. Defining your metrics

The third step is defining your metrics. Business metrics are quantifiable measures that track your business performance. They are often considered one and the same with KPIs, and they are not mutually exclusive – a KPI may also be a business metric – but they are not definitively the same.

The difference between KPIs and metrics is that KPIs are solely focused on your objectives and targets. They measure very specific goals. On the other hand, metrics can be anything that measures progress. For example, the amount of visits to a product’s landing page is a measurable metric that has value and may even be tied to business outcomes. But without a specific goal, it is not a KPI.

It’s important to have both KPIs and metrics within your corporate performance measurement process because they provide different motivations within an organisation. While KPIs act like destinations or goalposts along a journey, your metrics can provide you with an overall map of the progress of your business.

4. Tracking and measuring

The balanced scorecard is one of the most common systems used to track and measure corporate performance. This system combines financial, customer, process, innovation, and organisational learning metrics to track and measure an organisation’s performance from a long-range and broad performance perspective.

This management system helps to identify measures that should be taken by providing feedback about outcomes related to organisational processes. This means that organisations can easily align their daily, weekly, monthly, quarterly, and yearly activities with the overall goals of the organisation.

Measuring long-term performance

Historically businesses have focused on financial metrics in order to determine corporate performance. But there’s a growing focus on combining non-financial and financial metrics to achieve a broader overall view of the long-term performance of an organisation. This is done via the balanced scorecard approach.

The balanced scorecard approach is a great way to evaluate long-term performance because research shows that non-financial metrics give a longer view into financial performance.

Corporate performance management software

Your corporate performance management (CPM) software solution must be involve a modern approach to your needs. Tools like Drova act as a central hub for your goals, KPIs, and metrics, as well as the solution you need to integrate, track and measure each.

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