By Management indicators are often linked with measurable results such as annual sales or cost reduction in manufacturing. In other words, the definition of indicator is that ‘magnitude used to measure or compare the actual results in the execution of a job.
Driving a vehicle we need a panel to give us important points to make wise decisions in conducting information and also to conduct our business, we need to have data relevant to the management of it.
The data that are relevant are those that give us complete information and vary from one business to another, depending on their activities, objectives, goals, etc.
You must define what you want to control, how you will do and what your goal is. To see if the variable cost is within expectations, you compare the cost per unit with the unit price. All these measurements are made with ‘Indicators’.
Why is it important to measure?
Because when you have to present the business to other institutions, it will not be enough what you speak or you argue, but you must provide concrete data to support the comments, especially quantitative. Measurements are like photographs which deliver objective and indisputable information.
How is the data obtained?
The data is obtained by measuring or quantifying. Making measurements provides 3 major benefits to your business;
1 – Security
Successive measurements deliver valuable information allowing to reduce uncertainty and therefore develop more successful projects, improve costs and better meet customer needs.
2 – Efficiency
Successful and timely measurements avoid unnecessary costs and lead to more correct directions in the development of tasks facilitating decision-making, both in the project and during the progress of the work or the processes involved.
3 – Development
As a company has serious and deep analysis of the data, it gives knowledge that opens up new perspectives to the owners, so the development of humanity is somehow related to advances in measurement form.
Criteria for Establishing Management Indicators
For a management indicator which is useful and effective, it must meet a number of features such as the following:
- Relevant (that has to do with the strategic objectives of the organization)
- Clearly defined (to ensure proper collection and fair comparison)
- Easy to understand and use, comparable (you can compare values ​​between organizations, and in the same organization over time)
- Verifiable and cost-effective (which has not incurring excessive costs to obtain one).
The measurement can be undervalued as if it were a waste of time, however, realize that it is not possible to believe that our business runs smoothly and we are wrong. Many entrepreneurs are shipwrecked with good ideas for lack of monitoring time or good organizations disappear because they did not use the data as information relevant to decision-making.
