Essay Example on Measure Performance: Financial Metrics & Numerical KPIs

Paper Type:  Essay
Pages:  3
Wordcount:  616 Words
Date:  2023-01-16


Performance indicators are measures that assist business owners or stakeholders to understand their performance status. They act as predictors to assist in knowing whether the business is in the right direction concerning its strategic goals. Their different performance indicators, therefore, it requires an organization to choose KPIs that are in line with their objectives and goals.

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Financial metrics and numerical

Companies utilize numerical factors with a profit margin as a leading indicator. These indicators allow stakeholders to base performance on financial terms. Profits can both be gross and net profit. A performing company always have improved profits. Costs assist in determining methods to reduce overall costs. Solvency is an indicator to determine the ability of a company to continue providing services to its customers while paying for their debts. Solvency is a comparison ratio of net profit to total liabilities. HR roles in financial management are not instant, but it has helped in controlling employees' welfare development. A well-managed organization achieves its financial goals if various departments are integrated to work together. Human resource department is responsible for integrating different activities within the organization, which in turn compel employees to work together with an agenda of achieving profit maximization. HR roles are, therefore, an asset within the modern business world, which aims at wealth maximization of companies.

Customer metrics

The organization should not depend on reducing the cost to increase its customer base. Long term relationship with customers is an indicator to prove that an organization is performing well to assist in gaining a customer base while getting the best prices for services offered. Customer satisfaction and retention are achieved by identifying reasons that make customers happy. Customer satisfaction scores can be used as indicators to show what makes customers maintain brand remain loyal. Just like profits an organization can determine its performance by looking to understand the number of customers they have gained. An increased number of customers is an indicator that the company is performing well hence meeting their client's needs. Human resource department is tasked at ensuring that its employees have a customer service mentality(Brauns 2018, p n.a). Each employee should be treated with value, and in return, they will always ensure that they provide the best services to clients. Satisfied clients will always be loyal since they have confidence in services offered.

People metrics

It is an indicator used by the organization to determine the working environment status. Employee turnover-assist in determining the rate of employee retention compared to those leaving the business. High employee turnover rate implies that the management should look into its workplace culture since it might not be in line with its goals. Percentage of response to open positions within the firm is an indicator that the business is performing well hence the exposure of the company to qualified professionals. Employee satisfaction is directly related to work output (Nwachukwu, 2018,p45-46). Satisfied team of employees always work together to ensure that organizations goals and objectives are achieved. Human resource is tasked with identifying and widening employees working capacity. They are responsible for the development of program and policies that ensure a pleasant working environment. Employees whos working environment is conducive and provide room for improvement always ensures that they remain within the firm without thinking of quitting. Reduced number of employees leaving organizations imply that the human resource will cut costs on recruitments.


Brauns, M. 2013, "Aligning Strategic Human Resource Management To Human Resources, Performance And Reward," The International Business & Economics Research Journal (Online), vol. 12, no. 11, pp. 1405-n/a.

Nwachukwu, C., Chladkova, H. & Olatunji, F. 2018, "The Relationship between Employee Commitment to Strategy Implementation and Employee Satisfaction," Trendy Ekonomiky a Management, vol. 12, no. 31, pp. 45-56.

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