Management Essay Example: Key Performance Indicators of an Organization

Sales growth metric is a vital tool that provides the organization's management team with a clear visual of the performance of the organization. Sales growth will show whether the organization's revenue is increasing, more so even show each sales representative's contribution to the growth. The organization's executives in strategic decision-making activities utilize this information (Carton & Hofer, 2006). Information gained from the sales growth metric may help device realistic goals and expectation from all members of the sales team. Monitoring sales is therefore, vital in studying, understanding, and improving the overall performance of sales and the sales team.

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Cost of sales vs. revenue shows the overall performance of the sales team. The costs of sales include all expenses incurred to enable a sale such as salaries and commissions, as well as marketing and sales costs (Carton & Hofer, 2006). Therefore, this matric allows a comparison between what the organization makes against what the organization spends to make sales. This is especially useful in gauging the required investment level to attain a given performance level. The cost of sales to revenue ratio reflects the sales productivity and efficiency of the sales team.

Social media, albeit difficult to measure, effective and efficient use of this channel enhances sales performance. Close study of its social media presence and use, an organization is able to interact with its consumers directly. From this channel, the organization is able to focus its marketing to their specific target market, where complaints and feedback is direct. This therefore improves sales through this fast communication channel.

Keeping track of the opportunities vs. sales will provide an overview of the opportunities that lead to sales. This way the performance of each sales representative is measurable through the number of opportunities that he/she successfully follows through to the end. Moreover, this information also gives insight to the sales representatives ability to close. As a manager, keeping track of the opportunity win rate offers guidance on where to place your sales representatives depending on their strengths or weaknesses.

Employee satisfaction, which sometimes goes without being considered as a factor that impacts sales performance is an indicator of a healthy sales team. Employee satisfaction directly influences productivity, because sales representatives who get positive feedback are more likely to work harder towards making more sales to gain more feedback that is positive. Therefore measuring employee satisfaction may indicate gains or losses, which when mitigated can prevent further losses.

References:

Carton, R. B., & Hofer, C. W. (2006). Measuring organizational performance: Metrics for entrepreneurship and strategic management research. Cheltenham, UK: Edward Elgar.

Parmenter, D. (2015). Key performance indicators: Developing, implementing, and using winning KPIs.