Key performance indicators

Profit margins, asset productivity and return on capital  are common enough performance measures for the senior team. But how do these relate to a branch manager, a merchandiser, a customer service clerk? What practical activities in their daily work contribute to the overall financial goals? What choices should they be making, and what measures are most relevant to their sphere of control?

For example, in a petrol station, the biggest impact on margin is likely to be the amount each customer spends in the shop rather than at the pump. So the station manager should have measures to help focus on driving up merchandise sales per basket and on encouraging petrol customers always to come into the store.

With some correlation analysis, and interviews to gain enough understanding of the basics of the business, it’s possible to devise transparent, interlinking indicators for each level of the organisation so that pulling the right levers at the coalface translates to improved results on the P&L and balance sheet.