Characteristics of a Valuable Business Intelligence Indicator

July 21, 2014

Business indicators help executives gauge the health of their business and evaluate its performance. Some of these indicators include gross margins, market share, customer satisfaction, and so on. It goes without saying that without this kind of business intelligence, making timely and accurate decisions would be a huge challenge for the top level management of any organization.

There are two key missions that indicators help fulfill- one, to ensure that the business is on line to achieve its goals, and two, to tweak the goals and mission of the business in line with its emerging potential. There is little doubt that these composite metrics are a very critical tool in the business executive’s arsenal. However, it is also a fact that the most important indicators are those that include a people component as well.

Your Workforce – The life blood of any business

No business can operate without the critical contribution of its workforce. The smallest of businesses needs at least a minimum number of staff to ensure that all the activities are being carried out in time and in the right way. There is no fully automated business and this is exactly why it is simply not smart to ignore the human aspect when trying to evaluate business performance.

To give an example, a company’s sales figures have zoomed after a new marketing campaign has been launched. It is important to understand that the marketing staff who developed the new campaign, the sales team that implemented it, the production team that stepped up to handle the extra demand- all of these people have contributed immensely to the success of the campaign and ultimately the admirable sales figures. If just one of these teams were to be removed from the business and replaced with an entirely new team, the same results may not be achieved even if everything else is unchanged.

A campaign performance indicator that has both a business and people component will help you understand exactly why the sales improved and what factors supported the phenomenon. As a result you are better equipped to rework the same magic at a future date.

Business + People Component = Valuable Metric

Let us look at another example that pertains more to operational efficiency. A valuable indicator that contains both a business and people component would be one that lets you measure:

    • the time needed to perform various tasks in a store
    • the actual productivity of each employee

Monitoring this indicator and adapting based on its results would help you achieve your business objectives of keeping labor cost at minimum levels while ensuring that production levels are maintained at optimum levels. In short, you could use it for labor management and sales target achievement, which makes it a very valuable one indeed. This would not be possible with an indicator that encapsulates only a business component since the critical aspect of employee productivity, which can hamper or escalate operational efficiency, is not taken into consideration at all.

Determining the relationship between the workforce and business outcomes

People-comprised business indicators play another critical role by telling management more about the relationship between people and the business’s performance. This measurable relationship helps management tweak practices and systems so that more efficiency can be achieved within the organizational structure. Your most significant indicators should provide quantifiable evidence of how valuable the human factor is to business outcomes and how this critical information can be leveraged in ways to benefit the organization.

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