Management indicators

economic-dictionary

Management indicators are quantitative parameters that measure the behavior, process and performance of an organization.

Thanks to the management indicators, it is possible to interpret what is happening, to know the magnitude of deviation from a goal and from this to be able to take corrective or preventive measures.

Importance of management indicators

The most outstanding points that reflect the importance of the management indicators are the following:

  • Supports policy planning in the organization.
  • They provide essential information for decision making, in an administrative and fact-based style.
  • They measure progress over time.
  • It promotes the transparency of the activities of the entire organization, by communicating how the results will be measured and what are the objectives to be achieved.
  • It fosters motivation in the members of the organization, because it provides them with information about the objectives to be achieved and incentives can even be implemented to achieve goals.
  • Focus on continuous improvement, by giving rise to innovation processes to resolve non-conformity situations.

Characteristics of the management indicators

Taking into consideration that management is related to the ability to administer (outline specific actions to achieve the planned objectives); it is then that the indicators should measure this process.

In order for it to be considered a management indicator, it must meet certain minimum requirements, such as:

  • Utility: Selection of relevant, congruent and consistent data, so that they really reflect the situation of the organization and shape it to what it is desired to achieve.
  • Accessibility: A management indicator must be shared among users and made known to the entire organization; so that they can know what is measured, why it is measured and the importance of this; which will allow them to commit to the goals.
  • Simplicity: Low cost data generation, both in time and use of resources.
  • Ease: That allows, in a simple way, to reflect the fact to be analyzed and show the deviation in relation to what is desired.
  • Temporality: It must have the ability to measure itself in periods of time in a systematic way, so that it shows comparative historical data. (for example; daily, weekly, monthly, quarterly, yearly, etc.)
  • Timeliness: The collection and preparation of data for analysis must be processed in an agile way in relation to time, so that it allows taking corrective decisions that facilitate reaching objectives instead of measures that remedy a conflict.
  • Indicator measurement unit: Defines how the indicator will be measured. For example number, percentages, rates, etc.

Construction of management indicators

There are many methodologies to establish an indicator. For example, there are those that focus on the overall results of an organization, those that are measured as a function of time, those that measure the operation or those that measure the strategy. That is why, you must give answers to questions such as:

  • What was done?
  • How it was made?
  • What was it made for?
  • Which it was the result?

And since management indicators are used to guide the organization to achieve objectives at the time of its construction, it is necessary to comply with certain elements, these are:

  • Objective: What is the purpose of the measurement, for example eliminate, minimize, maximize, etc.
  • Reference value: Data with which it is compared. They can be historical or standard; it can be with respect to the requirement of users, clients or suppliers; with respect to the competition, etc.).
  • Reliability: The data must have the quality of being accurate. That is to say, totally in accordance with reality.
  • Formula: It is necessary to have a mathematical procedure with which the indicator will be calculated.
  • Source: Origin of the information that can be used to build the indicator.
  • Responsible: The person or area in charge of consulting, processing the information and presenting the indicator.
  • Management range: Maximum and minimum values ‚Äč‚Äčthat the indicator can take. In some cases they are defined using colors like those of the traffic light to easily identify the levels and make decisions. Here is an example of values:
Identifier colorRank Rating% of goal fulfillmentObservation
Green Satisfactory Between 95% and 100% It requires minimal intervention or maintenance of the level, to later establish new objectives to be achieved.
Yellow AlarmBetween 90% and 95% Requires preventive care
Red CriticalLess than or equal to 90% Requires corrective attention

Types of management indicators

Depending on what is to be measured and what is to be achieved, the types of management indicators can be classified as tactical, strategic, operational, shared or interrelated, efficiency, efficacy or effectiveness.

Management indicators can be calculated to understand processes, define responsibilities, measure behaviors, delegate, identify problems or opportunities.

Tags:  economic-dictionary USA comparisons 

Interesting Articles

add