The management of any business process depends on proper planning, production organization, delegation of tasks and leadership, followed by control and measurement of results, in order to correct any deviations and improve processes continuously.
But how do you measure results?
This is where business process performance measurements (KPIs) come about.
In this post, we’ll get to know what business process performance measurements are, what their characteristics are and how they’re defined.
Business Process Performance Measurement
Performance Measurements, also called Key Performance Indicators (KPIs), are key elements for the management of any organization.
It’s through them that one can verify if processes are attending to the needs of the company and leading to the attainment of its strategic objectives.
But how do you set good business process performance measurements?
Usually, the so-called SMART methodology is used, in which it seeks to define KPIs that meet the 5 criteria summarized in this acronym:
Another important point that should be taken into account when setting business process performance measurements is that there’s no point in having more than 5 to 8 of them.
In addition to this number, the amount of information for decision making begins to be excessive, making management difficult.
That’s why we begin our analysis of the 5 smart criteria by what we consider the most important: Relevance.
The 5 SMART criteria for setting business process performance measurements (KPIs)
As we said, we changed the order of the criteria. That’s because if we can only choose from 5 to 8 performance measurements, it’s good to choose those that are, for sure, the most relevant.
And how do you come to that conclusion?
The key is to understand, first, which parts of the process will bring more value to the product or service your company provides to customers.
For example. Imagine your company provides accounting advice. An interesting performance measurement would be to know what amount in tax penalties, per month, your company was able to save for each customer on average.
This type of business process performance measurement is relevant because it indicates that the results are positive for customers. This shows that the company is able to add value to its solutions.
Other types of measurements, such as how many sheets of paper were used for this, may have some relevance in a specific project like, cost reduction or environmental awareness. However, they’re not relevant to the management of the company in a strategic way.
Returning to the original order of the letters of the word smart; The “specific” criterion means that overly generic performance measurements are of no use.
So, to say that your business process performance measurement will measure the efficiency in calculating the tax rates customers need to pay, if you don’t specify the measurement criterion, it doesn’t mean anything.
Let’s measure how many calculations were done per month?
The average number of calculations per customer?
The percentage increase of calculations from one month to another?
Now, our measure of the economy generated for clients seems to be very relevant, and at the same time specific.
What if we measured the degree of customer satisfaction for each dollar saved in penalties because of our tax calculations?
Although very relevant and specific, this performance indicator is impossible to measure.
As a complement, we recall that there are several methodologies to measure customer satisfaction in relation to a company as a whole, such as NPS. See more details about it here: Customer Satisfaction Survey Questions: What to consider
In addition to defining the criteria for business process performance measurements, it’s necessary to determine the levels you want to reach numerically.
Let’s say that a goal in our KPI example is to save $ 1,000.00 monthly, on average, for each client.
However, if you exaggerate this goal or make it impossible, it can compromise the use of this performance measurement, discouraging employees and making measurement inefficient.
In what time do you want to achieve the performance index desired by the company? It seems obvious, but often people forget this business process performance measurement point. This makes the measurement a relatively meaningless number with no end date to aim for.
Do you know the churn rate? This is an important indicator for process performance in SaaS companies, check out more in this post: How The Churn Rate Calculation Can Help Your Business
Setting business process performance measurements is very important. But for this, you have to automate processes efficiently and effectively.
A BPM tool, like HEFLO can help a lot for this. If you want to learn more about BPMN process automation, take a look at our video tutorials.
Check out this demo class: