Performance Analysis: How To Evaluate Your Business To Make Data-Driven Decisions
Sure, it’s easy to see when you don’t hit your sales targets. What’s harder is knowing exactly what’s gone wrong along the way.
Every business has goals and objectives. Not every one of those has systems and methodologies in place to help them track their progress of reaching them.
In this article, we’ll cover the “what” and “why” of performance analysis. Plus, four tips to help you get the most out of the process.
What Is Business Performance Analysis?
Performance analysis helps you evaluate all the people and processes in your business on a long-term basis. This helps with effective decision-making as you’re basing the future of your company on facts and data rather than guesswork.
You can break performance analysis methods down into two main sections:
Quantitative: Numerical data that can be counted to result in “facts”
Qualitative: Descriptive data (from words or language) that are open to interpretation
The areas you choose to analyze will also depend on the size, setup, and needs of your business. For example, you might wish to create datasets for:
Real-time finance and revenue
Which marketing channels are most effective
How well your site converts
Project management in different departments
Yes, it’ll take time and resources. So, why should you go through this performance analysis process?
Why Should You Analyze Your Business and Team Performance?
Business analysis helps you identify performance problems that could be holding back your growth. Data should drive all your decisions—whether that’s status metrics or feedback from interviews.
Here are some of the benefits of business performance analysis:
Helps your employees track their own performance and see how far they’ve come
Clearly-defined expectations means everyone will be on the same page
Better performance management processes means better results
See how your leadership motivates or hinders employee productivity
Quickly see whether cash flow is positive or negative
The range of benefits you see will depend on the types of performance you’re analyzing. Now, how can you get the most out of this process?
4 Tips To Gain the Most From Your Performance Analysis
Just like sports performance analysis, you need to work out where your business isn’t doing so well to better target your focus of where to go next.
Here are four tips that can help you check the overall health of your company:
Identify KPIs and set benchmarks to establish baseline performance
Track how the market and customer behavior changes over time
Align employee and company goals for success
Use automated tools to help collate and analyze performance data
1. Identify KPIs and Set Benchmarks To Establish Baseline Performance
First of all, you need to figure out what to track so you can measure it effectively. This means identifying key performance indicators (KPIs). You won’t learn much about the ins and outs of your business if your only goal is to “make more money”.
More insightful KPIs could include:
Revenue per sales team member
Number of complaints received
Customer acquisition cost
Employee turnover rate
Customer service ratings
Once you decide the KPIs you’ll be tracking, you need to note down a baseline for each. Then figure out what tools or processes you’ll use to measure progress.
Setting short-term goals means you can tweak and make adjustments to them on a weekly basis. Speaking to your team and asking for their input can also help. A more collaborative approach means you won’t find out months down the line that targets haven’t been met.
2. Track How the Market and Customer Behavior Changes Over Time
You can get everything right when it comes to setting your KPIs, choosing your benchmarks, and tracking them over time. However, there are other huge factors that affect everything you do. And they’re all in constant flux.
Each of these factors are always evolving. New technology and trends will crop up that will inevitably alter the market you’re in. It’s important you keep on top of relevant industry news to make sure you adjust your strategy accordingly.
In terms of customers, their behavior changes generally depending on socio-economic factors. For example, data collection and privacy is a huge topic at the moment. Customers want personalized ads, but they’re not comfortable giving away the data required to create them.
All of these nuances can affect business performance. Not to mention the impact your competitors could be having on the market. If you’re falling behind their efforts, you’ll struggle to see any real growth.
3. Align Employee and Company Goals for Success
Performance evaluations for each employee are important. However, leading from a standpoint of truly caring about your employees involves finding out their career aspirations and how you can help them achieve those.
You may already have a coaching process underway to get a better understanding of each employee’s personal goals. If that is the case, stick to the same method of data analysis for each team member (if you’re not doing so already). That way, you’ll be able to see how each individual is doing alongside the team as a unit.
It’s easy to let business needs get in the way of connecting with your team on a one-to-one basis. However, align your employee and company goals and you’ll find fewer and fewer performance issues within your organization.
4. Use Automated Tools To Help Collate and Analyze Performance Data
Performance analysis usually results in an abundance of metrics and information to sift through. While the result of doing this is always going to be beneficial, it isn’t easy doing it manually.
You could hire a performance analyst to do the job. However, there are plenty of tools and performance analysis software that can help reduce the amount of time data collection and collation takes:
Google Analytics: There’s no better way to analyze your website’s performance than with the huge amount of data available on Google Analytics. Plus, it’s free.
Sisense: This data analytics finance solution can help improve operational efficiencies, understand profit/loss margins, and streamline cash flow.
Tableau: Bring together and visualize data from across your whole company with one of the most popular business performance analytics tools.
Microsoft Excel: If you prefer a more manual method, there’s nothing wrong with inputting and storing data in this tried-and-tested software.
Whichever performance metrics or workplace analytics you’re trying to track, there’s a tool out there for all of them.
Sports science works to align coaching tactics with an athlete’s goals to reach their optimal capability. Instead of single match analysis, in business, you need to look at a complex weave of processes and how they all impact each other.
Setting KPIs and benchmarks for your own performance analysis will help you track your progress to those goals in a measurable way. Just don’t forget to take the market, competitors, and customers into consideration too.
All this (and the happiness of your employees) can have a positive or negative impact on your performance analysis results. So don’t let them be an afterthought.
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Louis Carter is the founder and CEO of Best Practice Institute, Most Loved Workplace, and Results-Based Culture. Author of In Great Company, Change Champions Field Guide, and Best Practices in Talent Management, as well as a series of Leadership Development books. He is a trusted strategic advisor and coach to CEOs, CHROs, and leaders of mid-sized to F500 companies – enabling change and steering employer brand development together with highly effective teams, leaders, and organizations as a whole.