Indicators. Measure and you will win

Everything you need to know about indicators and their main features

Nowadays it is not conceivable a company that does not constantly monitor performance through indicators that allow identifying key information to detect opportunities, analyze productivity, define new objectives or evaluate compliance with them.

First, we must know what indicators are, why it is important to define them correctly, their benefits, the application process and what types exist. Next, we will try to answer these questions.

What is an indicator?

An indicator is a unit of measurement that allow assessing the performance of processes, as well as productivity, profitability or determining if the objectives set by company are being met. Moreover, indicators allow to measure the specific or general performance of both people and areas of the company.

Once the concept of an indicator has been defined, we must keep in mind and understand that there are many different indicators, Therefore it is important that we select those that really add value and are aligned with the business objectives. Therefore, we will define these key indicators as Key Performance Indicators (KPI). It is precisely these to which we must devote our greatest attention.

Importance of correctly defining indicators and its benefits

Over time, the measurements made through the indicators provide the company with very valuable information for decision making. Therefore, it is very important to measure what will really add value to the company. In addition, accurate measurements executed at the right time help and facilitate decision making.

It should also be noted that the implementation of indicators helps us to handle operations effectively, that is, if it can be measured, it can be controlled, and if it can be controlled it can be managed and improved. The measurement and implementation of valid indicators can be useful for the reduction or redistribution of costs, as well as the development and evaluation of projects, both in the short and long term. The indicators allow to have a broad vision on the productivity of the resources and assist to identify aspects of improvement associated with the load or distribution of the work.

The indicators also serve as a source of support when defining or modifying the objectives (which must be SMART), since they show us a broad vision of what is happening. The correct implementation of the indicators also allows analyzing the general performance of the company and helps to propose and execute corrective actions that serve as improvement.

When defining the indicators that we are going to use, we must consider what we seek to measure with its implementation. Therefore, each of the chosen indicators must have a series of characteristics necessary for its correct measurement.

The most important characteristics when defining an indicator should be the following:

  • Availability: the basic data for the elaboration of the indicator must be easy to obtain without any restrictions.
  • Simplicity: the indicator should be easy to elaborate and interpret.
  • Specificity: you must always measure what you really want to measure, otherwise the value of the indicator will be lower.
  • Reliability: the data used for the development of the indicator must be reliable (sources of information with reliable data).

Many companies do not consider the main qualities and often make mistakes when defining the indicators that will be part of the scorecard.

Indicators. Measure and you will win

Process of applying indicatots in 5 steps

To apply the indicators successfully you must follow the steps defined below:

  1. Choose the indicators: select the indicators that really have a strategic sense and add value to the company.
  2. Define objectives for the indicators: define the objective that is intended to be achieved with each indicator, in this way you will be able to maintain the established course or modify it efficiently.
  3. Appoint managers and stakeholders: appoint and evaluate the people in charge of supervising the process and those who will take part in it.
  4. Analyze the relationship between the chosen indicators: study and establish the relationship that the KPIs will have with each other and help enhance their results.
  5. Monitor results: continuously track results to see if the objectives set out above are being achieved and modify the direction when necessary.

Below, you can download the infographic on the process of applying indicators.

Definition of the main types of process indicators

There are a wide variety of indicators, so when selecting the most relevant for your strategy, you must take into account that you really want to get the data that your company has or can have and how the collection of this data will be. Below, we show you a list of the most relevant process indicators:

Productivity indicators

  • Productivity indicators allow you to measure the performance of the resources that are allocated to carry out a process and serve as support to see where it can be improved.

Efficiency indicators

  • Efficiency indicators make it possible to evaluate the use of resources and the level of execution of processes. They are intended to obtain better results with the minimum use of resources. These indicators help find find the intersection between minimal resource usage and maximum performance.

Effectiveness indicators

  • The efficiency indicators allow to measure whether the current processes are being carried out correctly. In addition, it establishes the relationship between the results obtained and those desired.

Capacity indicators

  • Capacity indicators make it possible to measure the production capacity of a company during a given period.

Quality indicators

  • Quality indicators make it possible to measure the total percentage of production that meets established quality standards. They also allow to measure the level of satisfaction in relation to the service or product offered.

Profitability indicators

  • Profitability indicators allow measuring the profit obtained in relation to the investment made. These indicators are of utmost importance when directing the strategy used, since they show us if the chosen path is the right one, or we must take another direction that maximizer profitability.

Value indicators

  • Value indicators allow to measure the perception that customers have about the brand.

Competitiveness indicators

  • Competitiveness indicators allow to measure the performance of the company compared to others in the same sector. In order to make this indicators relevant, it is important to use the proportional market share. This value determines within the sector by a company.

And you, have you already defined the indicators that will lead your company to success? Remember to always have these 2 points present for your definition:

  • What is not measured cannot be managed, improved or directed
  • Measure only what is relevant to your business

If you are still not sure what your key KPIs should be and how to treat them, you can contact us so that we can collaborate in the definition of these and in the creation of a system of monitoring and control of recurring and optimal indicators.


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