Diagnosing a company with efficiency and performance ratios
(Identifying Performance Problems and Issues)
INTRODUCTION
To diagnose is to break up or cut a company into pieces so that we could understand the mechanics or engines of the business: what has and why it happen. We want to know what are and not ticking.
A study is only meaningful if a comparison is made against industry standards. This is called gap analysis.
Performance problems and issues are identified where performance solutions and strategies are put
in place instead.
It is an in depth study of the company, it's inputs, processes, outputs and outcome searching for the root cause of problems. In summary we want to know it's true strengths and weaknesses.
From the study, we could learn from past mistakes and successes for the benefits of the future.
The best form of indicators are still the financial ratios because they are readily available. However the ratios used are only those that provide information from the performance perspectives.
At the lower levels, key efficiency indicators maybe the more appropriately label than KPIs.
Understanding is further enhanced if the company already had it's own industry standards. Best practices identified from the industry leader which could easily be adopted.
Variance or gap or comparative analysis could be conducted to understand the business's weaknesses and strengths where performance improvement strategies could then be applied to remove or narrow the gaps.
Comparison is only meaningful if measures are matched with the same.
When compared against the best in the industry, best practices could be adopted by just copy and paste.
Indeed, the right diagnosis should provide the right solutions and strategies.
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PERFORMANCE NEED ANALYSIS
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To identify performance problems and issues and resolving them subsequently.
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PERFORMANCE and EFFICIENCY MEASURES
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Installing performance management.
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(Identifying Performance Problems and Issues)
INTRODUCTION
To diagnose is to break up or cut a company into pieces so that we could understand the mechanics or engines of the business: what has and why it happen. We want to know what are and not ticking.
A study is only meaningful if a comparison is made against industry standards. This is called gap analysis.
Performance problems and issues are identified where performance solutions and strategies are put
in place instead.
It is an in depth study of the company, it's inputs, processes, outputs and outcome searching for the root cause of problems. In summary we want to know it's true strengths and weaknesses.
From the study, we could learn from past mistakes and successes for the benefits of the future.
The best form of indicators are still the financial ratios because they are readily available. However the ratios used are only those that provide information from the performance perspectives.
At the lower levels, key efficiency indicators maybe the more appropriately label than KPIs.
Understanding is further enhanced if the company already had it's own industry standards. Best practices identified from the industry leader which could easily be adopted.
Variance or gap or comparative analysis could be conducted to understand the business's weaknesses and strengths where performance improvement strategies could then be applied to remove or narrow the gaps.
Comparison is only meaningful if measures are matched with the same.
When compared against the best in the industry, best practices could be adopted by just copy and paste.
Indeed, the right diagnosis should provide the right solutions and strategies.
-------------------------------------------------------
PERFORMANCE NEED ANALYSIS
------------------------------------------------------
To identify performance problems and issues and resolving them subsequently.
- Overall performance
- ROE/ROA
- the business tripod
- The profit business model
- Market positioning
- The du pont chart
- The working capital efficiency
- The Fixed capital efficiency
- Financing the business
- Functional performance
- Marketing Metrics
- Operation Metrics
- HR Metrics
- Finance Metrics
- The strategy applications
- past successful strategies
- Turnaround strategies
PERFORMANCE and EFFICIENCY MEASURES
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- Overall performance ROA/ROE = CEO
- Key business strategies
- variances in performance
- Key Result Areas of the business
- Functional KPIs = Departmental managers
- Variances in performance
- productivity
- resource utilisation
- profitability
- Variance or Gap Analysis to explain gaps / differences
- Performance gaps
- Critical gaps
- Pareto principle
- Component breaking analysis
- root cause analysis
- Process or value chain analysis
- Output input analysis
- Efficiency Analysis
- Working Capital
- Fixed Capital
- Individual Performance Gaps
- Competency gaps
- Management Change
- Efficiency analysis
- Output input analysis
- Analytical Framework
- Pareto 20:80
- Root cause analysis
- Sensitivity analysis
- Ratio component
- Measuring Performance Gains or Losses
- Measuring processes
- input, process, output and outcome
- Diagnosing tools
- Ratio analysis
- dimensional graph
- dynamic ratio analysis
- spreadsheet template
Installing performance management.
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- Discuss and agree KPIs with the business leadership
- Determine objectives and goals
- Corporate Key result Areas
- Corporate strategic maps
- Build custom reports and dashboard
- Design suitable reporting formats for the business (performance metrics)
- Marketing
- Finance
- HR
- Operations
- Assist the heads to prepare performance plans and appraisal criteria for each staff under them.
- functional scorecard
- individual scorecard
- The Annual Performance Plans and Budgeting
- The year profit model
- The working and fixed capital model
- The ROE Chart
- The corporate BSC perspectives for the year.
- Cash flows projections
- Projected Financial statements
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