Metrics

Definition

Metrics are quantifiable measures used to track and assess the status of a specific business process. They are essential for evaluating performance and making informed managerial decisions.

5 Must Know Facts For Your Next Test

1. Metrics help in translating an organization's strategic objectives into measurable goals.
2. They can be financial, such as revenue growth, or non-financial, like customer satisfaction rates.
3. Balanced Scorecards use metrics to evaluate performance across four perspectives: financial, customer, internal processes, and learning & growth.
4. Effective metrics should be specific, measurable, achievable, relevant, and time-bound (SMART).
5. Selecting the right metrics is crucial for aligning day-to-day activities with long-term strategic goals.

Review Questions

• What role do metrics play in the Balanced Scorecard framework?
• Can you give an example of both a financial and a non-financial metric?
• Why is it important for metrics to follow the SMART criteria?

Related terms

Balanced Scorecard: A strategic planning and management tool that uses metrics to align business activities with organizational vision and strategy.

Key Performance Indicators (KPIs): Specific types of metrics that indicate how well an organization is achieving key business objectives.

Performance Measurement: The process of evaluating how effectively an organization is achieving its goals using various metrics and indicators.