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Learn how to do management by indicators the right way

Learn how to do management by indicators the right way

Have you ever been caught off guard by a storm? Sometimes, when we look at the sky and see the sun shining brightly, we may not realize that the presence of some clouds already indicates that a change is coming. But what does this example have to do with management by indicators, anyway? The answer is: everything.

When a company learns to actually analyze the data generated by its internal processes, the whole management becomes much more efficient. After all, the risk of the business being taken by surprise decreases considerably.

To help you better reflect on this topic, we have prepared this exclusive material on the subject. Shall we? Keep reading to check it out!

Management by indicators and result analysis

Management by indicators is nothing more than metrics-based decision-making. After all, it is a fact that every manager makes an assessment of the results of their team, department etc. However, this analysis does not always evaluate more sensitive data, which may be related to a bad result that the business is facing.

This happens when attention is focused on the bigger results, the macro of the situation. For example: a drop in sales performance can be justified by a bad market moment – when, in fact, an analysis of the salespeople’s approach would end up indicating that the sales team does not know well the product they are selling, thus, they have argument issues with the customer.

Good management by indicators, in practice

In this context, relying only on spreadsheets and manual analyses can make the managers’ mission very difficult. Therefore, it is essential that the company uses management software to manage its processes, as this makes data management easier.

Then, it is necessary to define which indicators will be analyzed. In other words, what questions will need to be answered by this analysis? With that in mind, the manager avoids wasting time on data that will not help them have a broad view of the company.

Some are market data, others are sectoral, and some are individual. This understanding makes the company correctly set up its processes, so that they always generate the appropriate data. Employees, on the other hand, need to understand what actions are required to generate this information, such as issuing reports and metrics. In some cases, this will require some form of guidance by supervisors.

In general, remember to be realistic in your analysis, contextualizing the metrics for the current moment of your company. A business that is starting its operations, for example, may have negative metrics, even if everything is going correctly.

The risks of ignoring management by indicators

The first risk is that the manager may not understand why a good or bad result has happened. This causes the company to lose efficiency, since it is difficult to correct errors without knowing their actual causes. This lack of information may also mean wasted capital, as resources are invested in processes without the business having data to confirm the strategy’s validity.

In addition, for businesses that seek scalability, such as startups, constantly analyzing metrics helps management to correct operating errors, avoiding losses. And the good news is that, by using the technology currently available, this management by indicators can be done even faster, generating accurate reports and improving the quality of your managerial work. Think about it!

And now, if you liked this article and want to go deeper into the role of data analysis in the management of a company, also read about how risk management can help reduce business costs!