A management indicator contributes to decision making.
A management indicator is data that reflects what were the consequences of actions taken in the past within the framework of an organization . The idea is that these indicators lay the foundations for actions to be developed in the present and in the future.
It should be noted that an indicator is something that serves to indicate or that indicates (that is, that shows something with signs or indications). The indicator can be physical (such as a traffic sign) or abstract (such as a statistic).
Management , on the other hand, is the action and effect of managing or administering . These procedures seek to carry out procedures to achieve an objective or achieve something.
Importance of management indicators
Management indicators are essential for the company to make decisions for its present and future, knowing the real efficiency of the measures, detecting the weak and strong points of the entity and being clear about the risk situation that the company has. .
It is important that management indicators reflect true and reliable data , since the analysis of the situation, otherwise, will not be correct. On the other hand, if the indicators are ambiguous, interpretation will be complicated.
Management indicators must present reliable data for the analysis to be correct.
Its characteristics
In addition to these characteristics, it is established that it is essential that any management indicator that is going to be used to see the success or failure of an entity has these other properties:
- Let it be defined.
- That it can be compared with other values, both from the same company and in relation to other entities.
- Make it relevant.
- That it can be used in a simple way.
- That can also be understood easily.
- That you do not have to make large investments in costs to be able to obtain it.
What a management indicator allows is to determine if a project or an organization is being successful or if it is meeting its objectives. The leader of the organization is the one who usually establishes the management indicators, which are frequently used to evaluate performance and results.
Types of management indicators
Experts distinguish between different types of management indicators , which study competitive advantages, resource utilization, service quality and financial performance, for example.
There are many classifications of management indicators that are used. However, among the most frequent are the following:
- Based on its dimensions, we talk about economic indicators , effectiveness and efficiency .
- From a classic point of view, there are those of increased sales , those of decreased costs ...
- In the same way, it is common today to resort to the use of these six fundamental indicators: those of competitive advantage, those of flexibility , those of quality of service , those of financial performance , those of use of resources and those that come to make innovation evident.
The most used indicators at a general level are those that are based on economic data and that allow us to know the evaluation of sales and costs. All companies claim that the sales indicator shows sustained increases, while the cost indicator must decrease or, at least, remain under control to maximize profits.