Analysis of department performance efficiency
A well-organized systematic process of assessing the performance of the company's structural units is called an analysis of department performance efficiency. The main purpose of such analysis is to reveal possible problems in activity, such as inconsistency of labor input to the received result. Analysis of efficiency positively influences the development of healthy competition between departments and contributes to fair labor evaluation.
Estimation of efficiency allows to get evident answers to the questions, how much expenses for activity of department and results, which it reaches are commensurable; how effective was the work in the previous period and the current one; allows comparing results of activity of your company and your competitors.
The most important indicator of efficiency in this analysis is the dynamics of the production process results: increase of profit and income, savings in resources (time, labor, raw materials). Achievement of results outlined in the business plan, marketing or financial plan is the main efficiency evaluation, because all company staff work to achieve these results.
It is necessary to analyze the effectiveness of work in each division of the company, defining the indicators of effective performance, evaluation criteria, which should contain both economic indicators (specific results), and social results of productive management in the company.
All the criteria for assessing the effectiveness of the department can be combined into three groups of indicators, characterizing different aspects of performance:
Regardless of how each department of a company functions, the factors that affect the quality of their employees are identical for all:
- General economic criteria characterize the effectiveness of the company's work in terms of profit growth, the number of costs for project management, the ratio of the budget for the implementation of innovations and the indicator of the total effect from their introduction.
- Qualitative criteria of labor will give an assessment of complexity, intensity and effectiveness of labor of department employees and the company as a whole. They include indicators of labor productivity, evaluation of correspondence and dynamics of salary size growth and labor efficiency, indicators of loss of working time per one employee, etc.
- Criteria of social efficiency unite such indicators as quality of personnel composition, moral climate in collective, index of turnover of personnel, level of discipline, evenness of distribution of loading on company subdivisions.
Regardless of how each department of a company functions, the factors that affect the quality of their employees are identical for all:
- Economic factors: employees' work experience, level of education and professional skills, working conditions and intensity of work, share of the industry on the national scale
- Personal factors: qualities and character traits of an employee that directly affect their work efficiency - creativity and initiative, quick decision making, discipline, honesty and integrity, responsibility
- Organizational and technical factors: operational support of labor - equipment of production and a specific workplace, compliance of technological labor organization with modern developments and software, general prestige of labor, its rational organization
- Socio-cultural factors: the level of social awareness of team members and the general social activity of the company, team spirit, general cultural and moral development.
What is important to consider when analyzing departments
- Profit dynamics
Profit was and remains the main indicator of efficiency and success of any business. It is necessary to compare the level of profit of the company for the current period and the same period in the past (year, quarter, month). A positive or negative indicator will indicate the appropriate level of performance. Profit is the main, but not the decisive indicator. Depending on the peculiarities of work, the company's profit may be affected by seasonality, market conditions, the level of productivity of employees, etc. - Internal performance indicators
The obtained profit results should be correlated with the specific data of the sales department, the number of received and processed requests, resolved appeals to the customer service and the total number of interactions of the company's employees with clients. If there were refusals of cooperation in the period, it is necessary to find out their reason and the stage at which there was a deal breakdown. Positive dynamics of each internal indicator shows high efficiency of work of each department and the company as a whole. - Work of the head of a company
The evaluation of the head's performance includes an analysis of their involvement in the work of each department, the level of communication with employees, participation in the process of selecting personnel and evaluating their qualifications. Attention should be paid to how often the head monitors the indicators and how they react to adverse changes, whether it changes the overall strategy of activity or is limited to tactical decisions. - Fulfillment or non-fulfillment of the sales plan
Both fulfillment and non-fulfillment of the company's sales plan entails a subsequent analysis of the reasons for this result. An in-depth and thorough analysis will provide insights, revealing a sought-after product, service or a successful marketing proposal. It is necessary to estimate the whole volume of traffic, the level of its conversion, the number of requests and transactions, the number of requests, processed by each manager and draw conclusions about the effectiveness. - Building communications in the company
An important aspect of the company, which directly affects the overall effectiveness of its work is the peculiarities of internal and external communication. The speed of receiving calls and messages from customers, handling appeals, the tone of communication and compliance with corporate standards of communication are evaluated. Based on the results of the analysis, a plan of measures can be made to improve the effectiveness of the team or each manager.
Why do you need an analysis of department performance efficiency?
Qualitative and professionally done assessment of the effectiveness of departments is a source of important information for the head of the company. Systematic analysis will allow timely identification of problems in management, functioning of the company and avoid deplorable consequences and unprofitability. Alternatively, you can identify points of growth and promising areas of activity.Results of the assessment will also help to identify measures to improve the overall efficiency of the department or increase the productivity of a particular employee. Possible solutions to personnel problems:
- Thematic training sessions
- Organization of product training, refresher course
- Work with clients under the mentoring of the head of the department
- New employee recruitment
- Familiarization with the company's strategic plan, internal communication standards