Indicators are essential tools in business management at both the strategic and operational levels. Whatever the company’s strategy, the use of performance indicators is fundamental in the decision-making process of the managers.
It can be said that there are two types of performance indicators – outcome indicators and trend indicators, both of which are fundamental to the management of any business.
Result indicators, also called generic indicators, are widely used by organizations in budgets and in the analysis of financial performance such as billing, EBITDA, net profit, among others and non-financial as acquisition, retention and customer loyalty.
Trend indicators, also called specific indicators, are those that communicate the way results are to be achieved (how to do it), promote change in the organization, and indicate if the strategy is being achieved. These indicators reflect the company’s strategy and allow us to anticipate future results that will be shown by the generic indicators (outcome).
The use of trend and result indicators make strategic management more assertive and effective, while at the same time evaluates and monitors the result of the operation, it has the means to direct the main processes and activities through trend indicators, ensuring greater alignment of those involved with the corporate strategy.
While outcome indicators are common in most companies, trend indicators consider the current business landscape, translating short-, medium- and long-term needs into a set of indicators and targets that will guide the goals.