Performance indicator. What does it reflect?

In the conditions of a market economy, the efficiency indicators of the organization become increasingly important. In general, the very concept of "effect" denotes the result of the actions performed. If it acts as the final result of the enterprise's activity, then it can be characterized both by value and by natural indicators. From an economic point of view, the effect is the difference that is obtained between income and expenditure. In the event that there is more income, then we can talk about the presence of a positive effect, or profit. It can arise when production volumes increase or the level of expenditure decreases. Otherwise, this condition is met. A negative effect indicates a loss-making activity. Nevertheless, the management of the organization must have an idea of the cost of which resources (capital investments) the actual result is achieved. It is the comparison of the existing effect and the materials used for this, time costs, raw materials and other elements that serves as the "foundation" for financial stability and the efficiency of the entire enterprise.

Next, we should say a few words about efficiency. It characterizes the degree of achievement of the goal of the enterprise with the application of a minimum amount of costs. To do this, use key performance indicators. They are based on the following basic ratios:

• Р / З;
• З / Р;
• (P-3) / P, where P is the result, and 3 is the cost.

A special place is taken by such an indicator of efficiency as profitability. It can be calculated for products, production assets, labor costs. There is also an indicator of the efficiency of the use of the enterprise's resources, fixed assets, circulating funds, as well as capital investments.

In economics, there is also comparative economic efficiency. It allows to find the most advantageous variant of the solution of the assigned task among the available alternatives. It is important to distinguish between the efficiency index and the criterion. The first testifies to the cost of which resources one or another result is achieved. But one measure of efficiency is not capable of giving a complete picture. Then the criterion is singled out. He is able to characterize the economic efficiency of the activity not only from the quantitative side, but also from the qualitative one. At the enterprise level, the level of maximum profit per unit of resources can be taken as a criterion. It reflects the objectives of production and their relationship to costs and revenues.

In general, the implementation of organizational changes and technical and economic measures produce a result not only in quantitative but also in qualitative terms, which is why it is important to separate the efficiency index and the criterion. Using each of them allows you to see only a part of the "mosaic". It is necessary to consider the totality of all the elements, taking into account existing relationships and dependencies. It is accepted to allocate natural, conditional, and also cost indicators. The use of each of them has not only positive aspects, but also negative ones, which must be taken into account.