Definition of key figure analysis in operational controlling
Key figure analysis in operational controlling is an important component of operational controlling. It is used to measure and evaluate the financial and operational performance of a company. Various key figures are used to make statements about the efficiency and effectiveness of business processes.
Objectives and functions of key figure analysis
Performance assessment
Key figure analysis is an important part of controlling and has various objectives and functions. One of the main objectives is to assess the performance of companies and their sub-areas. By analyzing relevant key figures, performance in different areas of the company can be objectively evaluated and compared. It is important to select the right key figures that provide a meaningful overview of the actual situation.
Increased efficiency
Another aim of the key figure analysis is to increase efficiency within the company. By identifying strengths and weaknesses in performance, targeted measures can be developed and implemented to improve efficiency in various processes. This can be made possible, for example, by comparing current key figures with the desired target values or by making an industry-wide comparison.
Decision support
The key figure analysis also serves as decision support for management and other decision-makers in the company. Based on the key figures determined, they can make well-founded decisions about future developments, investments or changes in the company. The meaningful information obtained from the analysis of key figures is therefore an important basis for strategic and operational decisions.
Early warning system
Finally, the key figure analysis also acts as an early warning system for potential problems or risks in the company. By continuously monitoring and analyzing key figures, trends or deviations that indicate potential problems or opportunities can be identified at an early stage. This enables management to take timely countermeasures or exploit opportunities in order to ensure the future viability and competitiveness of the company.
Categories of key figures
Key financial figures
Financial ratios are important indicators of a company's financial performance. They relate to the balance sheet, income statement and cash flow and provide information on liquidity, profitability, debt and equity. Examples of key financial figures are sales, profit, equity ratio or the EBIT margin. These key figures are crucial for assessing the financial stability and profitability of a company.
Key performance indicators
Performance indicators, also known as operational indicators, measure the efficiency and effectiveness of the various business processes and activities within a company. They are important for assessing the company's performance in various areas and identifying potential for improvement. Examples of key performance indicators are productivity, throughput time, capacity utilization or quality.
Process key figures
Process indicators are indicators that relate to the internal procedures and processes of a company. They help to evaluate the degree of efficiency and effectiveness in the implementation of business processes and make it possible to identify weaknesses and optimization potential. Examples of process KPIs are throughput times, error rates, process costs or the number of returns.
Customer and market key figures
Customer and market key figures deal with the positioning of the company in the market and how it is perceived by customers. They are crucial for assessing the attractiveness of the company and its products or services in the competitive environment. Examples of customer and market indicators are market share, customer satisfaction, customer loyalty or the number of new customers.
Key figure analysis methods
Analysis of individual key figures
Individual key figure analysis is a method of key figure analysis in which individual key figures are considered and evaluated. This enables a simple and quick assessment of certain aspects in a company. However, an isolated view can make it difficult to fully grasp cause-and-effect relationships and complex interrelationships within the company.
Key figure systems
Key performance indicator systems can be used to obtain a more comprehensive overview of a company's performance and efficiency. These systems bundle several key figures that are linked together in a structured framework. This makes it easier to understand the relationships and interactions between different key figures. Some well-known key figure systems are
Du Pont key figure system
The Du Pont key figure system is a classic key figure system that focuses on the profitability of a company. It combines return on sales, capital turnover and equity ratio to determine the overall profitability of the company.
Balanced scorecard
The balanced scorecard is a modern key performance indicator system that takes into account both financial and non-financial indicators. It enables a holistic view of the company's performance by combining four perspectives: Financial perspective, customer perspective, internal processes and learning and development perspective.
ZVEI key figure system
The ZVEI indicator system was developed by the German Electrical and Electronic Manufacturers' Association and focuses on balance sheet analysis and evaluation of a company's financial situation. It includes key figures on liquidity, profitability, capital structure and asset structure.
Benchmarking
Benchmarking is a method of analyzing key figures in which the performance of a company is assessed in comparison to other companies or industry standards. This makes it possible to better assess one's own position in the competitive environment and identify potential for improvement.
Selection and implementation of key figures
When selecting and implementing KPIs for KPI analysis, companies should consider some important aspects to ensure that the KPIs are meaningful and useful. These include:
Relevance and target orientation
Key figures should first and foremost be relevant and target-oriented. This means that they focus on the most important aspects of a company and contribute to achieving the company's goals. For example, a key figure used to measure financial performance should have a direct link to the profitability or liquidity of the business.
Comprehensibility and communication
The selected key figures should be easy to understand and communicate. This facilitates collaboration between different departments and enables effective communication of results and objectives. A good key figure is easy to interpret and can be understood by everyone involved in the company.
Measurability and availability of data
Key figures must be measurable and based on available data. Data collection should be reliable and as automated as possible to enable accurate and timely evaluation. Companies should ensure that they have the necessary data materials to calculate and analyze the selected key figures.
Dynamism and adaptability
In a constantly changing business environment, it is important that key figures are dynamic and adaptable. Companies should regularly check whether their key figures are still relevant and useful and adjust them if necessary. The development of industry trends and new technologies should also be taken into account.
Interpretation of a company's key figures
The correct interpretation of key figures is crucial for the informative value and effectiveness of the key figure analysis. There are various approaches and methods for correctly interpreting and analyzing key figures. Here are some of the most important ones:
Absolute and relative key figures
When interpreting key figures, it is important to distinguish between absolute and relative key figures. Absolute key figures indicate a direct value, while relative key figures represent ratios or percentages. For example, a company's turnover can be viewed as an absolute key figure, while the return on sales is a relative key figure that shows turnover in relation to profit. Both types of key figures are important in order to obtain a comprehensive picture of the situation in a company.
Time series analysis
Time series analysis is an important approach when interpreting key figures. Key figures are analyzed over a certain period of time in order to identify trends and developments. This enables companies to evaluate their performance over time and identify potential areas for improvement. Time series analysis can also be used to analyze seasonal and economic fluctuations.
Industry comparison
A sector comparison is another important method for interpreting key figures. The company figures are compared with those of similar companies in the same sector. This makes it possible to evaluate the relative performance of the company in the industry environment and to identify possible strengths and weaknesses. Such a comparison can also be carried out as part of the benchmarking process.
Target/actual comparison
The target/actual comparison is another method of interpreting key figures. The actual results (actual values) are compared with the planned targets (target values). This enables companies to assess their target achievement and, if necessary, make adjustments in order to achieve the goals they have set.
Limits and challenges of key figure analysis
Key figure analysis is an important tool in controlling and corporate management. However, there are also limitations and challenges that need to be taken into account when applying and interpreting key figures.
Misinterpretation and manipulation
One of the biggest challenges in analyzing key figures is the risk of misinterpretation and manipulation. As key figures often form the basis for decisions and evaluations, they can lead to over-embellishing results or overlooking undesirable cause-and-effect relationships. To avoid this, it is important to always adopt a critical and questioning attitude towards key figures and not to rely exclusively on them.
Complexity and information overload
The large number of available key figures can lead to complexity and information overload. In order to maintain an overview and select the most relevant key figures for the respective situation, it is crucial to focus on the essential aspects and pursue a clear strategy for the selection and preparation of key figures.
Short-term focus
Another challenge in analyzing key figures is the tendency to focus on the short term. As many key figures are based on current data and short-term results, they can lead to long-term developments and correlations being neglected. To avoid this, long-term key figures and indicators that provide a more comprehensive insight into the development of the company should also be taken into account.
Incentive and behavioral problems
Finally, key figures can also cause incentive and behavioral problems. If employees and managers are assessed and rewarded solely on the basis of key figures, this can lead to undesirable behavior, such as the manipulation of results or the ignoring of important aspects that cannot be directly reflected in key figures. To avoid such problems, it is important to create a balanced incentive system that takes both quantitative and qualitative factors into account.
Understanding cause-and-effect relationships in key figure analysis
A key element of KPI analysis is understanding the cause-and-effect relationships between different KPIs. The identification of such correlations makes it possible to estimate the effects of changes in one area of a company on other areas and thus make more informed decisions.
One example of a cause-and-effect relationship is the connection between customer satisfaction and sales. A high level of customer satisfaction can lead to customers coming back more often and recommending the company to others, which has a positive effect on sales. Conversely, low customer satisfaction can lead to customers leaving the company and a drop in sales.
In order to identify such correlations, it is important to analyze the underlying processes and structures of a company in detail and to examine the interactions between different key figures. Industry-specific characteristics or external factors may also play a role and should be included in the analysis.
By understanding cause-and-effect relationships, companies can take more targeted measures to improve their performance and achieve long-term success. However, it is important to emphasize that such relationships are not always linear or unambiguous and that it is always necessary to consider a variety of factors and interactions in order to obtain a comprehensive picture of the situation
FAQ
What does plan-plan comparison mean?
The term "plan-plan comparison" refers to a method in controlling in which two or more plans are compared with each other in order to assess the efficiency or effectiveness of the planned measures or targets. As part of the key figure analysis, a plan-plan comparison can be used to compare different scenarios or strategies and analyze their impact on the key figures.
In the plan-plan comparison, the assumptions, targets and measures of the various plans are examined and their impact on the relevant key figures is determined.
