How to monitor the admin area

The administration department is responsible for carrying out administrative tasks or functions within a company. Administrative management, in most cases, has a strong impact on the analysis of inputs and outputs, recording actual numbers as negotiation factors and striving to reduce acquisition costs for companies.

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Some companies often have unified administration and accounting departments, but they should not be confused. While the accounting department focuses on financial and accounting matters, administration is responsible for receiving accounting documents and handling invoice payment and delivery.

Now, the best way to have proper record-keeping in the administration department, depending on the relationships established with other areas, including accounting, is to define Key Performance Indicators (KPIs) to monitor the administration area.

Indicators are highly important metric elements for measuring the performance of any functional area, and we often suggest different types of indicators to use according to the needs of the area and what needs to be measured.

Therefore, the purpose of this article is to discuss the preeminent role these indicators play in the administration area, as they are crucial for the smooth operation of the company.

What are Key Performance Indicators (KPIs)?

"There is no improvement without measurement," goes a marketing phrase, conveniently used to reaffirm the idea that numbers help us evaluate the performance of activities carried out in companies. However, measurement alone does not add value to the organization; it must meet two requirements to do so.

Firstly, data capture must be transformed into information that influences decision-making to improve the company's performance. Secondly, strategic objectives that bring value to the company's growth must be prioritized. But how are management indicators defined?

Management indicators are ways of measuring whether a company, project, unit, or individual is achieving strategic objectives or not. These indicators are used at multiple levels to achieve success as defined in strategic planning.

High-level key indicators may focus on the overall performance of the organization, while low-level indicators usually focus on the performance of employees in each area, such as finance, marketing, and administration, which we specifically emphasize in this report.

Types of management indicators to monitor the administration area.

There are no specific management indicators for your administration area; it depends on what your company or department needs. Each area is different in each company; therefore, establishing a standard criterion for administration will not monitor the data you expect. Use indicators that are suitable for the processes followed by your company.

However, if you intend to monitor the administration area to gain better control over the invoices your company issues to your clients, for example, we present below the most commonly used types of indicators that could help you measure the achievement of your objectives.

1. Short-term and long-term indicators.

These indicators aim to measure actions that generate immediate and near-future results or long-term results in the future. As mentioned, they depend on strategic planning, where short-term and long-term goals are defined. Therefore, they correspond to the timeframe for achieving strategic objectives.

With these indicators, you can monitor the administration area from a temporal perspective to determine how long it takes for your company to achieve the previously planned strategic objectives.

Additionally, this indicator allows you to measure the performance and qualification of your human capital over time, following the management of talent acquisition with the human resources department.

2. Predictive and historical indicators.

This typology analyzes the interdependencies between KPIs. In this context, the distinction between a predictive KPI and a historical one depends on the context. Predictive indicators are those management indicators that can influence future results, while historical indicators involve performance indicators that describe past performance.

3. Effectiveness and efficiency indicators.

This category is useful for understanding two important dimensions of each process. Effectiveness analyzes whether the desired results were generated, while efficiency indicates the extent to which time, effort, or cost are appropriately utilized to achieve the desired results. These indicators allow you to assess the effectiveness and efficiency of your administrative management.

4. Strategic and operational indicators.

Grouping KPIs according to the organizational level they impact largely depends on the context, similar to what happens with predictive and historical indicators.

However, there are some KPIs that are frequently recognized as strategic, such as market share, customer satisfaction index, profit margin, and revenue.

Some operational KPIs may include the time taken to process an order, defect-free product rate, or percentage of optimized processes. It should be noted that any of these KPIs can become strategic if the company's management identifies it as a critical value-generating factor.

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5. Financial performance indicators.

There are also indicators that can help you monitor the administration area and are linked to financial performance because the administrative area plays a role in the company's finances to obtain measurable data, such as return on investment, debt-to-equity ratio, operating margin, and return on assets/return on equity.

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In conclusion, through different management indicators, you can monitor the administration area according to your company's needs. As we emphasized at the beginning, there are no specific indicators for this particular area, as there might be for sales, marketing, and production, as administration is closely linked to management and accounting.

Therefore, to define administration KPIs, you must first define the strategic objectives to be achieved, the financial resources available to accomplish them, and focus on interdepartmental processes that will serve as the operational vehicle for their fulfillment.

The indicators we presented are the ones that, based on our experience, can help you monitor relevant data for most companies, but there are many more.

What indicators do you believe can be added to this list?