This website uses cookies to ensure you have the best experience. Learn more

Performance Measurement Essay

5367 words - 22 pages

Performance and Performance Measurement in Conventional Accounting and Finance System


INTRODUCTION

All organizations whether profit oriented or non-profit ones are destined towards achievement of some predefined goals and targets. These goals, which are set by the management as very specific purpose for the existence of the organization, act as standards against which actual performance of the organization is later measured.

The very first step of any organizational effort is taken with situating the expected targets and thresholds. Then plans to accomplish these goals are chalked out, human and other resources are organized, efforts of organizational members are directed ...view middle of the document...

This article intends to develop a framework of tools and methods used to measure the organizational performance. We start with defining performance from different perspectives, and then proceed with the need for measuring the organizational performance. Our next focus is how the organizational performance is measured using both financial and non financial measurement tools. We will conclude our discussion with our deductions from the stated measurement techniques.

UNDERSTANDING PERFORMANCE AND ITS MEASUREMENT

Despite the more contemporary consideration devoted to it, performance management has been in spotlight of management accounting over the years. While organizational performance covers all areas of firm outcomes, i.e. financial performance, product market performance and shareholder return. In strict sense of management accounting, performance gives information about decision making and scorecard etc. As we will discuss in the later part of this write up, performance was initially supposed to be measured only by financial outcomes of the organization. A primitive discussion of financial performance was represented by Simon et al. (1954) who defined three functions of management accounting information as Decision-making (What should I do?), Attention-directing (What should I pay attention to?) and Scorecard (How well am I doing?).

A more recent view of organizational performance has been presented by the research of Lohman et al (2004) that provides a detailed insight into relevant aspects of organizational performance. These aspects include both financial as well as behvioural facets of organizational performance. Their research concludes that performance has three relevant aspects namely Resources, Output, and flexibility. They further elaborate these aspects and state that Resources include Expenses (e.g. distribution costs, inventory- related costs, service costs) and Assets (e.g. inventory carrying costs), whereas Output includes Financial output (e.g. sales, profit, return on investment), Time (e.g. customer response time, delivery lead time, on-time deliveries, fill rate), and Quality (e.g. reliability, shipping errors, customer complaints). Finally Flexibility comprises of Volume flexibility (ability to respond to changes in demand), Delivery flexibility (ability to respond quickly to tight delivery requests), Mix flexibility (ability to respond to changes in the mix of products demand), New product (and modified product) and Flexibility (ability to respond to demand for new products). Hence Lohman et als (2004) provided a broad understanding of organizational performance by including three aspects pertinent to performance.

On the other hand study of Richard et al. (2009) focused on the “output” aspect of the performance and further broadened its characterization by proposing that organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on...

Other Essays Like Performance Measurement

Financial Performance Measurement of Sbi Groups – an Empirical Study

1505 words - 7 pages Financial Performance Measurement of SBI Groups – An Empirical Study (Synopsis) Prasanta Saha Purash-Kanpur Haridas Nandi Mahavidyalaya, Howrah Introduction: Why you choose SBI? You have to clarify it in a paragraph. The Imperial Bank was established in 1921 by amalgamation of three presidency banks – the Bank of Bengal, the Bank of Bombay and the Bank of Madras under a special legislation. These presidency banks were created as a

Performance Measures Essay

664 words - 3 pages Performance Measures Performance measurement is a fundamental building block of TQM and a total quality organisation. Traditional performance measures, based on cost accounting information, provide little to support organisations on their quality journey, because they do not map process performance and improvements seen by the customer. In a successful total quality organisation, performance will be measured by the improvements seen by the

Hr Scorecard

1302 words - 6 pages goals and objectives o Encourage good coaching, feedback project management and team development skills o Devise appropriate incentives to reward and motivate staff. Why Attend..!! Upon successful completion of this course, participants will: • Know the concepts of Balanced Scorecard • Understand the phases of integrated performance measurement • Appreciate the uses and benefits of a range of measurement

Hello Panda

2571 words - 11 pages measures. The variables examined in the study included attitude towards the job, social pressure from coworkers, capability from personal skills. All these variables were found to positively and significantly influence an employee’s intiative towards his job, thus increasing his productivity. The study showed that productivity and initative of the employees who were aware and had a say on performance measurement criteria improved the departments

Performance Appraisal Evaluation Of ALARKO Group Of Companies

394 words - 2 pages Table of contents1)What is Performance Appraisal?2)Performance Appraisal Methods:a)Rating Scalesb)Essay Methodsc)Management by Objectives3)Alarko Group4)Performance Appraisal System of Alarko Group5)Conclusion6)Bibliography1) WHAT IS PERFORMANCE APPRAISAL?Performance appraisal is the effort to determine, in a certain framework of job and mission description, the individual's level to realize this job and mission. It is the measurement of the

Performance Management Framework

1613 words - 7 pages and direction to all employees. Performance appraisals play a critical role in implementing job requirements and in the overall skill and performance measurement process. Performance appraisals are used for providing feedback to employees for personal and career development, as well as a link between pay and performance. The organization’s performance appraisal model will require continuous cycles of skill and performance measurements, planning

Citibank: Performance Evaluation

616 words - 3 pages acct 6201 | Measuring performance: The Balanced Scorecard | Citibank: Performance evaluation | | | | In an age in which financial performance is dependent on more than the management of tangible assets, it is necessary to move beyond traditional financial performance measurement and evaluate the adjacent behaviors which ultimately lead to improved financial success. Citibank has moved forward by introducing a new performance

Marketing Strategies

1197 words - 5 pages the positive reinforcement is too infrequent. MONITORING AND EVALUATING PERFORMANCE MANAGEMENT Performance measurement analyzes the success of a work group, program, or organization's efforts by comparing data on what actually happened to what was planned or intended measurement. While, Performance management uses performance information to manage organizational capacity and processes: for example, to review programs; assesses and revises

Statistics in Business

864 words - 4 pages promotion process, or when you move to a new employer. Nominal Level of Measurement The nominal level of measurement is the lowest of the four ways to characterize data. Nominal means "in name only" and that should help to remember what this level is all about. Nominal data deals with names, categories, or labels. Data at the nominal level is qualitative. Colors of eyes, yes or no responses to a survey, and favorite breakfast cereal all deal with

Pay for Performance

574 words - 3 pages taking the lead – pay-for-performance can easily find in public sector service. E.g. health care, teaching * General public accepted Pay-to-Performance – more than 75% of US companies adopted this compensation scheme * Is benchmarking standard for a good company - One of the measurement criteria for “100 best companies to work for” * Pay-to-performance is being using in the education system, students know its benefit even they start to

The Key to Improving Job Performance

3515 words - 15 pages performance. Performance evaluation programs can either negatively or positively influence employees’ perception of their organization, thus, affecting their attitude and performance. A successful performance measurement system can encourage employee commitment, growth, and morale. Alternatively, an unsuccessful performance measurement system can be a root cause for potentially disastrous results. For instance, as opposed to building satisfaction and

Related Papers

Performance Measurement Essay

1070 words - 5 pages Performance Measurement Linda Tate MGT/437 April 21, 2014 Michael Koma Performance Measurement Performance measurement is an essential part of the company; it provides a stage for managers and supervisors, as well as, the performance of its employees. It helps them determine whether or not employees are meeting the company’s expectations. Performance measurement methods differ according to the work surroundings, such as, the

Performance Measurement Essay

2782 words - 12 pages difficult. Generally, performance measurement research focuses on analyzing performance measurement systems that are already in use, categorizing performance measures and then studying the measures within a category, and building rules of thumb or frameworks by which performance measurement systems can be developed for various types of systems. Beamon (1996) presents a number of characteristics that are found in effective performance measurement systems

Performance Measurement Essay

611 words - 3 pages improvements in performance. The management at this entity is introducing a new performance measurement system to replace the old one that was based on production of an operating statistics report. The problem with the old system was that it was too detailed and distracted focus from important issues to many relatively small issues. Also, it did not serve as a good results control system in the sense that it lacked proper measures in evaluating

Starbucks Business Performance Measurement & Management

5140 words - 21 pages MGSM842 – Business Performance Measurement & Management Term 4 2008 – September 2008 STARBUCKS CORPORATION LIMITED TABLE OF CONTENT EXECUTIVE SUMMARY 1. 2. 3. 4. 5. 6. 7. 8. Overview Organisation’s Objectives and Strategy Strategy Map Performance Measures Limitations Conclusion References and Bibliography Appendix 3 4 5 10 11 22 23 24 25 EXECUTIVE SUMMARY Syndicate Group No. 2 was required to develop a BPMM framework template