New Performance Measurement Analysis
New Performance Measurement Analysis
1.0 Introduction
The term performance' is a familiar term used in many aspects of everyday life. Most dictionaries define it as the manner or quality of functioning and it is appropriate to apply it to organizations, with regard to monitoring and quantifying their operating capabilities. Performance measurement system will be those traditional, financially-based performance measures which periodically summarize the organization's performance for the benefit of shareholders, lenders, creditors and statutory authorities.
Performance measures are used to evaluate, control and improve production processes in order for companies to ensure achievement of their goals and objectives. Performance measures are also used to compare the performance of different organizations, plants, departments, teams and individuals, and to assess employees. Performance measurement is an important aid to make judgments and decisions.
Most of the performance measurement systems are used as a reporting mechanism (e.g. financial reports) while other systems are employed for controlling the performance of products, employees and other resources within an organization (e.g. costing systems, staff appraisal and reward systems). Performance measurement systems are also employed increasingly to develop an understanding about the competitive position of an organization within its business environment (e.g. customer satisfaction and competitor ranking systems).
2.0 Reasons move towards the New Performance Measurement System
The research literatures claim that many organizations have found traditional performance measures to be insufficient guides for decision making in today's rapidly changing and competitive environment. Traditionally, performance measures have been primarily based on financial data like return on investment, return on sales, price variances, and others. Traditional performance measures...
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