Measuring Performance

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Measuring performance is a process by which an organization monitors important aspects of the programs and systems. Typically, performance is measure and compared to organizational goals and objectives. Contemporary organizations require managers be able to measure performance and analyze the impact of different aspects of organizational excellence (Mitrea-Curpanaru, 2021).

Garvin (1993) says what cannot be measured, cannot be managed. Performance management has evolved over a long period of time to adjusting to changes in the business and has attracted great interest in the last two decades (Taticchi & Tonelli, 2010).

The origin of performance measurement can be traced back to the late 13th century, when double entry was introduced (Johnson, 1981)


Figure 1. Evolutionary stages of performance measurement modified from (Gomes,2004).

The figure 1 explains how the first phase started because of the industrial revolution in Europe and America (Williams, 2002). The first phase started in the late 1880s and lasted for almost a century, while the second phase started in the late 1980s (Ghalayini, 1996). Although the origin of performance measurement is centuries old, early accounting systems research in the field has developed in two major phases during the late nineteenth and twentieth centuries (Gomes, 2004).

 

The Balance Scorecard (BSC) Model

In a recent global study of the management tools used, the balance scorecard was provided to be the sixth most widely used management tool (Mitrea-Curpanaru, 2021). The balance scorecard is a strategic performance management framework that has been designed to monitor organizational performance and execute strategy (Mitrea-Curpanaru, 2021).

 

Figure 2. The balanced scorecard links performance measures modified (Mitrea-Curpanaru, 2021).

The BSO identifies several aspects of the organization, representing areas where organizations need to achieve results, financial aspects, customers (external), Internal process and innovation and learning (Kaplan, 1992).  The four fundamental dimensions give four perspectives from which to examine the business of the organization (Kaplan, 1992). At the same time, managers need to find answers to some key questions:

-        Financial Aspect: its financial health. Cash flow? What does the company mean to shareholders?

-        Customers (external): are the customers happy? Where does the organization stand?

-        Internal process: What must we excel at? Managers need to focus on those critical internal operations that enable them to satisfy customer needs (Kaplan, 1992).

-        Innovation & Learning: Improving the skills and attitudes of the employees and the organization’s ability to learn.

 

List Of References

Garvin, D. (1993). Manufacturing strategic planning.

Ghalayini, A. M. (1996). The changing basis of performance measurement.

Gomes, C. F. (2004). A literature review of manufacturing performance measures and measurement in an organizational context: A framework and direction for future research. 39.

Johnson, H. T. (1981). Toward a new understanding of nineteenth-century cost accounting .

Kaplan, R. S. (1992, fEBRUARY). Harvard Business Review . Retrieved from https://hbr.org/: https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2

Mitrea-Curpanaru, G. G. (2021). Models for measuring the performance of an organization.

Taticchi, P., & Tonelli, F. (2010). Performance measurement of sustainable supply chains: A literature review and a research agenda.

Williams, D. W. (2002). Before Performance Measurement.

 

 

Comments

  1. Janith De SilvaSeptember 14, 2022 at 8:12 AM

    Employees are more likely to accept and be satisfied and motivated with the appraisal system if they participate in the development of appraisal criteria and measures and in the process of conducting appraisals (Holzer, 2007).

    ReplyDelete
    Replies
    1. Zainul FahadSeptember 15, 2022 at 9:40 AM

      While focusing on performance appraisal as a motivational tool, studies strongly suggest that performance appraisal systems possibly be used to enhance motivation (Chen & Eldridge, 2010; Appelbaum et al., 2011).

      Delete
  2. Dilki Ishara VidyaniSeptember 16, 2022 at 12:24 PM

    In another view of Balanced Scorecard Model, the financial measures of performance are the results of action that are already taken, whereas the other perspectives measure the future business future performance. But the most common mistake that most organizations do is focus on financial results by ignoring the other three perspectives in Balance Scorecard (Khan and Shah, 2011).

    ReplyDelete
    Replies
    1. Zainul FahadSeptember 16, 2022 at 1:59 PM

      the balanced scorecard approach extends this to including measures of performance relating to customer, internal processes and learning and growth needs of their people (Latshaw and Choi, 2002).

      Delete

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