Premium Essay

Performance Measurement Systems

In:

Submitted By pappadot123
Words 3267
Pages 14
Introduction

The subject of performance measurement is encountering increasing interest in both the academic and managerial worlds. This, for the most part, is due to the broadening spectrum of performances required by the present-day competitive environment and the new production paradigm known as Lean Production or World Class Manufacturing (Hall et al., 1991). In addition there is the need to support and verify the performance improvement programmes such as Just-in-Time, Total Quality Management, Concurrent Engineering, etc. (Ghalayini and Noble, 1996).

These programmes are characterised by their ability to pursue several performances at the same time, for example the increase in the product quality together with the lowering of the production costs and the lead times, following the reduction in discards, waste, reworks, and controls. Performance measurement is how organisations, both public and private, measure the quality of their activities and services. An influential 1982 book, "In Search of Excellence," sparked interest in measuring performance. Since then, business, government and other organisations have sought to measure the extent to which they meet organisational goals. Performance measurement may sound simple, but is often a complicated process that requires deep strategic thinking and assessment.

Performance measurement systems (PMS), such as Kaplan and Norton’s (1992, 1996a) Balanced Scorecard, focus on organisational performance and, although the impacts of these systems on organisational performance is a much debated question, they may be considered as a means of reaching performance objectives, thus the interest in these systems and their use. Considering their support role in both tactical and strategic decision making (Kueng et al., 2001), PMS are designed for executives, although not exclusively, and thus have an executive

Similar Documents

Free Essay

Accounting

...Measuring Performance Will evaluating performance measurements lead to better performance in government? Performance measurements document if an organization is reaching its goals. Has using performance measurements produced better performance especially in government? Research shows that performance measurements rarely lead to improved government performance or increased accountability in management. (Sanger, 2012, p. 185) Citizens are demanding better results from government when resource constraints are increasing and the level of trust in the government is low. The research investigates the relationship between performance measurements and implementation of behavior changes from the results of the measures. (Sanger, 2012) There are a variety of factors that influence the development, maintenance, and use of performance management. Organizational culture is also important in supporting an environment where performance data is used to measure the quality of work. Performance management even if initially popular fall victim to the politics of transparency. (Sanger, 2012, p. 196) This paper researched U.S. cities that were likely to measure the performance of their service delivery. There were 198 cities identified which they then looked at public documents that showed the citywide performance in four areas: police, fire, parks and recreations, and public works. (Sanger, 2012) This study used qualitative analysis research. After reviewing this research...

Words: 595 - Pages: 3

Premium Essay

Hello Panda

...Equity Theory of Motivation As the cliche goes, no man is an island. Everything man does is influenced by other men and his environment. Be it in school or at work, the reason why people persevere lies on the desire to achieve a certain goal. Hence, motivation is essential to keep the drive of doing things passionately and effectively. However, the enthusiasm to sustain the dream and keep the motivation alive can be tampered by life’s uncertainties. Given the unique characteristics that each student possess, the amount of effort exerted by an average student does not always equal the amount of effort exerted by an outlier in class, yet the results are the same or sometimes exceeded by the outlier. Perhaps there are instances when studying overnight and not studying at all yielded the same result. These situations affect the level of motivation a student harness when studying. The feeling of unfairness affects how he/she will prepare for the next exam. In the workplace setting, motivation is likewise an important factor to increase productivity. For example, an employee who worked overtime to get the job well done vis-a-vis an employee who slacked off and produced a mediocre output both received the same salary and the same praises from their boss. The hardworking employee might feel wronged upon seeing how his extra effort was overlooked. To give justice to the unfairness he feels, he opts to mimic the other employee, thus also producing a mediocre output. The equity theory...

Words: 2543 - Pages: 11

Free Essay

Business Report

...Problems in Performance Measurement at the Edwards School of Business Table of Content Executive summary 3 1. Introduction 4 2. Discussion 5 2.1 Problems with performance measurement 5 2.2 Factors that cause problems 6 2.3 Prediction of other institutions 8 3. Conclusion 10 4. References 11 Executive summary This report is a case study from Edward School of Business to analyze the problems in performance measurement. The point-based merit system is introduced for the purpose of improving faculty members’ performance in academic research when keeping good performance in teaching and motoring students. The reports will first give a general background of Edwards School of Business and the merit system. It then presents three specific problems that the school encounters, namely faculty members focusing too much on getting points rather than improving outputs, unfairness due to quantifying performance into points and confusions and distrust from faculty members. Besides, how these problems generate is discussed and prediction of results in other organizations is discussed. Introduction Edwards School of Business is the second largest college of The University of Saskatchewan, enrolling about 2,000 students every year. It is now undergoing institutional transformation to enhance academic research, the student experience and faculty engagement. To support the transformation, a new human resource strategy, the merit system, is made to set standards of performance measuring. It is a...

Words: 2431 - Pages: 10

Free Essay

Employee Resourcing Strategies

...Performance Measurement Promotes Effective Management Effective management is based on a foundation of effective measurement, and almost everything else is based on that. Bain & Company director emeritus and customer loyalty expert Frederick Reichheld unequivocally put it this way: "Measurement systems create the basis for effective management."[7] As Figure 1-1 illustrates, measurement determines what management does, and it works—through management—to touch every part of the organization, including compensation and rewards. Figure 1-1: MEASUREMENT: THE MOST FUNDAMENTAL MANAGEMENT SYSTEM. Organizations are conglomerations of many systems. Measurement is actually the most fundamental system of all. When the "measurement system" works well, management tends to manage (and reward) the right things—and the desired results will occur. The measurement system—for good or ill—triggers virtually everything that happens in an organization, both strategic and tactical. This is because all the other organizational systems are ultimately based on what the measurement system is telling the other systems to do. Unfortunately, as we will see, most organizations do not have one integrated measurement system, but rather many measurement systems located in functional "silos" and not well interconnected. I am continually amazed how many leaders pursue the wrong things— and it almost always comes down to what is being measured. The wrong measures tend to trigger the wrong activities—because...

Words: 3111 - Pages: 13

Premium Essay

Performance Measurement

...Performance Measurement Robert Campbell MGT/437 March 14, 2011 Sunil Mehta Performance Measurement According to NY Government (n.d.) website, “Strategic, performance measurement-based management systems allow an organization to align its business activities to its strategy, and to monitor performance toward strategic goals over time” (para. 1). Each measurement should be objective, easy to understand, controllable by minimizing outside influences, timely, accurate, cost-effective, useful, motivating, and trackable (NY Government, n.d.). The use of performance measurement is important because the stock market’s volatility has shown that financial measurement is not the only measurement. By using measurement techniques companies can compare themselves to established norms. In this discussion there will be a look at three different types of performance measurement systems, what they do and how they are used. These systems identified are the balanced scorecard, performance dashboards, and the economic value added. The balanced scorecard is a strategic planning and management measurement style widely used throughout the business world to bring its business activities in line with the vision and strategy of the organization (Balanced Scorecard Institute, 1998-2010). According to the Balanced Scorecard Institute (1998-2010) the implementation increases focus on strategy and results, increases organizational performance by measuring what is important, and aligns strategy...

Words: 1326 - Pages: 6

Premium Essay

Armco Case

...Case – The Armco Kansas City Works The previous performance measuring system at Armco was based on cost and safety factors, which were considered the primary desired results parameters. But looking at the nature of operation of the company, which is based on manufacturing, the higher management recognized that these parameters of measurement were not adequate to measure the performance and efficiency of the process. In other words, more knowledge of the desired results was to be gathered and performance dimensions were needed to be redefined. Hence, the management determined 10 important factors for its performance measuring system which are broadly focused on three areas - 1) the primary and most potential bottleneck area of the process, 2) the overall manufacturing process and 3) plant wide activities. Redefining the factors would help the company to measure the performance more effectively especially in terms of objectivity and understandability. At the same time, the new system has also pushed the organization towards more of a decentralized type by making its employees responsible for more areas that before. Still, the new system has left out two concerns. The first concern talks about how to evaluate performance in situations where numbers might get distorted by uncontrollable factors. As the performance measurement system is results oriented, it would be hard to measure from numbers so managers should also come out with a subjective measure for such situations, where...

Words: 396 - Pages: 2

Premium Essay

Measuring Procurement Performance in Rwanda Case Study: Social Security Fund of Rwanda Year: July 2010-June 2011

...PROCUREMENT PERFORMANCE MEASUREMENT……………………………………………………………………...6 5.1. DEFINITIONS…………………………………………………………………….6 5.2. WHY MEASURING PROCUREMENT PERFORMANCE……………….7 5.3. CHARACTERISTICS OF PERFORMANCE INDICATORS……………..9 5.4. BOARDROOM ALIGNEMENT…………………………………………….10 5.4 EXEMPLE OF A DETAILED FRAMEWORK FOR MEASURING PROCUREMENTPERFORMANCE…………………………………………...10 6. MESEARING SSFR PROCUREMENT PERFORMANCE………………….13 6.1. SIMPLIFIED PROPOSED FRAMEWORK FOR PROCUREMENT PERFROMANCEMESUREMENT………………………………………………...13 6.2. CHALLENGES FACED BY RSSB PROCUREMENT IN THE AREAS OF IMPROVEMENT……………………………………………………………………19 7. CONCLUSIONS AND RECOMMENDATIONS……………………………...20 7.1. CONCLUSION…………………………………………………………….……20 7.2. RECOMMENDATIONS…………………………………………………….…23 8. BIBLIOGRAPHY. …………………………………………………………….…24 MEASURING PROCUREMENT PERFORMANCE IN RWANDA CASE STUDY: SOCIAL SECURITY FUND OF RWANDA: 2010-2011 Abstract For decades procurement performance has been attracting great attention from different stakeholders due to poor performance resulting from non adherence to proper processes and procedures. It had been also proved that performance measurement is the key driver to improving quality of services while its absence or use of inappropriate means can act as a barrier to change and may lead to deterioration of the purchasing function and that Organisations which do not have performance means in their processes, procedures, and plans experience lower performance and...

Words: 5456 - Pages: 22

Free Essay

Preformance Management

...Performance Management Plan HRM/531 July 14, 2014 Patrice Cloutuer Construction Company performance Management Plan Clayton Commercial Construction Company has requested our recommendations for a performance management plan. We at Atwood and Allen have been working with Marylee Luther for the past several weeks by implementing various recommendations to this construction business to expand to Arizona. Clayton Commercial Company is currently located in Detroit Michigan, has 650 employees, and planning to increase 20% which would open 130 new jobs with their expansion in Arizona, and a turnover rate of 20%. Clayton Construction has a annual net revenue of 10 million dollars and expect their current -3% revenue growth to remain the same. Our recommendations would include the framework that can lead to build a evaluation system, the philosophy of performance management, and the feedback for an effective performance management plan. Performance Management Plan Atwood and Allen would recommend a performance management for the construction industry this system must gather related data to improve their goals through performance objectives by goal setting, measuring and assessment. Clayton Construction performance management system should include five elements in their system: Cost, cost growth, cost factors and budget factors; Schedule, schedule growth, duration, schedule factor, and duration factor; Safety, zero recordable and zero lost workdays; Change, change cost...

Words: 705 - Pages: 3

Premium Essay

W5 Quest

...ACF5100 Advanced Strategic Management Accounting Questions for discussion in Week 5 2.1 Explain the role of a company’s performance measurement system. Performance measurement systems play a key role in developing strategy, evaluating the achievement of organizational objectives and compensating managers. 2.4 Explain why the growing importance of intangible assets complements growing interest in the Balanced Scorecard. Increasingly, in order to succeed, organizations are relying on competitive advantage created from their intangible assets, such as loyal customers, high-quality operating and innovation processes, employee skills and motivation, data bases and information systems, and organization culture. The growing importance of intangible assets complements the growing interest in the Balanced Scorecard because the Balanced Scorecard helps organizations measure, and therefore, manages the performance of their intangible, knowledge-based, assets. With the Balanced Scorecard measurement system, companies continue to track financial results but they also monitor, with nonfinancial measures, whether they are building or destroying their capabilities—with customers, processes, employees, and systems—and how the company is managing intangible assets to create future growth and profitability. The Balanced Scorecard provides a framework for describing how intangible and tangible assets (such as property, plant, equipment, and inventory) will be combined...

Words: 975 - Pages: 4

Premium Essay

Six Sigma

...chi rompe di più? Come fa a rompere? Chiariamogli le idee Il metro funziona? Tutto ok? Metto gli allarmi ©GE Power Systems 2001-2002 (Send comments to Nilesh.Oak@ps.ge.com) Six Sigma Stretch Define 4% What is it that is not happening? (Problem Statement) What makes you say that? (Where is the data?) Ok, so what? Why bother? (Make a Business case) COSA NON VA? DMAIC: Formulating the Practical Problem ©GE Power Systems 2001-2002 (Send comments to Nilesh.Oak@ps.ge.com) What do I want to Improve? 8% Step 1: Select the CTQ Characteristic MISURIAMOLO Customer CTQ (Y) Measurable CTQ (y) Deliverables: Top CTQ(s) and Unit(s) DMAIC: Formulating the Practical Problem ©GE Power Systems 2001-2002 (Send comments to Nilesh.Oak@ps.ge.com) What’s the best way to measure? 8% Step 2: Define Performance Standards USL LSL Tell me what is good/what is bad! Set specification Limits Deliverables: USL, LSL, Target (Continuous), Defect Definition (Discrete) Come lo vorremmo? DMAIC: Formulating the Practical Problem ©GE Power Systems 2001-2002 (Send comments to Nilesh.Oak@ps.ge.com) Can I trust the output data? 8% Step 3: Validate the Measurement System Il metro funziona? Is the variation in measurement of y acceptable? Deliverables: Gage R&R% DMAIC: Formulating the Practical Problem ©GE Power Systems 2001-2002 (Send comments to Nilesh.Oak@ps.ge.com) How good am I today? 8% Step 4: Establish Process Capability ...

Words: 732 - Pages: 3

Free Essay

Quality Measurement Health Care

...for high performance. In order to create an atmosphere where physicians are meeting quality standards there needs to be an improvement program implemented to insure quality. According to article I researched “Performance measurements coupled with feedback (that is, audit and feedback) to health care providers has been shown to improve the quality care. Computerized clinical decision to support can improve quality.” (Persell, Dolan, Friesema, Thompson, & Kaiser, 2010) By using these methods it can increase quality performance and have less medical errors. Offering financial incentives if “performance measurements increase” can create results that are not true to form and have measurement errors. What may happen is physicians “may prescribe tests and treatments to patients for whom the benefits are insignificant because of concern that it will hurt their remuneration or publicly reported quality performance. (Persell, Dolan, Friesema, Thompson, & Kaiser, 2010)” When measuring the assessments if physicians believe that the tools used to measure their performance maybe incorrect what can happen is they may not heed to decision support or they may dismiss the findings even if they are not achieving the results that are expected of them. (Persell, Dolan, Friesema, Thompson, & Kaiser, 2010) In managed care one solution is to incorporate a standardization way for clinicians to record medical exceptions or to look at when a patient declines treatment into the performance measurement...

Words: 411 - Pages: 2

Premium Essay

Mgt/498

...factors of a company. The two companies being evaluated is USPS and Wal-Mart. The USPS internal and external factors are as follows: market and economic conditions, competitor actions, regulations, seasonality, and trend (" Internal and External Factors", 2014). The Internal factors are maintenance concepts, pricing strategies, product change, changes in usage factors, and promotions and advertising for products or services"(" Internal and External Factors", 2014). The USPS has to have better pay than the competitors to keep the employees. The carriers are paid well with USPS and tend to stay until the time they are eligible to retire. The "Performance Measurement Systems" (2004) website "External First-Class Measurement System (EXFC) is not a system-wide measurement of all First-Class Mail service performance". The USPS has very effective guidelines and follows protocol to the "T". The USPS takes great steps when ensuring quality service and care to their customers. They provide different services to their customer who in return keeps the customer coming back to them and helps keep the employees working. The postal service is continually trying to figure out different ways to keep money flowing in to keep our job secure. Wal-Mart is the second business that I have evaluated. The most popular technique is to focus...

Words: 928 - Pages: 4

Free Essay

Managing Finance

...process of implementing BSC is not easy and selecting the best performance measurement is the most challenging step. I agree with you how critical BSC is playing in the organizational future success as it is enhance effectively in developing the organizational strategy, measuring the result of the objectives. A survey been done of U.S. financial services companies (Ittner and Laecker, 2006) discovered that, most of these companies were not satisfied with their measurement systems. They believed there was too much emphasis on financial measures such as earnings and accounting returns and little emphasis on drivers of value such as customer and employee satisfaction, innovation and quality. ‘Limitations of financial data as a measure of total firm value, non-financial performance measures are necessary for an efficient performance evaluation’ (Kaplan and Norton, 1992). It is very important to take Stakeholders as first consideration in the implantation of BSC, where the organization must first of all understand the company value drivers and its mission, which means, the valuable approaches that will make the stakeholders convinced with the company future profit. Once these approaches are determined, the company will be able to use measurements that will translate the stakeholder’s objectives. Best Regards Qasim References: Kaplan, R. S. and Norton, D. P. (1992). ‘The balanced scorecard - measures that drive performance;, Harvard Business Review, 70(January-February), pp. 71–79...

Words: 268 - Pages: 2

Free Essay

Doc2

...Samples of each lot are inspected to ensure conforming to design specifications. SPC uses statistical tools to observe the performance of the production process in order to detect significant variations before they result in the production of a sub-standard article. Any source of variation at any point of time in a process will fall into one of two classes. 1) "Common Causes" – also called non-assignable or normal sources of variation. It refers to a wide range of sources that are present and make a repeatable distribution as time passes. 2) "Special Causes" – also called assignable sources of variation. They are unpredictable sources of variation and has an effect on only some of the process output. Nearly all of the production processes have variations; most of them are minor and may be ignored. But the major ones should be reduced or eliminated to improve the process. Once the dominant causes are identified, they can easily be treated or removed, so we can call it a stable process. When a process is stable, its variation should remain within a known set of limits. That is, at least, until another assignable source of variation occurs. Report description: * This report discusses the quality problem of a chosen product which is Granulated Sugar made by Euro Shopper Company. The problem was product variation which was spotted after the measurement of randomly purchased sugar packs. The team worked on studying the problem, understanding it and knowing its causes. In...

Words: 1994 - Pages: 8

Free Essay

Performance-Based Security Planning

...New Performance-Based Security Program Authored by The Sage Group The Professional Services Group (PSG) of Aronson Security Group asked us to comment on four questions related to metrics. Since creating, measuring and accelerating value is our focus, we were happy to oblige. Here were the four questions: * How do you determine what to formally measure? * How do you collect, understand and report on those metrics? * What value does security get from investing in metrics? * What value does the organization get from investing in metrics? What is Performance-Based security? Measuring security performance means assessing business and security results to: (1) determine how effective the strategies and operations are and (2) make changes to address shortfalls and other problems. There are different methods and criteria for measuring performance. However, the common strand through each is the ability to measure the results generated by core business processes, using specific metrics. For each process, there are many possible metrics. Why should Security Organization’s Measure? * Improvement: Understand your strengths and your weaknesses. Show continuous improvement over time. * Planning and forecasting: Performance metrics creates a progress trend line allowing organizations to not only be clear on their current performance position but also forecast their future condition based on the data * Technology Lifecycle Management: Performance metrics...

Words: 927 - Pages: 4