Assessing Business Performance

5 Key excerpts on "Assessing Business Performance"

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  Vets In Business

  Making it Better

  • Joe Hill, Joe Hill and Terry Hill(Authors)
  • 2023(Publication Date)
  • Austin Macauley Publishers

    (Publisher)

  Chapter 6 Measuring Business Performance

  This chapter looks at how firms measure their performance as a whole and the performance of the various functions in terms of their role and contribution to its overall success.

  Why measure? The purpose of measurement is to help set aside opinion-based discussions. Nearly all people have opinions and most think they are right! By adding data and measurements to an assessment, discussions will be less emotive while ensuring that outcomes can be better assessed.

  The maxim “what gets measured gets done” holds true for most, if not all organisations. Consequently, great care needs to be exercised when selecting which aspects of performance to measure. The chapter comprises two parts. The first highlights some key factors to consider when using performance measures while the second discusses some of the key measures to use and the insights they bring to help manage a business.

  Key Factors to Consider When Using Performance Measures

  This section separates the key factors to consider when using performance measures into three different but related categories.

  Selecting Measures

  For some businesses measurements are second nature and are essential in both current and future evaluation. For others they are infrequently used or only involve basic financial assessment. So, where to begin?

  Avoid long lists. The purpose of measuring and monitoring performance is to highlight those activities that are business critical, essential for the short- and long-term success of a business driving both revenue and profit. Measuring these ensures that people focus on those activities that impact key business targets.

  If the key objectives are not defined and set at the beginning of the process there is a tendency over time for the list of measures to grow. This upward drift is a natural consequence of several behavioural characteristics including:

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  Assessing Organizational Performance in Higher Education

  • Barbara A. Miller, Ph.D., Barbara A. Miller(Authors)
  • 2016(Publication Date)
  • Jossey-Bass

    (Publisher)

  One of the greatest challenges for assessors engaged in measuring performance at the organization, program, and process levels is to understand the nature and complexity of organizational performance. Organizational performance is defined and measured in multiple dimensions, each of which is linked to specific system elements. This is why assessment of organizational performance always begins with an analysis of the system’s external and internal elements as described in Chapters Two and Three. Wise assessors generally do not measure all dimensions of organizational performance all the time. They are selective, choosing the right performance areas based on specific needs and expectations of different assessment user groups, critical success factors, strategic goals, past performance issues, emerging political and social issues, and other relevant considerations. Areas of Organizational Performance Organizational performance can be defined operationally in many ways. In 1989, Scott Sink and Thomas Tuttle operationally defined seven areas of organizational performance. I formed them into a new combination more suited for assessment in higher education. By now you will recognize these seven areas of organizational performance as the following: 1. Effectiveness: a measure of the extent to which the unit achieves its intended outcomes 2. Productivity: a ratio of outputs created to inputs consumed 3. Quality: a complex area of performance measured in six dimensions: Quality of upstream systems (Q 1) Quality of inputs (Q 2) Quality of key work processes (Q 3) Quality of outputs (Q 4) Quality of leadership systems (Q 5) Quality of worklife (Q 6) 4. Customer and stakeholder satisfaction: a measure of the level of satisfaction of internal and external customers and stakeholders 5. Efficiency: a measure of resource utilization and the costs and benefits of quality management 6. Innovation: a measure of creative changes put into place to improve organizational performance 7

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  Maximizing Business Performance through Software Packages

  Best Practices for Justification, Selection, and Implementation

  • Robert W. Starinsky(Author)
  • 2016(Publication Date)
  • CRC Press

    (Publisher)

  Business performance is maximized in the economic or financial sense when the cause of underlying activity keeps focusing on the upward impact or effect. Where Six Sigma fits in. Where Business Process Improvement or Reengineering fits in. 50 Maximizing Business Performance through Software Packages The Financial Perspective As previously mentioned, the financial perspective is the traditional method of analyzing business performance. In the not so distant past at the height of the dot-com era, one would have thought that traditional financial performance measures had been all but abandoned. Both the economy and the financial markets are going through a gut-wrenching reality check as this manuscript is being written and financial performance measures are once again very much in vogue. With that said, most business owners and business investors follow what is generally referred to as a value-driven or fundamental analysis of the business organization. Although Benjamin Graham and David Dodd first described these analysis tech-niques many years ago, they remain as relevant today as when they were first described. A complete discussion of financial performance analysis techniques is beyond the scope of this book, but suffice to say that stakeholders are generally interested in several major dimensions of finan-cial performance that include: Return on investment Capital appreciation Earnings quality Return on investment is defined as the amount earned on the invested capital provided by the business and is usually expressed as a percentage. Return on investment rewards the business owner for taking on the risks of investing in the business organization. To succeed, most business organizations must exhibit a pattern of growth in revenues and in earnings. Earnings quality is an increasingly important measure to stakeholders.

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  Managing Strategy

  Your guide to getting it right

  • Chartered Management Institute(Author)
  • 2014(Publication Date)
  • Profile Books

    (Publisher)

  Measurements taken across these four categories are seen to provide a rounded balanced scorecard that reflects organisational performance more accurately than one based solely on financial indicators. This in turn assists managers to focus on their mission, rather than merely on short-term financial gain. It also helps to motivate staff to achieve strategic objectives.

  Traditionally, managers have used a series of indicators to measure how well their organisations are performing. These measures relate essentially to financial aspects such as business ratios, productivity, unit costs, growth and profitability. While useful in themselves, they provide only a narrowly focused snapshot of how an organisation performed in the past and give little indication of likely future performance.

  During the early 1980s, the rapidly changing business environment prompted managers to take a broader view of performance. Consequently, a range of other factors started to be taken into account, exemplified by the McKinsey 7-S model and popularised by Tom Peters and Robert Waterman’s book, In Search of Excellence. These provide a broader assessment of corporate health in both the immediate and the longer term. This checklist focuses on the balanced scorecard, which was developed by Robert Kaplan and David Norton in the early 1990s with the aim of providing a balanced view of an organisation’s performance.

  The balanced scorecard has become an increasingly popular performance management and measurement framework and regularly appears in the top ten in Bain & Company’s most used annual management tools surveys.

  Kaplan and Norton identified a number of stages for implementing the scorecard. These include a mix of planning, interviews, workshops and reviews. The type, size and structure of an organisation will determine the detail of the implementation process and the number of stages adopted. This checklist outlines some of the main steps.

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  Transforming Corporate Performance

  Measuring and Managing the Drivers of Business Success

  • Michael Milgate(Author)
  • 2004(Publication Date)
  • Praeger

    (Publisher)

  New ways, even combinations (as with combination drug therapies for certain diseases), are now needed to ensure that the life of an organization for the new century has a chance of continuing. Performance measurement appears to have become the critical business issue between the late 1990s and the first decade of the new century. As this book finds, it underpins or drives every element of organizational endeavor, it is a competitive differentiator in its own right and clearly not a vogue issue or passing trend. However, much of performance measurement is driven by “fads” being pushed by various consulting organizations or “guru” authors. Each themed chapter examines the strategic dimensions of that form of measurement, the process itself, and best practice approaches through case studies, case reports, research trends, and advisor overviews. Guidelines and insights help rethink perspectives and practices concerning the overall approach. The book can be used as a “dipin” resource, allowing the reader to either dip into a chapter that may be relevant or use the book from start to finish as a means of challenging the organizations approach to performance mearurement. Chapter 1 examines the business and strategic contexts of performance measurement, along with shortcomings in contemporary practice. Chapter 2 has three sections, covering balanced business scorecards, the functional adaptation of these frameworks for human resources (HR) and supplier measurement, and other emerging business measurement disciplines, including corporate dashboards. Chapter 3 details the broader context of business excellence and performance measurement by considering their links to business strategy, the rationale and benefits of selfassessment, and the process in practice. Chapter 4 discusses the contribution of benchmarking to business strategy, improving performance capability in relation to competitive issues, and the emerging practice of transferring best practices.

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