However, if an organisation focuses only on financial measures this be an underlying disadvantage because it overlooks the non-financial factors – market position, productivity, quality, and innovation – which could contribute to its longer-term success. This article will focus on financial performance measures: how different measures are used to assess performance, and the advantages and disadvantages of the different measures. ![]() ![]() An important question is the extent to which a manager’s performance should only be evaluated in relation to factors they can control, rather than the overall performance of their division.Īnother key question relates to the choice of measure (or measures) which are used to assess performance in particular, return on investment (ROI), residual income (RI) or economic value added (EVA TM). In this context, it is important to recognise the distinction between divisional performance and managerial performance. ![]() In these organisations, a vital part of the head office management’s role is measuring the performance of the divisions and of divisional managers. Many large organisations have divisionalised structures.
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