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Company’s Performance Measures and Indicators Critique Report


Financial measures

Budget comparisons and analysis

  • It involves making structured projections of the expected business activities before a financial year
  • It aims at maximizing profits by cutting down operational costs
  • It helps in the formulation of strategies and action plan aimed at achieving the set targets
  • It creates a picture of the performance of the company and its ability to meet targets

Action

  • Policymakers can revise the existing strategies
  • They can avoid the recurrence of past mistakes in the future

Return on Investment (ROI)

  • It is a mathematical technique for appraising the profitability and viability of an investment
  • It is important to persons involved in decision making
  • It is important when a decision has to be made regarding an investment to be financed through borrowed money
  • It is best for decisions on mutually exclusive investments

Action

  • The management only invests in projects with a positive ROI
  • Projects are ranked in descending order according to their ROI values

Human resource measures

Employee satisfaction survey

  • It establishes workforce job satisfaction
  • It considers employees’ attitude towards the organization, compensation, and carrier development opportunities
  • It provides the base for future planning
  • It provides data necessary for the improvement of employees’ motivation
  • Workers can express their dissatisfactions
  • The management can evaluate the workers’ opinions and engage employees in the evaluation process
  • All employees’ grievances should be considered

Performance evaluation

  • It refers to the appraisal of an individual worker’s performance
  • Important records include attendance and punctuality records, overtime records, leave records, sales records
  • It seeks to determine workers’ suitability and compliance with the organization’s policies
  • It provides information to support salary increments, promotions, transfers, demotions, and terminations.
  • The management can decide to effect demotions, transfers, or lay off workers based on this evaluation

Market position measures

Market share

  • It is the portion of the whole market that a given company controls
  • It is important in conducting a market survey
  • It determines the kind of customers a company wants
  • It helps to decide whether the existing share is enough
  • The management makes decisions based on the market share: whether shrinking or expanding
  • Managers decide whether to retain or improve the current market share

Size of the company in comparison to competitors

  • Companies operate under high competition
  • The size of a company determines its competitive advantage
  • Knowing the size of competitors will help in understanding their weaknesses
  • Thus, it is easy to compete by improving the quality of the products and maintaining good relations with customers
  • Competitors information aids in decision-making and strategizing
  • It helps in identifying competitors’ weaknesses

Action

By knowing a company’s size, the management seeks to improve the firm’s competitive advantage by:

  • Improving the quality of the product
  • Revising the credit policy for more sales
  • Acquiring new machines to increase efficiency and
  • Investing in advertisement among others

Action

  • The company may realize that poor working conditions are the barrier to customer satisfaction
  • Hence, it can improve the working conditions
  • Management may implement strategies to improve product quality
  • For a new product, management may decide to spend more on an advertisement, increase its production, or drop it

Product/service measures

Product rate of failure

  • It entails a product’s reliability based on its performance and appeals to the users
  • It involves gathering information from customers on their perception of the future of a product
  • This information is used to predict its survival
  • Such information determines the popularity and acceptance of a product, which dictates its future.
  • The management can thus take the right steps to avoid rejection of a product.

Action

  • The management may decide to change a product’s qualities
  • The management may avail spare parts to enhance the durability of a product, hence improving public confidence in the same
  • The management may drop the product to avoid losses in the end, which applies if it is proved that the product is likely to fail.

Customer satisfaction survey

  • It is an assessment of how well the products offered in the market meet the consumers’ requirements
  • It is designed to determine the percentage of satisfied customers dealing with a firm at a given time
  • Information on customer satisfaction highlights what needs to be done to improve the company’s profits
  • Customer feedbacks help in making decisions on whether to test or drop the product early enough to avoid losses
  • A company gathers information to assist in designing strategies aimed at improving products’ quality

Bridging the gap between short term and long term strategies

  • A wide gap exists in the performance measures designed to achieve short term and long term goals
  • Mostly, organizations overlook necessary strategies to achieve their missions and visions
  • SWOT is useful in analyzing these differences
  • It involves Strengths, Weakness, Opportunities, and Threats

References

Datta, P. (2012). An applied organizational rewards distribution system. Management Decision, 50 (3), 479-501.

Davies, J., & Kochhar, K. (2002). Manufacturing best practice and performance studies: a critique. International Journal of Operations & Production Management, 22(3), 289-305.

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IvyPanda. (2021, February 17). Company's Performance Measures and Indicators Critique. Retrieved from https://ivypanda.com/essays/companys-performance-measures-and-indicators-critique/

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"Company's Performance Measures and Indicators Critique." IvyPanda, 17 Feb. 2021, ivypanda.com/essays/companys-performance-measures-and-indicators-critique/.

1. IvyPanda. "Company's Performance Measures and Indicators Critique." February 17, 2021. https://ivypanda.com/essays/companys-performance-measures-and-indicators-critique/.


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IvyPanda. "Company's Performance Measures and Indicators Critique." February 17, 2021. https://ivypanda.com/essays/companys-performance-measures-and-indicators-critique/.

References

IvyPanda. 2021. "Company's Performance Measures and Indicators Critique." February 17, 2021. https://ivypanda.com/essays/companys-performance-measures-and-indicators-critique/.

References

IvyPanda. (2021) 'Company's Performance Measures and Indicators Critique'. 17 February.

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