Management performance means achievements or outcomes
achieved in relation to organizational goals set. How successful the management
has achieved the organizational objectives which are therefore involves a clear
evaluation of performance.
Financial performance is the achievements or
outcomes achieved in relation to monetary/economic terms. In evaluating the
financial performance, users are normally intended to analyze the financial
health of the organization for a specified period of time normally a year.
Users of financial information may have different perspectives in evaluating
the financial performance of the company, but the most common financial
measures specific to profitability includes;
Profit Margin- this measures how well the company is able to
generate profit and producing at low cost as it involves money earned after
deducting the cost of sales (direct cost).
Profit Margin- this measures the organizational strength on
generating profit after deducting all cost relating to production also
associated cost for bring the product to the market.
on Capital Employed- it is the most common measure used to analyze
the profitable investments, as it influence on investors’ decision in analyzing
a profitable investment among alternatives.
on Asset- this measures how the company is able to utilize the asset to
generate profit as it includes net income with total assets of the company.
The measures above comprises
the profit generated from operations, and the profit itself is realized after
deducting all cost in all level, it is therefore worthy to classify it as cost
measures as well.
Studies have been conducted on the contribution
non financial measures to organizational performance, with other researchers
argues that this measures have a significant impact on firm performance while
other still believing on the traditional approach. But studies supporting this
approach have recognizing the significant impacts made by product quality,
customer satisfaction, product innovation and leadership in firm
performance. In the study conducted by Gijsel
(2012) argued that, managers have been increasing reliance on non financial
measures by revealing that these measures are better off during the economic
crises and are also vital in evaluating firm future performance.
Result Based on objectives is a management
strategy that is aimed at achieving a significant change in the way the company
operates as the central target is to improve performance through expected
results (objective set). This approach
provides a framework to management for strategic plans, risk management and how
to monitor and evaluate the performance.
The primary purpose of this model is to improve efficiency and
effectiveness through accountability and performance reporting. For a company
to succeed in this approach then they must ensure that every stakeholder is
involved in the cycle and be defined according to the expected results. This
approach borrow from the system theory as it follow a consequential
relationships as the terms involved are not used interchangeably nor out of the
Inputs ? Activities Outputs ?
Shot-term outcome ? Medium term outcome ? Long-term outcome
The success of this approach is
the ability of the organization to create a management culture that focus on
results as the model require more than the adoption of new administrative and
operational system. This involves designing a results oriented management
Score Card (BSC)
The BSC created by Kaplan is one of the best
known and widely used multidimensional models for measuring performance
worldwide. Its contributions to measure performance on a balanced and
integrated system using four
perspectives of an organization has made a significant stem from the old
financial performance measure. The importance of this model is that it recognizes
customers and employees as crucial to organizational achievements. The model
also has given opportunity to use non financial measures by succeeding the
previous metrics such as the Economic Value added (EVA). (Kumar, 2004)
This model has been used by
governments, non-profit organizations and wide business industry. Unlike the
traditional approach which analyzes the past performance, BSC has able to
supplement both past and future performance with objectives and measures
derived from the organizations’ vision and strategy.