Evaluation Of The Performance Measurement

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PART A INTRODUCTION OF PERFORMANCE MEASUREMENT Now a days companies are being affected by ever growing competition in the global market. This competitive situation has inspired organizations to reinvent its very structure and the way it operates. Companies and its operations now have been segmented into divisions, which urge top management to assess the divisional performance to achieve company objective. Divisions tend to be categorised into either a profit centre or an investment centre. While the performance of profit centre is measured by taking profit figure into account, for investment centres its mainly profit and investment both. Performance measurement systems was developed as a means of monitoring and maintaining organisational control, which is the process of ensuring that an organisation pursues strategies that lead to the achievement of overall goals and objectives (Nanni, et al 1990). Neely, Adams & Kennerly (2002) has defined performance measurement as the following: “The process of quantifying the efficiency and effectiveness of past actions.” Within this definition is a reference to non-financial measures, defined by Moulin (2002) as: “The process of evaluating how well organisations are managed and the value they deliver for customers and other stakeholders.” According to United States General Accounting Office (GAO) , “ Performance measurement is the ongoing monitoring and reporting of programme accomplishment, particularly progress towards pre
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