Organizational Performance Management System

2669 Words Jul 8th, 2009 11 Pages
Table of Contents

Abstract 3

Introduction 3
The Changing Role of Organizational Performance Management 4

Organizational Performance Measurement Approaches: Balance Scorecard 7

Benefits and Shortcomings of Balance Scorecard 9

Five Key Organizational Performance Measures 10

Conclusion 12

References
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As per Vince Kellen (2003) those uses include monitoring and controlling activities, driving organizational improvement, maximizing the effectiveness of the improvement effort, achieving alignment with organizational goal and objectives, rewarding and disciplining.

The Changing Role of Organizational Performance Measurement System

How to create and measure organizational performance measurement system has been a persistent source of debate. Traditionally, organizational performance management system included measuring financial ratios, such as return on investments, cash flows, and cost of sales.
Figure one below depicts traditional performance indicators, focused mostly on financial measures.
Figure One Source: Frederico and Cavenaghi 2009

In the recent years the focus has been on measuring non-financial ratios, such as quality, customer satisfaction, safety and other stakeholders. Figure Two shows the new performance indicators, incorporating quality together with other financial indicators.
Figure Two Source: Source: Frederico and Cavenaghi 2009
Furthermore, according to Shackleton (2007) financial measures prohibit the guidance and evaluation of an organization’s ability to create future value through investments in customers, suppliers, employees, processes, technology and innovation. Shacketon agues that the pressure for reporting on corporate performance today, has confronted the traditional managerial
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