Measure of Performance of a Company

665 Words2 Pages

Companies usually implement Business Performance Measurement systems due to a number of reasons, although largely to improve management over the company. Glavan (2011) explains that company managers and supervisors involved in formulating business strategies have an important task of determining when, how and where to establish changes within the organization (p 2). These changes may not be sensibly realized without an in-depth familiarity of the relevant information on which they are pegged on. As a result, over the recent past, numerous Business Performance Measurement (BPM) systems have been developed by business experts, among them, the business scorecard, the Economic Value Added, the Activity-based Costing and Action-Profit Linkage Model. However, as this paper will illustrate, the balanced scorecard frameworks has been more popular among organizations in the contemporary society due to its focus on the necessary business perspectives. The Balanced Scorecard In a nutshell, performance measures quantitatively provide appropriate information on products and services and the production processes involved in them. Glavan (2011) elaborates that the balanced scorecard is perchance the most extensively used BMP framework among firms (p 3). This criterion was pioneered in 1992 by Robert Kaplan and David Norton and, according to Crossion and Needless (2011) originally concentrated on providing information on principal indicators of a business’s health as opposed to its traditional accounting measures (p 304). However, with time, the balanced scorecard improved its focus to instead measure the strategy of the business. The balanced scorecard is usually broken down into four sections. Whilst the financial perspe... ... middle of paper ... ...ess’s strategy and is therefore attributively, effective, efficient, qualitative and safe. These perspectives include the financial, the customer, the internal business and the learning and growth perspectives. This paper equally stresses on the overarching importance of a performance measurement process as it helps a business to realize effective decisions about issues affecting the business product or process and its subsequent output. Works Cited Crosson, S. V., & Needles, B. E., Jr. (2014). Managerial Accounting. Mason, OH: South-Western, Cengage Learning. Glavan, L. M. (2011). Understanding Business Performance Systems. Business Systems Research, 2(2), 25-38. Retrieved from: http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=112587 Neely, A. D. (2002). Business Performance Measurement: Theory and Practice. Cambridge, U.K.: Cambridge University Press.

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