The Importance Of Creating a Performance Measure in an Organization Essay

The Importance Of Creating a Performance Measure in an Organization Essay

Length: 1409 words (4 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

Performance measures play an important role in all companies and their daily operations. By providing multiple methods of comparison and evaluation, accounting measurements provide a better view of the overall state of a corporation. Not only do investors use certain measures to help decide which companies to invest in, but internal managers use other measures to make sure their company is meeting set standards and that it is not falling behind or losing money. Therefore, it is important that these measures are accurate and not misleading. It is up to auditor and regulators, such as the SEC, to ensure that only reliable measurements are being provided. While, customized measurements can more accurately focus on the goals of a specific company or process, more traditional measurements can be used to compare companies or processes. With the rise in popularity of customized or specialized performance measurements, their validity must be compared and contrasted to that of traditional measures of performance.
The importance for creating performance measures stretches from internal managers all the way to external investors. Internal managers can use different performance measures to help determine if a company is running efficiently and if it is meeting standards that were preset. For example, an internal manager of a manufacturing plant can use performance measures to see if enough products are being made to meet demand, if the machines are being utilized for the most profit, and if there is enough employees to run the machines. Executive management can use performance measures to determine if they are on track to be profitable for the year and if not they can use them to figure out why they are not profitable. Investors and Analy...


... middle of paper ...


...urn is the total return of a stock to an investor. This equals the capital gain plus the dividends for a certain period. The benefit of total shareholder return is that it allows the performance of shares to be compared even if they do not have the same growth rate or dividends. Economic Value added (EVA) is a measure of company’s financial status based on residual wealth. It is calculated by taking the net operating profit after taxes and subtracting out the cost of capital time the capital. Maintaining the integrity of these measurements is important since they are not regulated or audited. To maintain the integrity a company must be consistent with which data is included and it must disclose this information with the measurements. Along with that it is important that the company shows how these measurements hold up against the most comparable GAAP measurement.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The Importance of Performance Appraisals

- Introduction: Organization is a group of people brought to gather to achieve specific goals. Goals can be achieved if team member are performing well. Performance is the results of activities given to the employees in an organization to be achieved within specific period of time. Evaluating the current performance of employees against past performances and organizational standards is known as Performance Appraisal (Dessler, 2005). Furthermore performance appraisal helps the company know how individual employees are performing and how to improve their performance thus improving the performance of the company (Grubb, 2007)....   [tags: effectiveness of management, staff performance]

Powerful Essays
1400 words (4 pages)

Essay on The Importance of an Organization's Performance Management System

- One of the many ways to measure an organization's success in meeting or achieving its strategic objectives is to evaluate the performance of its employees. This evaluation, if it is to be effective or of substantial value to the organization, it needs to be systematic and purposeful. In order to explain the impact that a performance management system can have on other areas of human resource management, it is necessary to define the relationship between a performance management system and human resource management....   [tags: business]

Powerful Essays
1532 words (4.4 pages)

Importance of Performance Metric for IT Governance Essay

- Importance of Performance Metric for IT Governance: The organization order may deliver good governance, which is capable to add true value to the projects. The metric may have performance with a well-defined management with the means of success to determine the areas to focus on the effectiveness improvement. The carrying out of the metric include the improvement of the quality of IT services, reduction of risks in IT, reduce the cost of delivery services in IT. They are two types of performance metrics: 1. Development Metrics 2. Services Metrics Development metrics are used to measure the functioning in the maturation of the IT projects....   [tags: investments, stakeholders, projects]

Powerful Essays
1140 words (3.3 pages)

Job Descriptions Are Used For Measure Job Performance And Recruit For Talent

- Job descriptions are used to measure job performance and recruit for talent. It is a two-way communication that helps to ensure both the prospective employee and the employer understand roles and accountability. It also serves as an instrument to determine if an employee is qualified for the job being advertised and whether they can be effective from the moment they start the job (Ashe-Edmunds, n.d.). If properly written, a job description can avoid confusion and create accountability related to job tasks and the priorities of the organization....   [tags: Employment, Trade union, Recruitment]

Powerful Essays
832 words (2.4 pages)

The Importance of Reliable Measurements in Accounting Essay example

- Performance measures play an important in all companies and their daily operations. By providing multiple methods of comparison and evaluation, accounting measurements provide a better view of the overall state of a corporation. Not only do investors use certain measures to help decide in which companies to invest, but internal managers use other measures to make sure their company is meeting set standards and that it is not falling behind or losing money. Therefore, it is important that these measures are accurate and not misleading....   [tags: economic performance measures]

Powerful Essays
1973 words (5.6 pages)

The Importance Of Leading And Controlling On An Organization Essay

- 3.0 The importance of leading and controlling in times of conflict defined Conflict is labelled as the mismatched difference that is caused in some form of objection. In short, conflict is known as a discrepancy of individuals or group from a specific organisation. 3.1 importance of leading in conflicts Due to the presence of conflicts, it is crucial that a manager possesses good leadership skills. Leaders are defined as someone who has the ability to influence someone and has the managerial authority to do so....   [tags: Leadership, Management, Charismatic authority]

Powerful Essays
927 words (2.6 pages)

Essay on Employee Performance Measurment

- Assignment 2 Introduction Employee performance is the job related activities expected of a worker and how well those activities were carried out. (Johnsen, 2000) Measurement involves ascertaining the size, amount, or degree of something by using an instrument or device. (Euske et al., 1993) Therefore it can be concluded that employee performance measurement is how organizations, public and private, measure the quality of their activities and services. It involves the regular collection of data to assess whether the correct processes are being performed and desired results are being achieved....   [tags: organization analysis, goal achievement]

Powerful Essays
2370 words (6.8 pages)

Essay about Performance Measures: Pay-for-Performance Evaluations

- “Well-designed employee performance appraisal instruments assume great importance by providing agencies with information that can guide administrative and developmental decision-making about their most important asset—their human resources” (Mulvaney, McKinney, and Grodsky, 2012, p. 505). Job standards are used in performance management systems to inform the employee of the metrics by which their performance is being measured. Performance management systems inform employees of his or her past performance and what is expected of him or her for future performance....   [tags: employees, job standards]

Powerful Essays
1702 words (4.9 pages)

Job Satisfaction And Measure The Level Of Satisfaction Essay

- ... Advancement was a higher priority for middle management compared to nonmanagement positions as well as employees with college education compared to those with a high school diploma (SHRM, 2012). Employee/Manager relationship Having a good relationship with a manager/supervisor can greatly influence job satisfaction. One of the most important components is having open lines of communication, having effective communication can help employees feel they mean something to the organization which in turn can increase morale, productivity, and fulfillment....   [tags: Employment, Management]

Powerful Essays
1309 words (3.7 pages)

The Importance of Metrics Essay

- The Importance of Metrics Abstract Establishing metrics is crucial to any organization, especially in technology related company projects. Metrics permit organizations to measure its performance against industry sectors to determine how well the company is doing. Furthermore, metrics allow organizations to evaluate and improve the effectiveness and efficiency of its processes. Metrics are designated in different categories. The categories identified in this document include output, in-process, and people....   [tags: Business Metrics Organization]

Free Essays
1524 words (4.4 pages)