The performance of organizations is essential to achieve the planned objectives and get, consequently, the success of the business vision. The business vision is understood as the highest goal of an organization. In this context, performance measurement plays a critical role, in that it implies to monitor progress in the achievement of the strategies of the organization. For this, it is necessary to have tools that respond adequately to the needs of monitoring and evaluation forms and provides indicators to modify, if necessary, the direction of the strategies.
The organizations need to measure their activities regarding its vision and strategies, turning the latter into action, and give an overview of business performance. The measurement must allow the company to take corrective action, helping to define indicators to measure the achievement of objectives (Gjerde, Paulson & Hudges, 2007).
The measurement of the performance of the company must be applied to all product lines, divisions and departments of the company. The measurement process includes four steps:
■ turning the corporate vision into operational goals
■ communicate the vision and link individual performance
■ Business planning
■ Feedback, learning and adjusting the strategy.
There are four perspectives that help the organization to measure its performance:
■ Financial perspective: It analyzes the performance of financial indicators as cash flow, assets, liabilities, and ratios. The previous are a reflection of what happens to investment and economic value; in fact, all strategies culminate in a financial goal.
■ Customer perspective: This aspect is to identify the market and the client to which the service or product is directed. This perspective is a reflection of the market in which it competes. Through this information is obtained to produce, acquire, retain and satisfy customers also gain market share, profitability, among others.
■ Internal processes perspective: To achieve the financial targets and customer is required to improve certain internal processes of the company. These processes that must be improved require special attention by the managers so that influence to achieve financial targets and customers.
■ Learning and innovation perspective. This aspect allows identifying the necessary infrastructure to create long-term value. It includes the growth regarding human capital, systems, and organizational climate. It also implies find ways through which the organization can maintain its ability to change and improve.
It is important to note that each organization must adapt these views according to their strategies. It is also necessary to make clear that what matters is not the number of aspects to be analyzed, but the way they are linked and create relationships between the achieved results. And it is that any action that is performed on a variable or strategic indicator will have a direct impact on another indicator of the organization, hence the importance of knowing the cause-effect relationships between them (Khan, Halabi & Sartorius, 2011).
In this measurement, management indicators become vital signs within the Organization and allow the continuous monitoring conditions and identify the various symptoms is deriving from the normal development of activities. In business organizations, there must be the minimum possible number of indicators to ensure we have constant, actual and accurate information on aspects such as effectiveness, efficiency, effectiveness, productivity, quality, budget execution, the incidence of management, all of which constitute the set of vital signs within the organization. Objectives and tasks that an organization aims to achieve should be expressed in measurable terms, to assess the degree of compliance and progress thereof; it is here that the use of indicators has its greatest strength. The indicators may include measurements, numbers, facts, opinions or perceptions that indicate specific conditions or situations (Walther, 2014).
Reference List
Gjerde, Kathy; Paulson, A. & Hudges, Susan B (2007). Tracking performance: when less is more management accounting quaterly. Retrieved from http://www.imanet.org/docs/default-source/maq/2007maq_fall_hughes-pdf.pdf?sfvrsn=0
Khan, M.H., Halabi, A.K., Sartorius, K. (2011). The use of multiple performance measures and the balanced scorecard (BSC) in Bangladeshi firms. Journal of Accounting in Emerging Economies. Bingley: 2011. Vol. 1, Iss. 2, p. 160.
Walther, I. (2014). Key Terms: Chapter Twenty-Two. Principles of Accounting. Retrieved from http://www.principlesofaccounting.com/chapter22/glossary22.html
