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Ch. 11. Performance Measurement

The document discusses performance measurement systems for management control. It outlines limitations of solely using financial control systems and advocates for a balanced scorecard approach across financial, customer, internal business, and innovation/learning perspectives. Additionally, it discusses establishing cause-and-effect relationships between measures, key success factors to measure, difficulties implementing such systems, different types of measures, and how measurement can facilitate interactive control.

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202 views

Ch. 11. Performance Measurement

The document discusses performance measurement systems for management control. It outlines limitations of solely using financial control systems and advocates for a balanced scorecard approach across financial, customer, internal business, and innovation/learning perspectives. Additionally, it discusses establishing cause-and-effect relationships between measures, key success factors to measure, difficulties implementing such systems, different types of measures, and how measurement can facilitate interactive control.

Uploaded by

HILDA
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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MANAGEMENT

CONTROL SYSTEMS
SOUECE: ANTHONY AND VIJAY G
By
Rosmita Rasyid
Ch. 11. Performance Measurement
Exh.11-1. Framework for Designing Performance Measurement Systems
PERFORMANCE MEASUREMENT
SYSTEMS
• Limitations of Financial Control Systems
1. It may encourage short term- actions that are not in the company’s
long-term interest
2. Business unit managers may not undertake useful long-term actions
to obtain short-term profit
3. Using short-term profit as the sole objective can distort
communication between a business unit manager and senior
management
4. Thight financial control may motivated managers to manipulate data
PERFORMANCE MEASUREMENT
SYSTEMS
General Considerations
The Balanced Scorecard
BU should be assigned goals and then measured
from from 4 perspectives:
a. Financial
b. Customer
c. Internal Business
d. Innovation and Learning
PERFORMANCE MEASUREMENT
SYSTEMS
Performance Measurement Systems: Additional
Considerations
. A performance measurement system attempts
to address the needs of the different
stakeholders of the organization by creating a
blend of strategic measures: outcome and driver
measures, financial and nonfinancial measures,
and internal and external measures
11-2. : Cause-Effect Relationships among
Measures
Key Succes Factors
. Customer-focused Key Variables
Bookings, Backorders, Market share, Key
account orders, Customer satisfaction,
Customer retention, Customer loyalty

. Key Variables Related to Internal Business


Process, Capacity Utilization, On-time
delivery, Quality, Cycle time
Key Succes Factors
. Customer-focused Key Variables
Bookings, Backorders, Market share, Key
account orders, Customer satisfaction,
Customer retention, Customer loyalty

. Key Variables Related to Internal Business


Process, Capacity Utilization, On-time
delivery, Quality, Cycle time
Difficulties in Implementing Performance
Measurement Systems
Poor Correlation between Nonfinancial Measures
and Results
Fixation on Financial Results
Measures Are Not Updated
Measurement Overload
Difficulty in Establishing Trade-Offs
Measurement Practices
Types of Measures
Quality of Measures
Relationship of Measures to Compensation
Interactive Control
The primary role of MCs is to help excute
strategies. In industries that are subject to
very rapid environmental changes, MC
information can also provide the basis for
thinking about new strategies, it is called
Interactive Control
• Thank You

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