INVESTMENT AND BUSINESS ACCOUNTANTS

A performance measurement system is a traditional way of keeping track of what goes on in your business. The aim of performance measurement is to help managers and business owners analyse successes and failures of individuals or group of individuals. Successes or failure in this context is a function of the standard that has been set by the management.

Performance measurement includes those activities that are carried out by management to ensure that goals and objectives are efficiently, effectively and economically met. Identifying and implementing the right performance measurement is one of such management functions that do more harm than good when not done properly. Adoption and implementation of wrong appraisal method staff can lead to the issue of loosing motivation and this in turn usually tell on the overall productivity of the organization concerned.

The nature of modern day business made it difficult for top management to centrally control operations. Thereby making it necessary for companies to be divided into separate self-contained segments or divisions – where managers are allowed to operate with a high degree of independence. As important as it is to have a sort of performance measure in place to see how these divisional managers are doing, it is much more important to ensure that performance measurement criteria or technique adopted by a company does not in any way affect the overall achievement of goal congruence of a company which include safeguarding the investments and assets of a company.

It should also be noted that financial performance evaluation is not and should not be the only basis of measuring how a divisional manager performed. Other non-financial factors like: level of competition in industry, how competitive a company is quality of a company’s product, level of customer satisfaction, product leadership, legislations, etc should also be considered while evaluating the performance of a divisional manager. This will now smoothly introduce us to the next section of this article which deals with issues revolving around successful identification and implementation of optimum performance measure.

OPTIMUM PERFORMANCE MEASUREMENT SYSTEM THAT ACHIEVE GOAL CONGRUENCE IN AN ORGANIZATION

Performance measure is a key strategic management decision that needs to be handled with utmost care so that goal congruence can be achieved. But wait a minute, I think is the right time to briefly explain what goal congruence is.

WHAT IS GOAL CONGRUENCE?

I simple language, goal congruence is a phrase used to describe a situation where the activities of every individual and group in an organization works towards achieving the common objective of a company, which is the desire of top management. For example, the activity of the marketing manager should not in any way negatively affect the operations of the production manager.

FACTORS TO CONSIDER WHEN CHOOSING PERFORMANCE MEASURE

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management are those calculated activities that an organization
performs in the bid to reducing cost. Traditional management accounting system has been accused of being a cost
containment process whereby managers of [...] Continue Reading…

Elements and characteristics of strategic management accounting are those features that makes strategic management accounting uniquely different from other forms of accounting (managerial accounting and financial accounting).
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Human
resource management are those strategic interrelated actions
that are taken by a manager with the sole aim of managing an entity’s most
valuable asset –the workforce. Human resource management goes by [...] Continue Reading…

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Financial accounting is that branch of accountancy that seeks to keep record of the financial activities of a company using specified standards and legal requirement. At the elementary level, [...] Continue Reading…

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XBRL as financial accounting reporting format made its way into the limelight of financial reporting in the mid 2000s with companies given the option of voluntarily producing their annual [...] Continue Reading…

The
central idea that quickly spread amongst both academic and practicing
accountants is that ABC tries to allocate overhead costs to cost object more
accurately than traditional system. ABC use cost drivers [...] Continue Reading…

In the wake of the protracted debate as to which costing method (Marginal or Full costing), activity based costing (ABC) approach to ascertaining the true cost of products appeared as [...] Continue Reading…

Financial management swot analysis is a new paradigm in finance whereby financial managers are encouraged to simulate on different financial scenarios before applying it to real life situation. It [...] Continue Reading…

IMPORTANCE OF FINANCIAL PLANNING

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information in a prescribed format that is easily understood by the intended users. In [...] Continue Reading…

By scope of financial statement analysis, we simply mean those vital issues that must be dealt with while carrying out financial statement analysis exercise. Financial statement analysis is a [...] Continue Reading…

The question of what financial statements are used for is an important one as it raises awareness as to the importance accounting as a whole. Many debates went on [...] Continue Reading…

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Financial statements have a vital role to play in the overall business valuation process. Two kinds of information at least are contained in the financial statement that every financial [...] Continue Reading…

Business valuation techniques and methods of valuing a business has in recent time receive lots of attention both from the field of academic and from practitioner with many empirical [...] Continue Reading…

Customer care services is one skill that today’s accountant cannot do without as business operations continues to integrate. Gone are the days when only customers’ care advisors are seen [...] Continue Reading…

Church frauds as weird and unpleasant as it may sound has become part of the system in most church across the world today.  People now actively seek opportunities and [...] Continue Reading…

Green investments also known as social responsibility investment and quality corporate governance over the time has shown to be a bedrock upon which business success is hinged – corporate [...] Continue Reading…

Fundamental analysis is all about intelligent and informed forecast in an attempt to establish an intrinsic value that corrects for that vital information that is missing from the financial [...] Continue Reading…

Suboptimal practices in companies are a situation whereby responsible managers fail to do the right thing just to take advantage of existing controls and procedures. Management and decision makers [...] Continue Reading…

Foreign investment decision is a tough and often complex investment decision that sharply differs from the traditional domestic decision on investing. The normal financial evaluation of discounted cash flows [...] Continue Reading…

Transfer pricing is one single area of managerial accounting that has been generating heat and still generates more heat. The existence of interdependencies in divisional-ised companies creates a problem [...] Continue Reading…

Business analysis is a methodological process of evaluating a company’s economic prospects and risk in the light of the entity’s strengths and weaknesses. This exercise is done in order [...] Continue Reading…

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INTRODUCTION

Middle level managers are the tactical managers acting as a link between the strategic and functional managers. Their roles in business processes and decision making cannot be overlooked; [...] Continue Reading…

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Budgeting process or budgetary system is a critical thinking area of managerial decision making that management accountants needs to handle with care else, make grave mistake that may cost the [...] Continue Reading…

Budgeting in its general sense is the act of quantifying objectives in financial terms. Budgeting assists managers in decision making process in an organization. It is the function of [...] Continue Reading…

Functions of management accounting cannot be fully appreciated if a working definition and explanation of what a management accounting is all about is not reasonably provided. To this end, [...] Continue Reading…

Decision making process involves strategic planning and control activities. It is a universal fact that information produced by management accountants must be evaluated in the light of its final [...] Continue Reading…

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