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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