2. Performance Measures
Performance measure is considered as
quantifiable indicator which is mainly used
by companies to compare the performance
in terms of meeting their goals
2
3. Types of Performance Measures
• Human Resource Measure
• Financial Measures
• Market Position Measure
• Product and Service Measure
3
5. Financial Measure
• Profit and Loss
• Return on Investment
• Profit Margin
• Change in Level of Sales
• Budget Comparison and analysis
5
6. Market Position Measure
• Market Share
• Size of Company in comparison to
competitors
• Global Distribution and Sales Measures
6
7. Product and Service Measure
• Customer Satisfaction Survey
• Rate of Customer Return
• Product rate of failure
• Number of clients served
7
8. Human Resource Measure
Human resource measure is the tool,
which is mainly used for analyzing and
measuring the performance of human
resource within organization.
8
9. Importance of Human Resource
Measure
• Effectively Utilizing Employees
• Improvement in Efficiency
• Quality Improvement
• Increase in Productivity
9
10. Potential Actions of Measure
• Human Resource Measure
• 360 Degree Feedback
• Balance Scorecard
• Financial Measure
• Comparison of Budget
• Analyzing Finance Department
10
11. Potential Actions of Measure
• Market Position Measure
• Analyzing Competitors
• Market Research
• Product and Service Measure
• Customer Feedback
• Customer Loyalty
11
12. Product and Service Measure
Product and Service Measure is the
tool which is used for measuring the
performance of products and services in the
competitive market environment
12
13. Importance of Product and Service
Measure
• Providing Better substitute
• Develop Innovative Products
• Gain competitive advantage
• Customer Loyalty
13
14. Performance Measure from
Historical Information
Historical information is useful for
doing forecasting of the future market
conditions.
Company is also able to develop long
term goals and objectives through
historical information.
14
15. Performance Measures on Short
Term Goals
Measures based on short term goals is
useful in making decisions related to small
projects. It is also useful in the rapid
changing market conditions.
15
16. References
Amos, T. Ristow, A., Pearse, N. J. & Ristow, L.
(2009). Human Resource Management. USA:
Juta and Company Ltd.
Armstrong, M. (2006). A Handbook of Human
Resource Management Practice. USA: Kogan
Page Publishers.
Banfield, P. & Kay, R. (2012). Introduction to
Human Resource Management. UK: Oxford
University Press.
Martin, J. (2008). Human Resource
Management. USA: SAGE.
16
17. Cont…
Mathis, R. L. & Jackson, J. (2008). Human Resource
Management: Essential Perspectives. USA: Cengage
Learning.
McEvoy, G.M. & Buller, P.F. (2013). Human resource
management practices in mid-sized enterprises.
American Journal of Business. 28(1).
Petrescu, A.L. & Simmons, R. (2008). Human resource
management practices and workers' job satisfaction.
International Journal of Manpower. 29(7).
Styhre, A. (2003) Knowledge management beyond
codification: knowing as practice/concept. Journal of
Knowledge Management. 7(5).
17
18. Cont…
Werner, S., Schuler, R.S. & Jackson, S.E.
(2012). Human Resource Management.
USA: Cengage Learning.
Wickramasinghe, V. (2012). Influence of
total quality management on human
resource management practices: An
exploratory study. International Journal
of Quality & Reliability Management.
29(8).
18
Editor's Notes
Performance measure is considered as quantifiable indicator which is mainly used by companies to compare the performance in terms of meeting their goals. Every business and organization needs to measure their performance in order to knowing their position in to the market. Performance of any organization based upon many factors and measure points (McEvoy and Buller, 2013). Access and review of the outcome of main measures helps to measure the overall performance of the organization. These measures have direct relation with overall performance of the organization. Companies can also take short and long term decisions on the basis of performance measures.
Human resource measure is the tool, which is mainly used for analyzing and measuring the performance of human resource within organization. Financial Measure is the performance tool which is used by the organization for analyzing the profit margins and return on investments, so that they can make their budgets accordingly (Petrescu and Simmons, 2008). Market position measure is used for identifying the level of business in comparison to other companies within market. Product and Service Measure is the tool which is used for measuring the performance of products and services in the competitive market environment
There are different elements of human resource measures:
Performance measures are also used for appraisal, transfer, promotion and demotion. Performance measurement is an important task of total quality management. Productivity report is a data evaluation sheet in which each unit of labor economic output includes, producing in the economy as whole. Productivity report generated and released in the starting of every quarter and it shows the data regarding the previous quarter. Turnover is also considered for the human resource measure, turnover shows the working ability and performance of the workers for a particular quarter (Styhre, 2003). Turnover is all about the total monthly or quarterly availability of human resource within the organization. Absenteeism is also considered in the evaluation of performance of human resources. More absenteeism could be the reason of fired by the job. An employee should present on maximum working days to get higher ranking and to being a key person of the organization. Employee satisfaction is also necessary as equal to customer satisfaction. A satisfied employee always generates more satisfied customers which are the main objective of many organizations. Employee should be satisfied with the work environment, job satisfaction, work amenities and their performance appraisal provided by the organization.
There are some elements for financial measure:
Profit and Loss: It is the measure in which, organization identify the profit and loss of the company at the end of year. Accordingly, company makes decision for their financial budget.
Return on Investment: In this element, company measure the overall return on their investments, so that it is useful in using the income of the company in effective manner.
Profit Margin: It is also necessary for the company to analyze the profit margins for its every products and services they serve to the customers (Werner, Schuler and Jackson, 2012).
Change in Level of Sales: In this, company measures the sales of its products and services from past several years. It is useful in doing forecasting of future sales of the company.
Budget Comparison and Analysis: In this measure, company make comparison between the standard budget and the actual amount spend during the year.
Some elements of market position measure:
Market Share: Company measures the performance in the market by identifying the level of market share within the industry. High level of market share improve the position of company and low level of market share useful in making better decision for the company.
Size of Company in comparison to competitors: Size of the company can be measured through its financial level in the market. With the help of this, company is able to make decision for developing its market position (Wickramasinghe, 2012).
Global Distribution and Sales Measure: In this measure, company analyzes its performance by identifying that how many companies and consumers are using their products and services.
Elements of Product and Service Measure:
Customer Satisfaction Survey: Customer satisfaction is necessary to outperform for any organization. For this purpose some organization conducts some survey in which they ask the customer requirements and then produced the product according to their requirements. Manufacture a product according to the requirement of the customers always helpful to outperform in the market (Amos, Ristow, Pearse and Ristow, 2009).
Rate of Customer Return: Customer returns and complaints are the barriers for the organization performance. Organization should take serious for the sales return and customer complaints in order to achieve high performance level.
Product rate of Failure: Failure of any product in any particular market is a big reason for their bad performance. Performance measure also includes the rate of product failure due to any reason. Main reason of a product failure is customer dissatisfaction which could be determined through the customer satisfaction survey.
Number of Clients Served: Clients served by any organization also consider in their performance measurement. Maximum number of clients served by the organization could give higher performance level. More customers generate more sales with extra revenue.
Human resource measure is the tool, which is mainly used for analysing and measuring the performance of human resource within organization. Employees in any organization are known as human resource. Human resources are the main part of any organization in order to perform their business activities. It is necessary to manage human resource in the way that they will be utilized at their best (Armstrong, 2006). Human resource management is necessary to get optimum utilization from available resources. Measurement of the human resources in the organization helps to get overall firm’s performance measure.
Importance of Human Resource Measures:
Improvement in Efficiency: A process characteristics indicating the degree to which the process produces required output with a minimum resource cost. It helps to give answer about, are we doing right.
Effectively Utilizing Employees: Effectiveness is considered to indicating the degree in which the process outcome conforms about the project requirements.
Quality Improvement: in this measure it has considered that the product and services are meeting the quality required by the customers or our product is meeting with customer expectations or not (Banfield and Kay, 2012).
Increase in Productivity: Value added by the process divided by the value added of the labor and capital consumed tells about the productivity of the organization.
In order to make improvement in the performance measure tools, companies have to take certain potential actions for their different measures. In case of Human Resource measure, managers have to use 360 Degree Feedback and Balance scorecard. In 360 Degree Feedback, performance of the employees is measured through all perspective and takes reviews from employees and managers. In balance scorecard, organization develops different aspects and standards, on the basis of which performance is measured (Martin, 2008). In case of financial measure, comparison of budget and analyzing finance department is helpful in taking decision for the potential actions that need be taken for measures. Organization compares the budget from past several years and also assessed the performance of finance department.
In the market position measure, organization analyzes the strategies and policies of its competitors and accordingly they make changes in its products and services. This strategy is useful in improving the market position of the company. At the same time, it also useful in developing the competitive advantage and improve the competitive position. In product and service measure, it is necessary for the company to take action for the taking the customer feedback (Mathis and Jackson, 2008). With the help of this, company can get the reviews for its products and services. Moreover, customer loyalty is also an important tool for measuring the level of product and services. It is because company does not have to bear the brand switching cost and make further improvement for retaining the customers for long term.
Product and Service Measure is the tool which is used for measuring the performance of products and services in the competitive market environment. Evaluation of product and services provide by the organization is a main factor of performance. Better quality products and services help to perform much better. Product and services should be delivered as per the customer requirements. Product and service measure is also useful in measuring the level of customer satisfaction for the products and services (Wickramasinghe, 2012). In addition to this, it also measures the customer retention, so that organization can make decision to acquire the market at global level.
Product and service measure plays an important role for the companies to achieve success in the competitive market environment. With the help of this, company can make decisions for providing better substitute to the customers. With the help of this, they can retain the customers for long term. Measuring the products and services is also necessary for make decisions that whether their products are still required in the market or they have to move towards developing innovative products (Styhre, 2003). By providing innovative products to the customers, company can gain competitive advantage in the market. Moreover, it is also necessary that company have to make efforts in order to retain the competitive advantage for long term. Proper management of products and services on the basis of results through measurement, company can gain the advantage of customer loyalty.
Historical information for performance measure is still useful in some aspects. It is because through historical information organizations can do forecasting of the future market conditions. Company is also able to develop long term goals and objectives through historical information (Martin, 2008). Historical information is also necessary all making all the important decisions for the organization. It is also essential for the companies to make effective use of historical information.
Measures based on short term goals are useful in making decisions related to small projects. It is also useful in the rapid changing market conditions. In comparison to historical information, short term goals are playing more important role in the today’s rapid changing market environment (Armstrong, 2006). With the help of short term goals, company can divide its overall objectives into small projects and according allocate to the employees within companies.
