Life is all about setting goals and trying to achieve them. The same theory also applies in the managerial industry. The accomplishment of desired results in a business is called performance. One of the major concerns of the top managers of a firm is the actual performance of the firm so its measurement is unavoidable.
It is really important and necessary that the performance is measured at all levels. The performance is usually divided into five parts in order to be measured in a simpler and more accurate way:
Customer Service and Satisfaction
I will concentrate in operations identifying relevant performance measures and comparing them to measures used by my syndicate company Price Waterhouse Coopers (PwC). Analysis
Operations are all the processes in transforming inputs into desired outputs. These processes must be efficiently and effectively coordinated by managers and eventually they must accomplish specific organizational goals. All operations, despite how well managed they are, are capable of improvement. In order for the operations to be improved however, weaknesses should be identified first. Therefore operations need some kind of performance measurement as a prerequisite for improvement. In the operations area we need to consider five aspects which will be critical to measure. These ‘performance indicators’ are: •
Quality (How Good?)
Quantity-Dependability (How many?)
Time-Speed (How quickly?)
Easy of use-Flexibility (How easily?)
Cost-Money (How expensive?)
All operations have in common three main characteristics: inputs, actions (process) and outputs. When measuring performance, we need to consider these component parts having always in mind the five performance indicators. A firm can provide services, produce goods or contain elements of both. In this case, PwC is a strictly providing service firm. In manufacturing firms performance can be measured in different ways and especially with a set of quantitative ratios. For example: Labour cost per unit, material yield, unit overhead cost, stock keeping units etc. Some other measures which can be used only by a manufacturing company are inventory holding, scrap levels-percentage of material costs and value, delivery reliability, testing and simulation of a product etc.
A service firm performance is usually measured in terms of quality. Nevertheless, these performance measurements can also be measured in terms of time, flexibility and cost, and they can also be used by a manufacturing company. In order to analyze the measures, I will divide them to the three main parts of operations, input – process – output: Input
In the case of a service firm, input is generally the people who run the operation’s function. These range from servers to drivers and operators to managers and controllers. To measure the knowledge of the staff the employee appraisal system can be used. Appraisal is a formal meeting between the supervisor and the employee where performance evaluation can be made with comments and opinions of both. This helps the employee to be more efficient and increase his performance. Productivity measures can also be used in this area. There are usually measured by accountants and the most important, which is relevant to input, is the Net Output per employee ratio. This ratio is equal to the quotient of the added value per annum over the total number of employees. Efficiency of the employees can also be measured using accounting formulae. Efficiency ratio measures the actual product/service output with that expected. Using time as the common denominator then both the numerator and denominator are expressed in minutes, hours, days whichever is the most appropriate unit of measurement. Process
Process is the transformation of inputs into outputs. Here we would typically be seeking measures of the efficiency of the process, for example: •
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