Performance measures

Definition

Performance measures are metrics used to assess the efficiency and effectiveness of an organization's activities. They are crucial for informed decision-making and strategic planning.

5 Must Know Facts For Your Next Test

1. Performance measures can be financial (e.g., ROI, profit margins) or non-financial (e.g., customer satisfaction, employee turnover).
2. The Balanced Scorecard is a tool that integrates multiple performance measures across four perspectives: financial, customer, internal processes, and learning & growth.
3. Effective performance measurement aligns with organizational goals and objectives.
4. Key Performance Indicators (KPIs) are specific metrics selected as critical indicators of progress towards strategic goals.
5. Regular analysis of performance measures helps identify areas for improvement and supports continuous improvement initiatives.

Review Questions

• What are the two main types of performance measures?
• How does the Balanced Scorecard approach integrate different performance measures?
• Why is it important for performance measures to align with an organization's goals?

Related terms

Balanced Scorecard: A strategic management tool that uses a set of financial and non-financial measures to provide a comprehensive view of organizational performance.

Key Performance Indicators (KPIs): Specific metrics chosen as essential indicators of progress towards achieving strategic objectives.

Strategic Planning: The process of defining an organization's strategy or direction and making decisions on allocating resources to pursue this strategy.