PERFO R M AN C E

MAN AG E M E N T
U NI T - 3
. HI MAKUMARI . V
MRS
Measurement of performance at Organizational Level
Performance measures are metrics along which organizations can be gauged. Most executives,
investors and stakeholders watch and examine measures such as profits, stock price, and sales in an
attempt to better understand how well their organizations are competing in the market, as well as
future predicted results. But these measures provide just a glimpse of organizational performance.
Performance referents are also needed to assess whether an organization is doing well. A
performance referent is a benchmark or standard used to make sense of an organization’s standing
along a performance measure.

Using a variety of performance measures and referents is valuable because different measures and
referents provide different information about an organization’s functioning. As well, many
commonly used measures, including accounting ratios, are highly past-focused.

These indicators show stakeholders the end-results of past decisions, but do little to predict future
firm performance. Strongly managed organizations must develop a deep understanding of what
events or actions support strong(er) performance (i.e., increased product training for sales force leads
to increased sales the following quarter), and then ensure they measure these as well.
 E.EFQM
The European Foundation for Quality Management (EFQM) Excellence Model, is a self-assessment framework
for measuring the strengths and areas for improvement of an organization across all of its activities. The term
‘excellence’ is used because the Excellence Model focuses on what an organization does, or could do, to
provide an excellent service or product to its customers, service users or stakeholders.
EFQM wants to support managers and directors in training, sharing ideas and innovating with the aid of the so-
called EFQM model as a common framework. The EFQM Model or EFQM business excellence model is the
most popular quality management tool in Europe, used by more than 30.000 organizations to improve
performance. It supports you to self-assess and reflect. 84% of our members say that the EFQM model helps to
improve their organization.

This quality management model aims at sustainable excellence in which quality, efficiency and sustainability
are the key elements. The basis of the EFQM Model consists of the Total Quality Management (TQM) concept.
It consists of a universal framework of concepts, thus enabling organizations to share information in an effective
way, irrespective of the different sectors, cultures and life stages in which they are located.
Organizations can thus take other organizations as a model, so that they obtain insight into how far they meet
the image of a high-quality organization. The EFQM consists of nine criteria that are subdivided into five
Enablers and four Results
 F. DashBoard
A performance dashboard is a layered information delivery system that parcels out
information to users on demand so they can measure, monitor, and manage business
processes and achieve strategic objectives.

Dashboards are a collection of graphs, charts, gauges or other visual representations that are
used to monitor the levels of the selected KPIs(key performance indicators). The dashboard
is used for monitoring operational activities and is not necessarily directly linked with the
strategic directions of a company. Moreover, the dashboard usually provides instant review
of results and is constantly updated. Data available in dashboards is used to provide a
foundation for better decision making and more efficient day-to-day management of teams,
resources, and expenses. For most organizations, dashboards present a high-level idea of an
organization’s overall performance. Dashboards are made up of multiple report types,
allowing users to easily compare and contrast different reports or access diverse datasets
within one business intelligence environment.
G. Balanced Scorecard

The balanced scorecard was first published by Professor Robert Kaplan and Professor David Norton in the early
‘90s. In 1996 the two published a book that bore that title. The balanced scorecard is a strategy performance
management tool. The scorecard lists financials goals, customer goals, internal business goals, and innovation &
learning goals. These four goals give a good overview of what the company tries to achieve, i.e. the company
strategy. As we know, the HR strategy follows the business strategy, so the HR scorecard is heavily influenced
by the business scorecard. Indeed, the HR scorecard takes the strategy as defined in the balanced scorecard as the
starting point and then identifies the HR deliverables that drive these outcomes. The balanced scorecard method
transforms an organization’s strategic plans and goals from mere statements into execution plans and “orders''.
This can be done at a very granular level if needed. Balanced scorecard provides a framework that not only
provides performance measurements, but it also helps planners identify what should be done and how it should
be measured. Balanced scorecard enables executives to truly execute their strategies.

The balanced scorecard method today is often implemented as a full strategic planning and management system
where data is fed directly from accounting and company IT systems into the model to calculate metrics and
compare them with strategic goals and plans.
Balanced Scorecard Framework
1. FINANCE
Financial measures of performance relate to organizational effectiveness and profits. Under the financial perspective, the goal of a
company is to ensure that it earns a return on the investments made and manages key risks involved in running the business. The goals
can be achieved by satisfying the needs of all players involved with the business, such as the shareholders, customers, and suppliers.
The shareholders are an integral part of the business since they are the providers of capital; they should be happy when the company
achieves financial success. They want to be sure that the company is continually generating revenues and that the organization meets
goals such as improving profitability and developing new revenue sources. Steps taken to achieve such goals may include introducing
new products and services, improving the company’s value proposition, and cutting down on the costs of doing business

Objectives:
●Revenue Growth
●Cost Reduction
●Asset Utilization
●Shareholders value

Measures:
●Operating Income
●ROI
●Sales Growth
●Reduction of administrative expenses
2.CUSTOMERS
The customer perspective monitors how the entity is providing value to its customers and determines the level of customer
satisfaction with the company’s products or services. Customer satisfaction is an indicator of the company’s success. How well a
company treats its customers can obviously affect its profitability.
The balanced scorecard considers the company’s reputation versus its competitors. How do customers see your company vis-à-vis
your competitors? It enables the organization to step out of its comfort zone to view itself from the customer’s point of view rather
than just from an internal perspective.
Some of the strategies that a company can focus on to improve its reputation among customers include improving product quality,
enhancing the customer shopping experience, and adjusting the prices of its main products and services.

Objectives:
●Customer satisfaction
●Increased quality of products
●Reduced delivery time
●Customer loyalty

Measures:
●Number of warranty claims
●Percentage of on time deliveries
●Customer complaints
●Customer satisfaction
●New customer acquisition
●Market share
3.INTERNAL PROCESS
A business’ internal processes determine how well the entity runs. A balanced scorecard puts into perspective the
measures and objectives that can help the business run more effectively. Also, the scorecard helps evaluate the
company’s products or services and determine whether they conform to the standards that customers desire. A key
part of this perspective is aiming to answer the question, “What are we good at?”
The answer to that question can help the company formulate marketing strategies and pursue innovations that lead to
the creation of new and improved ways of meeting the needs of customers.

Objectives:
●Improve productivity or efficiency
●Improve product quality
●Reduce manufacturing or process time

Measures:
●Defect rate
●Lead time
●Number of suppliers
●Material turnover
●Cycle time and velocity
●Manufacturing cycle efficiency
4.LEARNING AND GROWTH
Organizational capacity is important in optimizing goals and objectives with favorable results. The personnel in the
organization’s departments are required to demonstrate high performance in terms of leadership, the entity’s culture,
application of knowledge, and skill sets.
Proper infrastructure is required for the organization to deliver according to the expectations of management. For example,
the organization should use the latest technology to automate activities and ensure a smooth flow of activities.

Objectives:
●Efficient and effective use of employee
●Product innovation
●Information system capabilities

Measures:
●Amount spent on employee training
●Employee satisfaction rating
●Employee retention
●Number of suggestions per employee
●Number of new products
●New products sales as percent of total sales
●Number of patents
●Amount spent on Research and Development
Purpose and Objectives of balanced scorecard
It is a common concern about why organizations should use a balance scorecard? There are some purposes and
objectives due to which a balanced scorecard is generally used in the organization.

Purpose- The main purpose of a balance scorecard is to integrate the organization on one platform. It also
empowers the employees who can now contribute to the organizational system through their thoughts and
actions. The balance scorecard has a purpose of measuring both tangible and intangible aspects of performance.
The balance scorecard serves a purpose of overall improvement of organization by taking care of four important
perspectives of organization.

Objectives- Every organization has a vision and mission, however, it often feels lost in day-to -day operational
work. The main objective of the balanced scorecard is to ensure that at operational level the vision, mission and
value of the organization is properly reflected. The objective of using a balanced scorecard to make sure that the
set financial goal is achieved through a planned workout. The balance scorecard also helps to uplift the
organization at the skill and talent level. The objective of a balance scorecard is to understand the wants and
needs of customers and to set internal processes to satisfy the customers.
So let's take it one step at a time and check out eight tips to help you manage a high-performing virtual
team.

1.Give Your Employees the Right Equipment

Online workers need high-quality and reliable equipment because it’s the only way to keep the workflow
smooth and uninterrupted. As a business owner or manager, you cannot neglect this aspect and expect
employees to obtain the best technology on their own.

2.Goal-Setting Is Fundamental
The first tip is rather technical, but the second one is fundamental performance-wise. Namely, you need to
think through your business goals carefully and determine the right objectives and deliverables for each
member of the virtual team.

3.Delegate Tasks Properly

Micromanagement does not work in the online environment, so you’ll need to learn to delegate tasks properly.
Every member of the digital workforce should know his/her responsibilities and focus on a single project at a
given moment.

4.Use Multiple Communication Channels

Although it may seem counterintuitive, the experience taught us that multiple communication channels can
5.Organize Online Meetings Regularly
The fact that you cannot meet colleagues in person does not mean you shouldn’t organize online meetings. This is the core of
virtual work, so we encourage you to schedule meetings regularly and discuss the most important topics with your coworkers.

6.Take Advantage of Project Management Tools

Traditional means of online communication are always useful, but you can boost employee productivity with project
management tools.

7.Recognize Achievements and Reward Top-Performers

If you want the most talented individuals to stay with your team for a long time, you better recognize their achievements and
reward top-performers. Unlike traditional business teams, virtual colleagues don’t have the chance to meet in person, exchange
praises, and celebrate professional victories.

8.Keep In Mind the Life-Work Balance

You don’t have to be a top-level manager to understand that your virtual team needs some rest from time to time. A survey
shows that unplugging after work hours is the biggest pain point for 40% of employees who work in a virtual environment.

Virtual teams are very specific because they rely on alternative channels of communication and cannot count on traditional
face-to-face interactions. In such circumstances, managers have to be careful and plan out everything in a way that suits the
new business model.
How to manage team performance
If you want to manage your team for performance goals, consider some of the following steps:

1. Set effective goals

To have a team understand and complete new goals, consider making them SMART goals. These are objectives with qualities that
make them easier to perform due to their clarity of expectation and detail. SMART goals meet the following sets of criteria:

●Specific: Be specific concerning expectations, measurements and due dates of team members.
●Measurable: Try to use units that are measurable and easy to understand. This can help establish expectations quickly.
●Achievable: Setting goals well within your team's capabilities ensures you can evaluate their performance on an accurate
scale.
●Relevant: While the purpose of performance evaluation is a measurement, the goals your team completes should still be
relevant to the company. Keep your goal relevant to company duties and current employee obligations in the workplace.
●Time-based: Make your evaluated goals time-based. This can ensure expectations have a limit so that proper evaluation of
work can result from your SMART goal.

2.Select capable leaders for each team

When managing team performance goals, consider appointing leaders to each team who are either management employees or
capable leaders. Appointing capable individuals to lead your teams can ensure knowledgeable and skilled employees are
available to consult during projects. Not only does this help lessen the stress of staff during this time, but it also builds
communication between team members and the leadership skills of all leading employees.
 3.Schedule training
As you evaluate each team during the management project, consider scheduling training for each team based
on the data you find. If you notice a team excels in one aspect of the project and not another, creating training
courses for individual members, or the entire team, can help evaluate results and determine the next steps
toward progress. Training may be the best path toward an increase in production, as it provides your team
with new skills and more confidence in their abilities.

4.Ensure communication is available and reactive

If you've established leaders during this project, ensuring communication is available for all employees can
be easy and effective. If you haven't already, consider appointing leaders who are available for answering
questions or addressing concerns during a project. Employees may have questions concerning project criteria,
such as due dates, deliverables, changing expectations or project notes.

5.Align team goals with organizational or familiar goals

When you manage your team performance, try to create goals that align with expectations that are familiar
to your employee base. Having familiar or similar goals that your employees understand can help simulate
what normal, daily goals look like in the typical schedule. This makes your evaluation more accurate.