Performance Measurement In Management

Furthermore, performance measurement facilitates the comparison of an organization’s performance with the performance of other organizations. As mentioned previously, since performance measurement can act as a good indicator of an organization’s long term performance and it captures different facades of information with regards to the goals and objectives of the organization, the organization can use these information as a basis for comparison with other organizations and through these, gain a competitive advantage over its rivals (Berry, Broadbent & Otley 1995).

Finally, performance measurement would assist in focusing the management’s attention on issues that are important to the organization. It also forces managers to relook at issues which were initially thought to be trivial, but in reality, were in fact major problems which would have far reaching effects if not solved promptly. With the large amount of information that performance measures bring about, managers are able to have a more in depth understanding of the processes of the organization. This would help in bringing their attention to issues that could not be observed from the surface and allow them to take steps in resolving these issues. A research carried out by Bourne et al. (2002) showed that managers believes that performance measurement was aiding them in achieving better business performance by ‘forcing them to re-look at the measures and in particular, the changes when they were not happening but reflected in the report’. This example shows that performance has the potential to improve the business performance of organisations by refocusing the management’s issue on more important issues.

3.2 The Cons of Performance Measurement

In spite of its popularity and...

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...tantly review the performance measurement system, ensuring that performance measures are kept up to date and are in line with the organizational goals and visions. Without constant review and evaluation, the performance measurement system might soon turn out to be obsolete (Bahn 2005).

4. Conclusion

In conclusion, despite gaining widespread popularity in recent years, we have to understand that there are pros and cons to performance measurement and should be managed carefully. Organizations need to understand that there is no fixed template for performance measurement systems. As mentioned by Manzoni and Micheli (2010), what might be effective for one organization might not be suitable for another. As such, it is of utmost importance that organizations look out for suitable performance measures for themselves and continually reassess the relevance of these measures.