Organisational And Managerial Performance

ENVS1130 E.J. de Renzy-Martin

Foundations of Management December 2002

Coursework 1

Organisational and Managerial Performance

1. How, when, where and by whom should organisational, managerial, product and service performance be measured?

It has never been more important to accurately measure business and managerial performance. Since the post-War renaissance, companies' prospects of obtaining a competitive advantage have solely depended on a combination of the expertise, knowledge and skills of its staff. There is, however, no single measure of performance in any situation. A large proportion of performance measures are qualitative not quantitative, and therefore value judgements can only be calculated with supportable and justifiable standards. Consequently, it is imperative that the main attributes of those who measure this performance can analyse and interpret the results, with a fundamental understanding of the environment, people, customers, the market- and the organizations' position within it. This is not possible without the full and latest information, constantly gathered and assessed.

It is important that a central element of this approach is that targets need to be measurable, and reflected on consistently and frequently; but these are not always measurable quantitatively. However, a quantitative output may not always add value:

"Value is derived from innovation, sharing knowledge and reacting quickly and effectively to a new scenario..."

Rigid performance objectives might also become outdated in the dynamic business world of today. Although it would make sense to maintain firm quantitative objectives for certain personnel, notably sales teams, business and managerial operation measurements should be principally qualitative. Japanese companies seem to have progressed with a more suitable model for performance measures, which relies on organisations identifying key indicators, and seeking continuous, regular improvements in these specific areas instead.

"...obstacles do not exist to be surrendered to, but only to be broken."

The extent to which targets are met is often a matter of external factors beyond any individual's control. There are many factors that can affect the company or firm's performance that are beyond any manager's influence, and the company or firm could make severe losses, or vast profits, through no fault of the person in charge. A large proportion of the time it is due to the state of the economy, and the circumstances in which the given market is operating. It is important to differentiate between what is within the manager's control, and what might only depend on an economic recession or other uncontrollable factors. Profit margins are therefore a bad judgement, as although this is overtly easy and straightforward to measure; further elements would have to be addressed. A better and more reliable assessment, for example, would be the companies' position or market standing within its market.

Generally, it is simple to measure the quantitative side of performance, as statistical and financial information are simple to obtain; from databases, surveys, reports and other company materials. The efficiency of the workforce could be measured by the output per person, and by establishing the percentage of market share the manager has obtained. However, it is more important that the manager has achieved the company's set objectives, cut down costs, and has given adequate returns to stakeholders.

"...success is more than impressive numbers in an annual report."

Qualitative measures require thorough investigation into the meaning and significance of these figures. Areas of scrutiny might be staff performance, resource utilization and innovation. Monitoring of a manager's performance must be sustained, with assessment on a regular basis, yet giving enough time for progress to be made. A monthly check on a manager's managerial performance might be adequate, leaving a longer period for an organizational performance test, as it might take additional time for any significant change to take place in returns on investment.

Another important measure that should also be applied to organization and management activities is motivation, although practically this is very difficult to measure. This means that staff should, somehow, be measured for their motivation, and the manger's effectiveness, also considered on this. It is a hugely important factor which, if executed appropriately, provides to a healthier working environment for employees, and consequently a more competent work force.

"...it is much safer to be feared than loved, when, of the two, either must be dispensed with."

Above all, it is crucial that every organization and manager learns from lessons of the past, so that the future can be better prepared for. Only by measuring and evaluating all aspects of organization or managerial performance, can actual success or failure be judged, and relatively quantified. This is the key to effective long term resource utilization, indicating where improvements must be made.

2. Identify specific performance measures that could be used to analyse each of the following products and services from the following different points of view:

(a) The company

(b) The customers

(c) The suppliers

(d) The community

* Easyjet

* People Carrier Cars

* Madame Tussauds

There is a need to recognize that an organisations performance will be assessed by a large variety of people, in many different ways and at many different times. It will be measured by each group simply according to that group's own egotistic interests. It is necessary to recognise this range of both internal and external parties, and the measures they address from their own viewpoints, when they come to asses the organization. Continuing feasibility is further likely when concerns and interests of each individual party are recognised, reconciled, and satisfied successfully.

.