Performance is the end result from work inputs and processes, measured in outputs divided by inputs.
The emphasis in this management approach is on the outcome rather than on the input or process which has been dominant in the traditional management.
Some 40 years ago, Peter Drucker highlighted the importance of management by objective or MBO. It stressed on having clear objective on whatever job or work that you do. Although this task appeared to be simple, yet on closer examination this failure of having a properly defined objective has been the major contributor to most corporations' failure.
We solve this problem today by adopting the SMART Goals, where your objectives should be specific, measurable, achievable, realistic and time bound.
Often, objective statement is stated in a generic terms such as "I want to maximise profits" Although the statement is clear but it is still not specific. Work target should be stated on performance basis i.e in using key performance indicator or KPI.
In maximising profits, a return on equity or ROE is the most acceptable and appropriate performance indicator for a business entity.. Although the emphasis is performance, efficiency in inputs and processes should drive the entity towards the targeted defined performance.
What is not performance?
Inputs are not performance. Nor are processes. Number of hours worked are inputs. Sales figures are outputs but yet they are not performance. Performance is normally the end results of a business activity. Sales profitability could be the performance of the sales department.
In business, the ultimate goal is always the return on equity which is the key performance measure to the shareholders.
Copyright : Arriffin Mansor 012-2786282
The emphasis in this management approach is on the outcome rather than on the input or process which has been dominant in the traditional management.
Some 40 years ago, Peter Drucker highlighted the importance of management by objective or MBO. It stressed on having clear objective on whatever job or work that you do. Although this task appeared to be simple, yet on closer examination this failure of having a properly defined objective has been the major contributor to most corporations' failure.
We solve this problem today by adopting the SMART Goals, where your objectives should be specific, measurable, achievable, realistic and time bound.
Often, objective statement is stated in a generic terms such as "I want to maximise profits" Although the statement is clear but it is still not specific. Work target should be stated on performance basis i.e in using key performance indicator or KPI.
In maximising profits, a return on equity or ROE is the most acceptable and appropriate performance indicator for a business entity.. Although the emphasis is performance, efficiency in inputs and processes should drive the entity towards the targeted defined performance.
What is not performance?
Inputs are not performance. Nor are processes. Number of hours worked are inputs. Sales figures are outputs but yet they are not performance. Performance is normally the end results of a business activity. Sales profitability could be the performance of the sales department.
In business, the ultimate goal is always the return on equity which is the key performance measure to the shareholders.
Copyright : Arriffin Mansor 012-2786282
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