Question 1
Performance measures are particular values or characteristics used to measure/examine a result or performance criteria. It may be expressed in a qualitative or quantitative way which helps institution to understand, manage and improve what they do. Performance measures inform the institution:
? how well it is doing
? if it is meeting its goals
? if its customers are satisfied
? if its processes are in statistical control
In the early 1990's, Dr. Robert Kaplan (Harvard Business School) and Dr. David Norton, developed a new system for performance measurement, called the balanced scorecard. The balanced scorecard is a management system (not only a measurement system) that enables institutions to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. The balanced scorecard suggests that institution or organization should be viewed from four perspectives including both financial and non-financial measure:
1) Financial perspective.
This perspective evaluates the profitability of the institution's strategy. It focuses on profit targets, cost avoidance, and cost-efficiency (i.e. the ability to deliver maximum value to the customer). It involves:
? Operating Income :
Operating income can be used to gauge the general health of the core institution.
? Return on Investment :
ROI is a backward-looking metric that yields no insights into how to improve the institution's results in the future. ROI has been used primarily for se ...