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Area of Study 1: Large-Scale Organisations in Context

Area of Study 1: Large-Scale Organisations in Context. Chapter 3: Evaluation of performance. The concepts of efficiency and effectiveness. Efficiency. Effectiveness. The best use of resources in the production of goods and services

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Area of Study 1: Large-Scale Organisations in Context

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  1. Area of Study 1: Large-Scale Organisations in Context Chapter 3: Evaluation of performance

  2. The concepts of efficiency and effectiveness Efficiency Effectiveness The best use of resources in the production of goods and services Outcome judged on both the quality and quantity of the goods and services produced Productivity is a quantitative measure of efficiency (numerical). Measures the relationship between inputs and outputs. The ability of the organisation to achieve its previously determined objectives Managers and employees are appraised against the organisational and departmental objectives

  3. Measuring organisational efficiency and effectiveness Key Performance Indicators Measuring performance A tool used to measure progress towards the achievement of organisational goals and outcomes When a number of KPI’s are used together they can provide an overview of the organisation’s performance Qualitative measures Quantitative measures Any performance measure must be: Relevant Valid Reliable Delivering valuable information All KPIs should be comparative and may be compared to: Changes in KPIs over time Other organisations or benchmarks in the industry sector Budgets, estimates or targets set by the organisation

  4. Financial Performance Indicators

  5. Non-financial Performance Indicators

  6. Non-financial Performance Indicators Continued... Activity 3.2 Activity 3.4

  7. Growing importance of non-financial measures of organisational performance ‘Balanced Scorecard’ measurement Allows managers to look at performance of an organisation from four perspectives: 1. Customer Perspective 2. Internal capabilities perspective 3. Innovation and learning perspective 4. Financial perspective Read the characteristics of the balanced scorecard and table 3.2, the advantages and disadvantages. Complete Questions 1-3 of Activity 3.5

  8. Growing importance of non-financial measures of organisational performance continued… Stakeholder approach Focuses on how the organisation meets the needs of its stakeholders Number of different stakeholders in an organisation who all have a vested interest in the performance of the organisation

  9. Social responsibility and evaluation of performance • All organisations must ensure that social responsibility is incorporated into their performance management. KPIs can include: • Level of waste • Staff turnover • Level of workplace accidents • Triple bottom-line accounting (3BL) popular method of determining if an LSO is doing well in terms of: • Economic factors (financial) • Social factors • Environmental factors

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