Monitoring Business Performance by Lind Per

Author:Lind, Per [Per Lind]
Language: eng
Format: epub, pdf
ISBN: 9781135044954
Publisher: Taylor & Francis (CAM)

6

Models for Assessing Business Performance

When creating a model for performance assessment, it is of crucial importance to have as good an understanding as possible about those factors having the most significant impact on performance. In certain situations, assessment depends on and is subject to contextual rules and regulations, standards, references, principles and legal conditions that influence and sometimes determine whether performance is satisfactory or not. In other situations, where such endorsed references cannot be applied but assessment is rather based on perceptions, such as in the case of assessing work performance of individual employees, other types of models are needed. Such models are based on observations and assumptions about factors leading to poor or satisfactory performance. When rules, regulations and standards can be used as references, assessment is facilitated because actual performance is compared with established reference values. Actual cost or revenue results are satisfactory if they tally with specified reference estimates. Various models like those based on indicators (see Chapter 7) have been developed to facilitate this kind of assessment.

When endorsed references cannot be used to determine performance, there is need for specific understanding and awareness guiding subjective assumptions and interpretations for determination of satisfactory performance. With reference to the discussion about ontology and epistemology in Chapter 5, it is clear that different forms of knowledge are required, depending on the context. The ontological and epistemological questions concerning what is performance and how can we understand performance are the starting points as we endeavour to describe relevant models for assessing business performance. From an ontological perspective, performance does not exist per se, but we construct the concept of performance based on implicit assumptions, such as the completion of an activity or task. While accomplish refers to meeting a target or not, performance can vary on a scale from poor to excellent. When formal accounting routines were still the prevailing tools for performance assessment there were well defined models to measure liquidity, solidity and other accounting concepts. Nowadays, other parameters have become vital for assessing performance—not only one, but many different models have been formulated for assessing business performance.

The epistemological approach is central to our ability to comprehend performance—not only how we know but also who is to judge whether performance is acceptable or not. The models, having been developed for this purpose, tend to take either an external or internal perspective, or both. Taking both perspectives implies that the organisation must be seen both in its external and internal environment, defined by customers and clients, products and services, employees, management styles, history and readiness to change and adapt to changes in the environment. All these aspects are necessary to consider, and together they provide an impression of the organ-isation based on its internal culture, the managers’ vision of the company, and the customers and client’s impressions. Identifying how these three aspects correspond is important to obtain a complete picture about how the different organisational elements harmonize.

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