Essay on Performance Measurement Methods

The role of the managers in any organization is to ensure that the organization is always productive. As a result, managers are obsessed with their numbers of their organizations to measure their productivity. However, the numbers that the managers have do not give them the clear picture of the performance of the organization in the manager (Zimmerman, 2014). Therefore, there is need to have a performance method that has both qualitative and quantitative metric that can be used by the manager to determine the overall industry growth.

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The first method to measure performance is in comparison with the benchmark that matter in the industry outside the organization. Most numbers that managers crunch to determine the performance of their organization is usually internal numbers that compare their plans with the budget to determine how the organization has performed in a given period. However, these numbers may have been cooked hence the manager will have the notion that they are performing well while in reality, they are having problems in their performance. Therefore, it is imperative to measure your numbers against benchmarks organizations so that you can develop and define competitive priorities (Likierman, 2009). For instance, an organization such as McDonald's to determine their performance, they should compare their numbers to that of one of their competitors such as Burger King.

Return on Assets (ROA) is another performance measurement method that can be used to determine the overall productivity and growth of an organization. ROA metric gives a reflection of strong and stable performance by the organization. The ROA metric analyzes how the organization has been able to utilize all the available assets it has and what the organization got in return (Raynor & Ahmed, 2013). Unlike the normal comparison between the budget and the organization gain, the ROA emphasizes on individual assets and how they have impacted on the performance of the organization (Zimmerman, 2014). For instance, Raynor & Ahmed (2013) determined that McDonald's is an exceptional company because of its ability to use its assets including the workers to ensure that the organization provides better services that result in more revenue hence surpassing most of its competitors.

In conclusion, ROA and Benchmark comparison are effective performance measurement tools that can be used by managers to determine how their company is growing in the market. These tools not only show the numbers of the company but also those of the competitor and highlight areas where issues may be so that the company can formulate ways of dealing with the arising issues for them to be productive.

References

Likierman, A. (2009). The five traps of performance measurement. Harvard business review, 87(10), 96-101.

Raynor, M. E., & Ahmed, M. (2013). Three rules for making a company truly great. Harvard Business Review, 91(4), 108-17.

Zimmerman, J. L. (2014). Accounting for decision making and control (8th ed.). New York, NY: McGraw-Hill.