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Role of performance measures.

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The Vice President of Operations would like to increase profitability, improve customer service, and expand the business. Even though the external accounting department spends 5 days preparing each quarter's financial statements and disclosures, she does not examine those financial statements issued to the company shareholders.

You are to attend an afternoon meeting to discuss why this is the case. You have been assigned the task of examining the pertinent information and proposing two recommendations for the Vice President. These recommendations are to take effect at the end of the quarter.

Create a word document presentation outlining your recommendations. Include all your supporting material.

# Objective: Discuss the role of performance measures in an organization.
# Describe the functions of managerial accounting and the external uses of accounting.

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? Discuss the role of performance measures in an organization.
Performance measures helps in implementing the strategy of the organization. It involves:
* Creating fits between way things are done & what it takes for effective strategy execution
* Executing strategy proficiently & efficiently
* Producing excellent results in timely manner
* Building a capable organization
* Allocating ample resources to strategy-critical activities
* Establishing strategy supportive policies & procedures
? Instituting best practices & mechanisms for continuous improvement
(Hamel,G Corporate strategy)

The performance measures provide feedback to organizations in order to assist in implementing strategies and objectives. Note that in the strategic-management model that feedback is critically important. Changes can occur that impacts all strategic-management activities. Feedback allows these changes to be identified and adjustments to be made. Feedback in the strategic-management process promotes the creation of a climate for two-way communication and, thus, allows esprit de corps to be achieved in an organization. Therefore most desired outcomes are common to all types of organizations. Here are some categories of critical performance outcomes:

1. Customer Satisfaction and Quality - Ratings and performance standards for measuring and reporting how well you meet customer requirements.
2. Efficiency and Effectiveness - Many services must be delivered in an efficient and effective manner. For example, timeliness is often a good indicator of efficiency. If you do the "right things," this should get reflected in the form of effectiveness.
3. Resources and Utilization: The ability to maximize the use of fixed assets and use Agency resources is a good indicator of performance. Cost and budget performances are common examples.
4. Productivity and Improvements: If you can accomplish better results through new ways of doing things, then this is a form of innovation and in turn is a very solid indicator of performance.
(Govindrajan, Management Control system)

According to the one performance measurement index Balance scorecard the following perspectives are important:
The Balanced Scorecard tends to focus more on critical performance indicators and missing out what can be considered ...

Solution Summary

The role of performance is measured in organizations. The function of managerial accounting is analyzed. In a 1416 word solution, the subject is adequately discussed.