How effective is your performance measurement system?
Article Abstract:
The use of outmoded and unsuitable performance measurement systems is the reason why Corporate America is losing its competitive advantage worldwide. Most companies continue to use measurement systems that are based on cash flow returns, payback period and other financial returns, despite the fact that these ignore critical intangible factors. Fortunately, there is a movement toward the use of performance measurement standards that are linked to corporate strategies and long-term vision of the company. Companies that need to switch to this type of performance measurement systems are those where performance is accepted on all dimensions except profit, no one observes that performance reports are not being provided, managers waste their time arguing about the definition of measures, share price is low even though financial performance is good, measures have not been replaced for a long time and corporate strategy has recently been changed.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1995
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The Balanced Scorecard and Tableau de Bord: translating strategy into action
Article Abstract:
The French organizational performance measurement system Tableau de Bord and the Balanced Scorecard framework introduced by Robert Kaplan and David Norton both use a variety of factors to assess performance. The Tableau de Bord has been used in France since the early 1900s, originally as a means to help process engineers gain a better understanding of the relationship between actions and process performance. It later evolved into a management tool for assessing the progress of the business and determining appropriate corrective actions. The Balanced Scorecard was developed out of the realization that organizational performance is too complex to be measured by only one performance indicator. It takes into account four different perspectives, namely, financial, customer, internal processes, and learning and growth. The benefits and implementation of these performance measurement processes are discussed.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1997
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Do new performance measures measure up?
Article Abstract:
An analysis of the relationship of different performance measures with stock prices and stock returns was performed. This study focused on such measures as Stern Stewart's Economic Value Added (EVA), Boston Consulting Group's Cash Flow Return on Investment (CFROI) and the Residual Cash Flow (RCF). It also examined more traditionally reported and used operating measures and standard return on investment (ROI) measures. Findings revealed that traditionally reported ordinary operating figures and the RCF were significantly related to both stock prices and stock returns. Therefore, companies that have adopted or are intending to adopt EVA or CFROI as their main performance measure should consider using residual cash flow as an alternative to these two.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1998
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