Performance Measurement of Listed Companies

...

Obviously, in this method, there are some similarities to other measurement methods; however, it is much more closely linked to the organization’s strategy. In other words, reviewing the measurement through the balanced scorecard might help the organizations to see its strategy. Honestly, the use of the scorecard is partly similar to the use of the Tableau de Bord, which aims to cascade different organizational levels and force capacities and separations of the company to position them in the framework of the corporation’s overall strategy in the early twentieth century (Epstein and Manzoni, 1997).

Although it is undeniable that the balanced scorecard is widely used, a great number of scholars have identified several shortcomings of the balanced scorecard because of the lack of consideration of some features of earlier frameworks which could enhance the framework. For example, “the competitiveness dimension, the human resources perspective/employees satisfaction, supplier performance, product/service quality, and environmental/community perspective” is absent in the balanced scorecard method (Neely, 1995: pp.88). Moreover, the customer and internal perspective are not defined as aspects of company performance that determine success, like the generic strategic goals of cost, quality, and flexibility and so on. However, it may not be very serious, because it is impossible to include all dimensions in a company performance measurement.

4.2.3 European Foundation for Quality Management’s (EFQM) Business Excellence Model

EFQM is the method which was designed by the European Foundation for Quality Management’s Business Excellence Model to take a broader view of company performance. A number of areas that were not considered by the balanced scorecard, especially the enablers of company performance improvement, are considered in EFQM.

Certainly, there are 18 measures in this measurement framework to reflect the company performance much more fully in the area of: business perspective; processes/resources; customer/external perspective; customer satisfaction/impact on society; financial perspective; business results supported by leadership establishing effective policies; people perspective; people satisfaction and strategies to be undertaken by employees.

However, Neely and Adams (2001: pp.149) pointed out “it is a subjective self-assessment too rather than an objective measurement framework and the categories for measurement are very broad.”

5. Characteristics of Company Performance Measurement

According to the several company business performance measurement frameworks mentioned above, a number of typical characteristics have been displayed. These characteristics are beneficial for organizations to identify a more suitable model of company performance measures to evaluate their performance. Below are some of the main characteristics.

First of all, the fact that it is necessary for companies to provide a “balanced” picture of the business when the certain company performance measurement is used has been emphasized by Keegan, Eiler, and Jones (1989). There are three exact areas they mentioned in the work that should be reflected: financial and non-financial measurements, internal and external measurements, and efficiency and effectiveness measurements.

Secondly, a briefer company performance overview should be provided, because it is a good way for users to understand it easily and apply it to their companies efficiently and effectively. That is why some methods like the balanced scorecard are widespread.

Thirdly, it is obvious that multi-dimensional measures are implemented in recent company performance measurement frameworks. In other words, this characteristic shows that all aspects of company performance are essential to the organizations’ development: one of the typical frameworks is EFQM. However, it should be possible for organizations to recognize where there are loopholes or where there is a need for more focus as well.

Fourthly, the fact that company business measurements ought to be integrated both across the companies’ functions and through its hierarchy has been stated in the work of Bititci et al. (1998). Besides, it is better for measures to monitor past performance and plan future performance by using the planning (feed forward) and control (feed-back) system.

In these reviews of company performance measurement frameworks, in a word, both “core” criteria and “non-core” factors are necessary to be set in the measure systems. In other words, the company performance measurements should be brought into correspondence with both management techniques and advancement initiatives. These two areas should be consistent in the corporations, such as activity-based costing management, benchmarking, business process reset and total quality management.

In a word, an integrated and diversified system of company performance measurement should contain most of these techniques. Only in this way, can organizations be helped to identify whether the current performance evaluation method can appropriately reflect their business performance and objectives or not. Nevertheless, it is undeniable that not all frameworks presented above are suitable for every industrial area.

6. Conclusion

This short essay has considered the reasons why people manage to measure their company performance and stated some well-known measure frameworks during the past 30 years from two aspects together, with their typical characteristics separately. Although all of these methods have been developed to help companies assess their success appropriately, they work in a number of different ways and each of them has both advantages and shortcomings, especially when apply to different specific fields. It seems that some research according to industries are likely to be performed in the foreseeable future, so that all kinds of organizations can select the most suitable method to measure their company performance efficiently.

Bibliography

Neely, A.D. (1998) Performance Measurement: Why, What and How. 1st edn. London: Economist Books.

Lingle, J.H. and Schiemann, W.A. (1996) ‘Form balanced scorecard to strategy gauge. Is measurement worth it? ’,Management Review, 85(11), pp.56-62.

Johnson, H.T. and Kaplan, R.S. (1987) Relevance Lost-The Rise and Fall of Management Accounting. 1st edn. Boston: Harvard Business School Press.

Bruns, W. (1998) ‘Profit as a performance measure: Powerful