Area of Study 1: Large-Scale Organisations in Context

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Area of Study 1: Large-Scale Organisations in Context. Chapter 3: Evaluation of performance. The concepts of efficiency and effectiveness. Efficiency. Effectiveness. The best use of resources in the production of goods and services
Area of Study 1: Large-Scale Organisations in ContextChapter 3: Evaluation of performanceThe concepts of efficiency and effectivenessEfficiencyEffectivenessThe best use of resources in the production of goods and servicesOutcome judged on both the quality and quantity of the goods and services producedProductivity is a quantitative measure of efficiency (numerical). Measures the relationship between inputs and outputs.The ability of the organisation to achieve its previously determined objectivesManagers and employees are appraised against the organisational and departmental objectivesMeasuring organisational efficiency and effectivenessKey Performance IndicatorsMeasuring performanceA tool used to measure progress towards the achievement of organisational goals and outcomesWhen a number of KPI’s are used together they can provide an overview of the organisation’s performanceQualitative measuresQuantitative measuresAny performance measure must be:RelevantValidReliableDelivering valuable informationAll KPIs should be comparative and may be compared to:Changes in KPIs over timeOther organisations or benchmarks in the industry sectorBudgets, estimates or targets set by the organisationFinancial Performance IndicatorsNon-financial Performance IndicatorsNon-financial Performance Indicators Continued...Activity 3.2Activity 3.4Growing importance of non-financial measures of organisational performance‘Balanced Scorecard’ measurementAllows managers to look at performance of an organisation from four perspectives:1. Customer Perspective2. Internal capabilities perspective3. Innovation and learning perspective4. Financial perspectiveRead the characteristics of the balanced scorecard and table 3.2, the advantages and disadvantages. Complete Questions 1-3 of Activity 3.5Growing importance of non-financial measures of organisational performance continued…Stakeholder approachFocuses on how the organisation meets the needs of its stakeholdersNumber of different stakeholders in an organisation who all have a vested interest in the performance of the organisationSocial responsibility and evaluation of performance
  • All organisations must ensure that social responsibility is incorporated into their performance management. KPIs can include:
  • Level of waste
  • Staff turnover
  • Level of workplace accidents
  • Triple bottom-line accounting (3BL) popular method of determining if an LSO is doing well in terms of:
  • Economic factors (financial)
  • Social factors
  • Environmental factors
  • Recommended
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