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EVALUATING PERFORMANCE, MONITORING NEW DEVELOPMENTS AND INITIATING CORRECTIVE ADJUSTMENTS

EVALUATING PERFORMANCE, MONITORING NEW DEVELOPMENTS AND INITIATING CORRECTIVE ADJUSTMENTS. By: SANDRA G DOFITAS MBA-Ex11. PERFORMANCE EVALUATION. a periodical assessment & analysis of the performance of an organization or some of its units

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EVALUATING PERFORMANCE, MONITORING NEW DEVELOPMENTS AND INITIATING CORRECTIVE ADJUSTMENTS

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  1. EVALUATING PERFORMANCE, MONITORING NEW DEVELOPMENTS AND INITIATING CORRECTIVE ADJUSTMENTS By: SANDRA G DOFITAS MBA-Ex11

  2. PERFORMANCE EVALUATION • a periodical assessment & analysis of the performance of an organization or some of its units • look for ways to measure the financial & economic consequences of past management decisions that shaped investments, operations & financing over time

  3. PERFORMANCE EVALUATION • Important Questions: • Were all resources used effectively? • Was the profitability of the business met? Or did it exceed expectations? • Were the financing choices made prudently?

  4. Performance Evaluation (Internal): ACTIVITIES • Financial Analysis • Organization’s Performance, Review and Analysis (PRA)

  5. PERFORMANCE EVALUATION • basis for the evaluation is the pre-determined performance standard set by the organization

  6. Ratio Analysis • Ratio analysis is primarily used to compare a company's financial figures over a period of time • an excellent method for determining the overall financial condition of a business • puts the information from a financial statement into perspective, helping to spot financial patterns that may threaten the health of your company. • In isolation, a financial ratio is a useless piece of information

  7. Ratio • By definition, a ratio can relate any magnitude to any other – the choices are limited only by the imagination. • To be useful, its meaning & limitations have to be understood.

  8. Ratio Analysis • Analyst must first define the following elements: • The viewpoint taken • The objective of the analysis • The potential standards of comparison

  9. Ratio Analysis • 3 Major Viewpoints of Financial Performance: • The Managers • The Owners (Investors) • The Lenders & Creditors

  10. Ratio Analysis • Manager’s Point of View: • Operational Analysis • Resource Management • Profitability

  11. Ratio Analysis • Owner’s Point of View: • Investment Return • Disposition of Earnings • Market Indicators

  12. Ratio Analysis • Lender’s Point of View: • Liquidity • Financial Leverage (the use of borrowed funds to acquire investments) • Debt Service

  13. Monitoring New Developments ACTIVITIES • Organization’s Performance, Review and Analysis (PRA) • Appraisal of Employees’ Performances • Regular Auditing • Implement Computer System to Manage the Company’s Performance

  14. Performance Evaluation (External): • Turbulent Changes in the organization’s external environment - competitor’s tactical moves - disruptive technology - changes in economic & political conditions - sudden regulatory changes

  15. Performance Evaluation (External): • Competitive-Response • to “sense & respond” to changes in its external environment

  16. Competitive-Response ACTIVITIESBEST PRACTICES • Intelligence Repositories • Alerts & Broad Access • Reporting Based on Pattern Recognition • Escalation • Scripting • Competitive Scorecards • Sense & Capture • Create Intelligence • Analyze & Inform • Deliberate & Decide • Respond & Engage • Measure & Correct

  17. Identification of Deviations(Actual Performance vs Standards) • Pay attention only to exception (ex. areas where deviations are significant) • Analyze the underlying causes of deviations from the required level of performance

  18. Corrective Adjustments/Actions • Changing certain conditions (like replacement of a machine, better service to customers, search for more reliable suppliers) • Training, transfers, organizational adjustments in authority (deviations caused by ineffective supervision or lack of adequate expertise, interpersonal conflicts, etc.)

  19. Corrective Adjustments/Actions • Revision of objectives, strategies, policies, procedures, etc. (deviation caused by defective standard of performance) Note: Changes in standards may be required by factors beyond management’s control – e.g. net profit fell below expectation due to rise in prices of raw materials)

  20. “I am careful not to confuse excellence with perfection. Excellence, I can reach for; perfection is God's business.”Michael J. Fox

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