Professional Documents
Culture Documents
1. Introduction
Performance can be defined as achievements of the organization in relation with its set
goals. Here achievement can include accomplishment of an individual or a group of
individuals that forms a team in achieving the overall goal of the organization. Basically
performance includes both economic as well as behavioral measuring factors.
Another non-financial area for goals is your company's public image. Improving the
way the general public views your company can mean increased business and stronger
relationships with the community. Potential objectives include maintaining a
professional image, establishing a positive social media presence and giving back to
the community. Donating time and money to charitable organizations helps establish
your company as a fixture in the community (Frost, 2018).
Although financial measures are important for evaluation purposes as discussed above, we
have seen that nonfinancial measures are also important in evaluation of performance.
Therefore a company should use a mix of both financial and non-financial measures when
evaluating performance. The balanced scorecard is a balanced set of measures that
organizations use to motivate employees and evaluate performance. These measures are
typically separated into four perspectives outlined in the following (Kaplan, 2018)
Measures established across the four perspectives of the balanced scorecard are linked in a way
that motivates employees to achieve company goals. For example, if the company wants to
increase the defect-free rate and reduce product returns, effective employee training and low
employee turnover will help in achieving this goal. The idea is to establish company goals first,
then create measures that motivate employees to reach company goals.
According to Kaplan Bank (2018), Value for money (VFM) is often quoted as an objective in Not
for Profit Organizations (NFP), i.e. have they gained the best value from the limited funds
available. In assessing performance using the VFM technique a firm should look at the following:
By seeking out and then adopting recognized good practice where this can be adapted to
the institution's circumstances
Through internal VFM audit work
Through retaining both documents that show how an activity has been planned to build in
VFM, and evidence of the good practices adopted
By examining the results or outcomes of an activity.
Organization is not complete without people. Employees are one of the key drivers of
performance of the organization. However, like any other resource, human resources need
a proper management and evaluation. If human resources are not well managed the
company will lose valuable time which could have been used to stile the firm to a right
direction. For a better performance work organization human resources need to be engaged
in the workplace. Managers need to ensure human resources are involved in key areas of
organization drive. This will create a sense of belongingness and motivates employees to
perform better. To ensure employees perform better there should be predetermined set of
performance indicators that can be used as a benchmark on human resources performance
appraisal on yearly basis.
9.1.Performance evaluation
The success of each division, whether measured by return on investment (ROI) or
otherwise will be changed. These measures might be interpreted as indicating that a
division’s performance was unsatisfactory and could tempt management at head office
to close it down a certain department while it is not.
9.2.Performance-related pay
If there is a system of performance-related pay, the remuneration of employees in each
division will be affected as profits change. If they feel that their remuneration is
affected unfairly, employees’ morale will be damaged and this will impact the
organization negatively.
9.3. Make/abandon/buy-indecisions
If the transfer price is very high, the receiving division might decide not to buy any
components from the transferring division because it becomes impossible for it to make
a positive contribution. That division might decide to abandon the product line or buy-
in cheaper components from outside suppliers.
9.4.Motivation
Everyone likes to make a profit and this ambition certainly applies to the divisional
managers. If a transfer price was such that one division found it impossible to make a
profit, then the employees in that division would probably be demotivated. In contrast,
the other division would have an easy ride as it would make profits easily, and it would
not be motivated to work more efficiently.
9.5.Investment Appraisal
New investment should typically be evaluated using a method such as net present value.
However, the cash inflows arising from an investment are almost certainly going to be
affected by the transfer price, so capital investment decisions can depend on the transfer
price.
9.6.Taxation and Profit Remittance
If the divisions are in different countries, the profits earned in each country will depend
on transfer prices. This could affect the overall tax burden of the group and could also
affect the amount of profits that need to be remitted to head office. Generally transfer
prices can have a profound effect on group performance because they affect divisional
performance, motivation and decision making.
Tanzania Standard News paper is a media house which is owned by the government of the
United Republic of Tanzania. Like any for profit organization performance at TSN is
measured by looking at both financial and non financial measures.
REFERENCES
Barringer, B.R., Harrison, J.S. (2000) ‘Walking a Tightrope: Creating Value Through
Interorganizational Relationships’ Journal of Management, Vol. 26, No.3, pp.367-
403