Chapter 11 Notes!
Chapter 11 Notes! ACCT 2102
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This 6 page Class Notes was uploaded by Breana Carey on Thursday April 21, 2016. The Class Notes belongs to ACCT 2102 at Georgia State University taught by Kathleen S. Partridge (P) in Fall 2015. Since its upload, it has received 82 views. For similar materials see PRIN OF ACCT II in Accounting at Georgia State University.
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Date Created: 04/21/16
Performance Evaluation Revisited: A Balanced Approach Thursday, April 14, 2016 22:58 Performance Measures Measures that can be determined only after something is finished are called lagging indicators of performance because their calculation "lags" when a particular objective that hasn't been met Leading indicators are when they're there to help predict a future result These provide managers with information they need to make sure they take timely and corrective action Financial measures are net income, earnings per share, and ROI and they're financial based information taken from accounting reports. They're quantitative and objective Nonfinancial measures are not based on accounting results and can be either qualitative or quantitative Qualitative are usually based on perceptions and feelings w/choosing the right performance measures the best ones need to relate to corporate strategy and areMART SPECIFIC relates to the product MEASURED meaning that its complete and accurate ACTIONABLE something can be done to influence it's value RELEVANT relates to the corporate strategic goals and objectives TIMELY meaning that managerial choices need to be made in a timely manner Key performance indicators (KPI) that measure successful progression towards organizations key goals The key to using these measures is to know the cause and effect relationship A performance dashboard is a visual display of the key measures related to an organizations operational goals and strategies The Balanced Scorecard David Norton and Robert Kaplan created the balanced score card which is a management tool that integrates four performance measures 1. Learning and growth asks us "Are we developing employees and providing technique that can create a change" Measures that Relate to Learning and Growth Employee Employee turnover rate satisfaction # of Training suggestions provided by dollars spent per employees employee Training hours Revenue per per employees employee Percentage of Technology vacancies filled with spending per employee internal candidates 1 Internal business process perspective answers the question "Are we improving our business processes?" Measures related to this require efficiency and production** Percentage of Rework hours on time deliveries Manufacturing Time to market cycle efficiency Cost per unit Number of Defect rate equipment break downs Reponses time Delivery cycle to customer request time 1 Customer perspective is about the customer and what the customer needs "Are we meeting our customer’s goals?" Measures to this include customer purchases, and their expectations regarding quality, price, delivery speed Customer Market share satisfaction index Product return Number of rate complaints Customer Percentage of profitability revenue from new customers Customer Number of new attrition rate customers Customer Loyalty index 1 Financial perspective answers "Are we reaching our financial goals?" managers are most comfortable with this measure because those are the ones that most organizations have always used this as a way to measure their success Measures related to this include Net income Cash Flow Residual income Return on Profit margin Investment Earnings per share Revenue EVA Growth Net Income per Employee A strategy map is a pictorial representation of the cause and effect relationships embodied in the strategy To balance a score card you should have a good mix of leading and lagging and quantitative and qualitative measures Benchmarking Benchmarking is the practice of using data from other organizations to identify the processes and practices associated with world class performance With benchmarking you're no trying to achieve another organizations goals but you're identifying the goals and see why the other organizations goals are so successful Meeting Delivery Expectations Delivery cycle time is the time between an orders placement and its shipment and this varies by business Manufacturing time (throughout time) is the time from start of production to the shipment of product to the customers Manufacturing cycle efficiency is the ratio of value added processing time to total manufacturing time
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