Traditional and Contemporary Performance Measurement

1 Introduction The past company performance was measured by asking "How much is the company earning?" To some extent, they are correct as gross income, profitability, return on capital, etc. are the result of the company's survival. Unfortunately, in today's business, if management focuses only on the company's financial situation, there are many possible adverse consequences. As the business environment changed dramatically, traditional methods focused on minimizing production costs no longer match perfectly (Hall, 1980).

Financial performance indicators are often used to measure the performance of an organization, but some companies rely on these indicators to have an adverse effect. Traditional financial indicators are more likely to measure the results of yesterday 's behavior than to predict tomorrow' s performance. Therefore, administrators should not rely on a series of measures to provide clear performance goals. Many companies still rely on cost and efficiency indicators, but time, quality and service metrics may be more appropriate in some cases. In order to be effective, performance standards should evolve to properly assess performance and concentrate resources on continuous improvement and motivation. In order to combine various types of performance indicators, some companies have developed a performance measurement framework.

Traditional performance measurements are insufficient to measure performance and lead organizations to respond to a rapidly changing complex economic environment. Organizations need to link performance assessment to strategy and need to measure performance in such a way as to promote good outcomes in the future and reproduce historical achievements. "Balanced scorecards provide managers the tools they need to succeed in the future Today it is important for organizations to compete in complex environments to understand exactly the goal and how to achieve it. Scorecard transforms organization Mission and strategy to become a comprehensive set of performance indicators that provides a framework for strategic measurement and management systems