Key Principles of Performance Management System

This document discusses the key principles of performance management system and their importance in managing the performance of each department in an organization. It also explores the construction of a balanced scorecard for an industrial manufacturing company to achieve financial and non-financial objectives. Additionally, it highlights the need for a single performance measurement system to match the perspectives of multiple territory stakeholders.

ACCOUNTING FOR
DECISION MAKING
( ONLINE EXAM)
1

a) Key principles of Performance management system
There are several principles that play important role in management of performance system.
Some of key principles are being honest and open about performance of each department of
organization, keeping emphasis on development and performance of each employee, there
should be system that review performance in effective manner, always being in touch of proper
paper work( Agarwal, 2020). These are some key principles that finance department should keep
in mind while practicing each activity in organization. Balance score card is a performance
measuring tool that make easy for business to make structure report for working of employees so
that it can monitor and control cost arising from such activities. In the case the company has not
measured performance effectively. BSC tool will help new CFO to work efficiently so that it can
improve its image in market by taking corrective actions.
b) Construction of balanced scored card for industrial manufactory company to achieve financial
and non financial objectives
Balance score card is effective tool that help industrial manufacturing company to measure its
performance by making report. These framework are sue to evaluate the financial, process of
internal management and growth of organization. The BSC helps to visualize strategy of
business to know map of working to achieve its all objectives. for creating BSC for such
manufactory company, the management need to evaluate its objective and goals like leading in
innovation, retain customers, increment of sales revenue (Surjaatmadja and Kusniawati, 2020).
Create a strategic map so that it can reach those objectives in productive way, and the last step is
delineation measures so that company can evaluate success of each objective. These are the steps
to construct BSC for company of manufacturing.
c) Single performance measurements system to match perspective of multi territory
stakeholder of every territory want the company to perform in best manner. With the respect to
this every organization’s stakeholder want to earn good profitability, good image and success of
firm. a bad goodwill of company can affect interest of stakeholders. Perspective of stakeholders
like customers, suppliers, investors etc. influence success or failure of organization. Customers
will not buy products of those companies whose do not fulfill the requirement of their employees
and try to make goods with cheap resources. BSC can be used by organization to convince all
stakeholders that performance of organization has been measured by using an standard tool of
performance management system.
REFERENCES

Books and Journal
Agarwal, A., 2020. Investigating design targets for effective performance management system:
an application of balance scorecard using QFD. Journal of Advances in Management Research.
Surjaatmadja, S. and Kusniawati, A., 2020. The Pharmaceutical Cooperatives Performance
Indicators, Based on Balance Scorecard. Systematic Reviews in Pharmacy, 11(2), pp.499-506.