review21 - CHAPTER 21 Performance Management and Evaluation...

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CHAPTER 21 Performance Management and Evaluation 00001REVIEWING THE CHAPTER Objective 1: Describe how the balanced scorecard aligns performance with organizational goals. 10. The balanced scorecard is a framework that links the perspectives of an organization’s four basic stakeholder groups with the organization’s mission and vision, performance measures, strategic and tactical plans, and resources. The four groups are investors, employees, internal business processes, and customers. To add value for these groups, an organization determines each group’s objectives and translates them into performance measures that have specific, quantifiable targets. 20. During the planning phase of the management process, managers use the balanced scorecard to translate their organization’s vision and strategy into operational objectives that will benefit all stakeholder groups. Once they have established these objectives, they set performance targets and select performance measures. In the performing phase, managers use the organization’s operational objectives as the basis for decision making within their individual areas of responsibility. Managers evaluate the effectiveness of their strategies in meeting performance targets set during the planning stage and compare planned performance with actual results. Managers prepare a variety of performance reports to communicate results to stakeholder groups. Objective 2: Discuss performance measurement, and identify the issues that affect management’s ability to measure performance. 30. A performance management and evaluation system is a set of procedures that account for and report on both financial and nonfinancial performance. Such a system enables a company to identify how well it is doing, the direction it is taking, and what improvements will make it more profitable. 40. Performance measurement is the use of quantitative tools to gauge an organization’s performance in relation to a specific goal or an expected outcome. Each organization must develop a unique set of performance measures appropriate to its specific situation that will help managers distinguish between what is being measured and the actual measures used to monitor performance. Objective 3: Define
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review21 - CHAPTER 21 Performance Management and Evaluation...

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