tools-for-enterprise-performance-evaluation

This is also a standard but one that is expected to

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: und of golf. This is also a standard, but one that is expected to be achieved. In setting standards within a business environment, management needs to consciously consider the level of standards to adopt: e Graduate Programme for Engineers and Geoscientists I joined MITAS because I wanted real responsibili Please click the advert Maersk.com/Mitas Real work Internationa al International opportunities ree wor o ree work placements Month 16 was I was a construction supervisor in the North Sea advising and helping foremen he solve problems s Download free ebooks at bookboon.com 21 Standard Costs Tools for Enterprise Performance Evaluation Achievable standards are realistically within reach. Such standards take into account normal spoilage and inefficiency. Such standards are intended to allow workers to reach the established benchmarks. This level of standard provides a clear set of metrics against which job performance can be gleaned. The interpretation is generally unambiguous; when goals are not met, improvement is needed. It is also thought to reduce the opportunity for frustration and discouragement that can be associated with less attainable goals. Ideal standards may never be reached. They represent what will result in a state of perfection -- no spoiled goods, no worker fatigue, no errors, etc. The idea behind such standards is that employees will never rest on their laurels. Instead, they will achieve their full potential by striving to hit the lofty goal. Many businesses avoid ideal standards because they fear that employees will see ideal standards as meaningless since they cannot hope to achieve them. In other words, the employees cease to strive for a goal they cannot hope to reach. Further, such goals may not help in performance evaluations; what is the feedback value of telling employees they failed to meet such standards (after all, isn’t that what was expected)? 3.3 The Downside of the Standards A manager also needs to consider the downside of standards and develop compensating balances. For instance, if employees are encouraged to work fast, quality can suffer. Standards need to be in place to make sure that quality of output is not adversely affected. On the other hand, some seasoned employees may have become so skilled that they can easily meet their output goals and find themselves able to coast through the work day. Usually skilled workers receive a higher pay scale; it is not unfair to expect them to produce more output. Therefore, one standard may not fit all. A good manager is particularly adept at helping to establish fair standards, and use them to plan and control the operations within their area of responsibility. Download free ebooks at bookboon.com 22 Variance Analysis Tools for Enterprise Performance Evaluation 4. Variance Analysis As already mentioned, standard costs provide information that is useful in performance evaluation. Standard costs are compared to actual costs, and mathematical deviations between the two are termed variances. Favo...
View Full Document

This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

Ask a homework question - tutors are online