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individual efforts and accomplishments to business unit objectives. It can therefore be incorporated as a performance management process at individual, team, unit and corporate levels. To summarize, Kaplan and Norton (1996a) comment that: Many people think of measurement as a tool to control behavior and to evaluate past performance. The measures on a Balanced Scorecard, however, should be used as the cornerstone of a management system that communicates strategy, aligns individuals and teams to the strategy, establishes long-term strategic targets, aligns initiatives, allocates long- and short-term resources and, finally, provides feedback and learning about the strategy. 2.The European Foundation for Quality Management (EFQM) The EFQM model is shown in Figure 3.1 and indicates that customer satisfaction, people (employee) satisfaction and impact in society are achieved through leadership. This drives the policy and strategy, people management, resources and processes, leading to excellence in business results. Figure 3. 1 The EFQM model
147 The nine elements in the model are defined as follows: Leadership:how the behavior and actions of the executive team and all other leaders inspire, support and promote a culture of total quality management. Policy and strategy:how the organization formulates, deploys and reviews its policy and strategy and turns it into plans and actions. People management:how the organization realizes the full potential of its people. Resources:how the organization manages resources effectively and efficiently. Processes:how the organization identifies, manages, reviews and improves its processes. Customersatisfaction:what the organization is achieving in relation to the satisfaction of its external customers. People satisfaction:what the organization is achieving in relation to the satisfaction of its people. Impact on society:What the organization is achieving in satisfying the needs and the expectations of the local, national and international community at large. Business results:what the organization is achieving in relation to its planned business objectives and in satisfying the needs and expectations of everyone with a financial interest or stake in the organization. EFQM model can help performance management by: developing a fuller understanding of how business results are achieved and processes continually improved; offering mechanisms for tackling systems problems in the workplace; promoting performance management as a two-way dialogue; providing a positive and universal framework for the description of jobs and roles; helping to align individual and business objectives; pointing the way to identifying, defining and building the capabilities that the organization needs its people to demonstrate.
148 3.Economic Value Added The economic value added (EVA) measure represents the difference between a company’s post-tax operating profit and the cost of the capital invested in the business. The cost of capital includes the cost of equity what shareholders expect to receive through capital gains. The theory of EVA is that it is not good enough for a company simply to make a profit. It has to