What Gets Measured Gets Done……�? Essay Example
“What gets measured gets done……”
- By Peter Drucker
This quote is often ascribed to Peter Drucker, a management guru. In a company for smooth running of its business everything must be measured, it can be financial or non financial. Since not only financial measures influence resulting figures but also non financial figure contribute a lot. Areas of financial performance measurements are Profitability, Risk Involved, liquidity of available funds and financial efficiency and performance of the company. Under non financial performance measurement employee satisfaction, customer loyalty and the level of product innovation aspects will come. Financial and other measures are correlated. Contemplation of both non financial factors and financial factors of measurement can give a clear picture of the company; it will be helpful in taking an appropriate decision. Factors like innovation has to play a vital role in decision making as it decides future market of a products, change is the fashion of the day. Customer loyalty must be measure in order to decide on output volume whereby both the aspect are considered and chance of losses can be reduced. These two measures are similar two tires of a motor cycle, whereby if one tire gets punctured vehicle can run for a small distance but in long run we can’t run. Company can manage its operations without measuring non financial measures for a short run but on a long run those matter a lot. No company focus to live for a short run due to the nature of business returns. Returns can’t be got in short run due return on investments it will take years to come.
For Example: When Pepsi-Cola Company is assessing the factors of business success they give more weightage to Non-Financial measures. We can see this fact in the manager’s bonus issue. Bonuses are given on meeting targets. The above example gives a clear idea as to how a non- financial measure is affecting the financial measure. They must go all together. The focus should be
- By Peter Drucker
This quote is often ascribed to Peter Drucker, a management guru. In a company for smooth running of its business everything must be measured, it can be financial or non financial. Since not only financial measures influence resulting figures but also non financial figure contribute a lot. Areas of financial performance measurements are Profitability, Risk Involved, liquidity of available funds and financial efficiency and performance of the company. Under non financial performance measurement employee satisfaction, customer loyalty and the level of product innovation aspects will come. Financial and other measures are correlated. Contemplation of both non financial factors and financial factors of measurement can give a clear picture of the company; it will be helpful in taking an appropriate decision. Factors like innovation has to play a vital role in decision making as it decides future market of a products, change is the fashion of the day. Customer loyalty must be measure in order to decide on output volume whereby both the aspect are considered and chance of losses can be reduced. These two measures are similar two tires of a motor cycle, whereby if one tire gets punctured vehicle can run for a small distance but in long run we can’t run. Company can manage its operations without measuring non financial measures for a short run but on a long run those matter a lot. No company focus to live for a short run due to the nature of business returns. Returns can’t be got in short run due return on investments it will take years to come.
For Example: When Pepsi-Cola Company is assessing the factors of business success they give more weightage to Non-Financial measures. We can see this fact in the manager’s bonus issue. Bonuses are given on meeting targets. The above example gives a clear idea as to how a non- financial measure is affecting the financial measure. They must go all together. The focus should be