Page 198 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 9: Performance Measurement Systems

9.4.1 Internal Business Perspective Notes

Innovation Process

1. Percentage of sales from new products
2. New product introduction vs. customers and vs. plan
3. Time to develop new generation of products
4. Number of key items in which the company is first or second in the market

5. Break-even time i.e., time from the beginning of product development till the time the
product is introduced and generated enough profit to payback the original investment
made.

Operation Process

Financial Measures: Standard costs, budgets and variance analysis
Non-financial Measures: Cycle time, quality measures, cost measures of the internal business
processes through activity based costing
Post-service sales process: Warranty and repair activities, the treatment of defects and returns,
and the process and administration of customer payments.

9.4.2 Learning and Growth Perspective

Employee Capabilities (i.e., employee satisfaction, employee retention and employee
productivity): (i) Annual percentage of key staff that leave, (ii) Measures for measuring employee
productivity i.e., sales revenue per employee, (iii) Periodically measuring employee’s satisfaction
using surveys.
Information system capabilities:
1. Percentage of processes with real time, quality, cycle time and cost feedback available,

2. Percentage of customer, facing employees, having online information about customers.
Motivation, empowerment and alignment:
1. The numbers of suggested improvements per employee

2. The percentage of employees with personal goals aligned to the balance score card and the
% of employees who achieved personal goals.
Performance measurement in service organization: There are four unique characteristics,
distinguishing service companies from manufacturing organizations:
1. Most of the services are intangible
2. Services output vary from day-to-day since services tend to be provided by individuals
whose performance is subject to variability that significantly affects the service quality,
the customer receives
3. The production and consumption of many services are inseparable such as, rail journey

4. Services are perishable and cannot be stored.

LOVELY PROFESSIONAL UNIVERSITY 193