Approach to the performance of the organization, Approach to assess the results of proper management activities - Management

Performance Approach

The main task of the management is a purposeful impact on the management object in order to improve the performance of its economic activities. Supporters of this approach rightly believe that the effectiveness of management can not be considered in isolation from the final results of the organization's activities, since management is an integral part of it.

It should be noted that the definition of key indicators of economic activity of enterprises is also a sufficiently developed topic in management theory. The effectiveness of management is assessed by various indicators of economic activity and financial condition of the enterprise - sales revenue, profit and profitability, labor productivity and return on assets, liquidity and solvency indicators, financial stability and asset turnover. However, the use of these indicators to evaluate the effectiveness is not enough, because they are additional and do not include all the costs and results of the economic activities of the enterprise. As U. points out. Buffett, in many corporations the effectiveness of managers is determined by the net profit obtained, and not profitably distributed capital. However, simply by retaining and reinvesting profits (ie, not sharing it with shareholders), managers can report an annual increase in profits without exerting special efforts to actually increase capital gains. & Quot; Therefore, these indicators should be supplemented by the main indicators of economic activity - the profitability of total assets and equity.

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where ДСА - profitableness of cumulative assets; Пдн - profit before payment of taxes; CA - total assets.


where DSC is the return on equity; Pv - net profit; SC - equity.

For a comprehensive assessment of efficiency, both indicators should be used, because individually they do not fully characterize all the elements of the effectiveness of the economic activity of the enterprise. DSA shows the operational efficiency of management of the whole organization, the profitability of total assets, and DSC - the amount of income of owners on the invested funds. High values ​​of DSC companies lead to an increase in the value of its shares, suggest a significant potential for its growth.

Approach to assess the results of proper management activities

With this approach, only indicators directly related to managerial work are used, with its results and costs. In connection with the complexity of the evaluation of the results of managerial work, only additional performance indicators are used here - the coefficients of the number of administrative and management personnel, administrative costs, labor discipline and the rule of manageability.

The ratio of the number of administrative and managerial personnel is determined by the formula


where Кчу - factor of the number of AUP; CAAP - the number of AUP; Cho is the total number of employees.

The coefficient of labor discipline is determined by the formula


where KTD is the coefficient of labor discipline; CNTD - the number of violations of labor discipline.

The rule of control determines the ratio of managers and subordinates in the organization:


where Well - the norm of controllability; Chobr - total number of employees without managers; Чр - number of heads.

The cost factor for management is determined by the formula


where Kuz is the cost factor for management; Zu - management costs; Zo - total current costs.

The listed indicators are useful and necessary for a comprehensive assessment of management effectiveness, but certainly are private indicators that can be used as additional performance indicators.

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