Financial Performance of an Organization

Measures of Financial Performance and Future Performance

Measures of financial performance may not always be desirable in the assessment of organizational performance mainly because they evaluate past actions. In order to predict future performance of business entities, it is important to use forward looking measures which are also referred to as key performance indicators. Such metrics may include the trends in key financial aspects. To this end, the historical trend that reveals the performance of an organization in several key aspects would be an important input in the forecasting of future performance (Meier, Favero & Zhu, 2015). Such data may include the trend in growth of revenue, reduction of expense, rate and speed of receipts from accounts receivables. Another forward looking measure that a firm could employ to help forecast future performance is the improvement of control processes, mainly quality of products and services offered by the firm. This would go a long way in ensuring that the projected earnings are not affected by recalls and customer returns, both of which would reduce the probable margins that would have otherwise been realized. A third forward looking measure that a firm could use is the compliance with organizational safety and health recommendations including proper maintenance of tools, machines and equipment as well as proper training of employees on safety procedures. This, as Sinelnikov, Inouye & Kerper (2015) note, would go a long way in helping avoid liabilities that would otherwise arise from injuries sustained in the course of work performance at the firm. It would also help troubleshoot and thus aid the company in avoiding possible losses through downtime.

Value Chain Metrics and Business Unit Strategies

Each of these metrics focuses on a specific aspect of the value chain. For one, the compliance with organizational safety and health requirements measures the firm’s ability to handle disasters at work. The improvement of quality control process is concerned with the both the production (output) and income aspects of an organization. Finally, the historical financial data looks at the trends in the firm’s finances and thus focuses on the monetary aspects of the firm’s operations, Parmenter (2015) asserts. These measures all tie to the strategies in our business unit in a number of ways; the financial trend ties to the growth strategy which seeks to register continuous increase in revenues earned by the firm. The quality assurance strategy also ties to the growth strategy as it will ensure both the retention of existing customers as well as the recruitment of new customers. Finally, the safety metric also plays into the growth strategy of the firm as it would help keep down the costs incurred in operations by limiting the overall liability of the firm.

Business Culture and Impact on Performance

In this organization, the business culture enables the business strategy and does have an impact on the financial performance in the value chain. This is evident form the transformational leadership at the firm which is premised on the inspiration of each employee to perform their best; a fact that then promotes the overall performance of the firm. Additionally, the culture of openness has encouraged creativity and innovation at the firm, both of which have resulted in the improvement of performance in line with the growth strategy championed at the firm.

Cultural Norms and Organizational Operations

Cultural norms that govern the operations of this organization include the respect of each individual’s opinion and valuing of their contributions. The organization also encourages team work in the fulfillment of roles and performance of assigned job duties. Behaviors such as initiative and innovation as well as dedication to work and team spirit are promoted at the organization. On the other hand, such behaviors as manipulation and sabotage are punished. Also considered unacceptable and thus punishable at the organization are lateness, laziness and insubordination.

References

Meier, K. J., Favero, N., & Zhu, L. (2015). Performance Gaps and Managerial Decisions: A Bayesian decision theory of managerial action. Journal of Public Administration Research and Theory, 25(4), 1221-1246.

Parmenter, D. (2015). Key Performance Indicators: Developing, Implementing, and using Winning KPIs. John Wiley & Sons.

Sinelnikov, S., Inouye, J., & Kerper, S. (2015). Using Leading Indicators to measure Occupational Health and Safety Performance. Safety Science, 72, 240-248.