What is the Concept of Organizational Performance ?
The concept of Organizational Performance is the comparison of an organization's goal and objectives with its actual performance in 3 distinct areas. Those areas are,
- Financial Performance
- Market Performance
- Shareholder Value
Financial Performance
Refers to an organization's results with regard to return on investment and return on assets.
Market Performance
Refers to a company's ability to make and distribute their outputs in the most cost effective way and to set a price that returns a reasonable amount to suppliers. In addition market performance refers to the ability if an company to meet the demands and expectations of consumers regarding the good or service produced. Some organisations also measure market performance with regard to how great a share of the market they possess relative to their competitors and some measure their ability to achieve social responsibility (or stewardship of the environment and responsibility to the community)
Shareholder Value
Refers to the value of what a person holding shares in the firm possesses.
These 3 measures determine whether an organization is meeting its goals. The concept of Organizational Performance is connected to the ideas of effectiveness and efficiency. A business organization must produce the right things and it must produce them using the fewest possible inputs if it is to have a strong organizational performance.
Businesses typically try to perform well in a number of areas of organization. First, they try to perform financially. That is, they need to realize a good return on their investment. They need to add as much as possible in their production process.
Second, they try to perform well in terms of the market. What this mean is they must gain as much market share as they can (consistent with thee goals of their firm) They must be producing a product that has a higher demand and they must be producing it at a price that allows them to compete on the market.
Finally, they need to perform well in terms of creating value for their shareholders. They need to make money that can be distributed in the form of dividends. They also need to have their stock price rise at a reasonable pace.
References
Elena, I. and Maria, C. (2016). Organizational
Performance-A Concept that Self-seeks to find Itself.[Online].Available at<http://www.utgjiu.ro/revista/ec/pdf/2016-04/27_Ion,%20Criveanu.pdf
James, L. (2012). What is
Organizational Performance.[Online].Available at< http://www.growth.pitcher.com.au/resources/articles/what-is-organisational-performance
Hi randika, I thought employee engagement strategy is less about focusing directly on ‘engagement’ and more about giving employees the environment they need for engagement to flourish.
ReplyDeleteHi Sanjeewa. Exactly. It is obvious that providing employees with a better work environment is vital for better performance. But in addition to the environment, employees should be provided with several other factors that may lead to engagement. If you can go through my next article under the topic “Employee Engagement and Organizational performance” you can see that there are many other factors that will finally lead towards a better working environment such as, nature of work, organizational systems, opportunities, Rewards. And employees in a better working environment along with these factors are obviously engaged towards their work.
DeleteRandika,
ReplyDeleteYou are right 3 areas that you mentioned above article have the impact on Organization Performance but Better Organization performance needs employee engagement.
In the share holder area how the company can expect the engagement???
Hi Reha, Definitely employee engagement leads towards better organizational performance. Under organization performance, one main important area is shareholder value. Increased shareholder values leads towards better organizational performance as mentioned in the article. It is obvious that an organization with truly engaged employees outperform when considering with that of other companies.
ReplyDeleteAlso, engaged employees enhance an organizations’ financial performance. And it has been founded through several researches that, companies with engaged employees have higher shareholder returns. All these factors finally will lead towards better shareholder value that is mainly derived from employee engagement.
Reha, I think it would be easier for you to get a better understanding on the relationship between Employee Engagement and shareholder value through the article “Trends in Global Employee Engagement, and may access through the below link,
Deletehttp://www.aon.com/attachments/thought-leadership/Trends_Global_Employee_Engagement_Final.pdf
Amazing Blog! SOS is an digital employee engagement platform that offers fun, interactive Online employee engagement activities and games you can play with office colleagues online and remotely.
ReplyDelete