PERFORMANCE MEASURES FOR NON PROFIT MAKING ORGANISATIONS(NPO)

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PERFORMANCE MEASURES FOR NON PROFIT MAKING ORGANISATIONS(NPO)


WTM ? (WHAT TO MEASURE)

EFFICIENCY  getting out as much as possible for what goes in

NPOs

EFFECTIVENESS  relationship between an org’s outputs and its objectives

ECONOMY  spending money frugally


HOW CAN BE MEASURE

INPUTS

JUDGEMENT

COMPARISON


QUANTITATIVE MEASURE

• Efficiency measurement input and output is illustrated as follows: • •

Where input is fixed = actual output ÷ max output obtainable for a given input

• •

Where output is fixed = min input needed for a given output ÷ actual input

• • • •

Where input and output are both variable = Actual output ÷ actual input compared Standard output ÷ standard input


VFM ECONOMY • Acquiring appropriate resources (input) for minimum cost whilst maintaining quality e.g. money, materials EFFICIENCY output/input • Maximising output for a given input • Achieving minimum input for a given output • In terms of monetary & non monetary measures

EFFECTIVENESS ….RESULTS • Output achieves the desired objectives • Use monetary, non monetary & quality measures The 3 measures may be in conflict with each other & may sometimes complement each other TewYouHoo/Performance Analysis in NPO

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• • • • • •

PERFORMANCE MEASURES IN POLICE FORCE Fall/ increase in crime rates Average cost per crime % of total crimes solved How efficiently costs have been controlled Quality of support for crime victims Courtesy and friendliness of police force to the public

PERFORMANCE MEASURES IN CHARITIES • Amount collected from the public compared to target • No. of people helped by the charity • Success of appeals • Public awareness of charity • Commitment of charity workers TewYouHoo/Performance Analysis in NPO

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PERFORMANCE MEASURES IN HOSPITALS • • • • • • • •

Number of operations performed compared to targets Survival rates No. of nurses and doctors per patient Response time for emergencies Waiting list periods Quality of hospital food Comfort or overcrowding in hospitals Courtesy and friendliness towards patients by staff

TewYouHoo/Performance Analysis in NPO

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PERFORMANCE MEASURES FOR SERVICES


SERVICE VS MANUFACTURING The problems associated with performance measurement of service businesses is due to the following Service characteristics • Intangibility – lack of substance • Inseparability – created at the same time as consumed • Perishability – a service is perishable • Variability – problem of consistency of output • No transfer of ownership – no transfer of property


What are services ?

perishable intangible

SERVICES

simultaneous

heterogeneous


BUILDING BLOCKS DIMENSIONS COMPETITIVE FINANCIAL QUALITY of SERVICE FLEXIBILITY RESOURCE UTILISATION INNOVATION


Dimensions • Competitive performance (sales, market share, new businesses) • Financial performance – budget (i.e. budgeted expenditure limit, standard performance measures) • Quality of service • Flexibility (speed of delivery, ability to respond to customers’ specifications, coping with demand) • Resource utilisation measures (emphasis productivity) • Innovation


MEASURES FOR FINANCIAL DIMENSION

Profitability

2. Liquidity

• Profit

• Debtors days . Creditors days

• Return on net assets

3. Capital structure

4. Market ratios

• debt/equity • LT to ST debt

• PE • ROCE

ANMTYH/Scope of performance measurement

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MEASURES FOR COMPETITIVENESS DIMENSION

Sales growth

Market share

Repeat business

Number of customers

ANMTYH/Scope of performance measurement

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MEASURE FOR QUALITY DIMENSIONS 1. 2. 3. 4. 5. 6. 7. 8.

Reliability Competence Customer relation/feedback Number of complaints Customer retention rate Responsiveness Friendliness Cleanliness

ANMTYH/Scope of performance measurement

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MEASURES FOR FLEXIBILITY

Volume flexibility (coping with demand)

ANMTYH/Scope of performance measurement

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MEASURES FOR RESOURCE UTILISATION DIMENSION

Productivity

Service rendered per labourhour

Utilisation rate

ANMTYH/Scope of performance measurement

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ADDITIONAL MEASURES FOR RESOURCE UTILISATION DIMENSION Business Input Output Accounting firms Man hours available Chargeable hours Hotels

Rooms available

Rooms occupied

Railway companies

Train miles available

Passenger miles

Banks

Number of staff

Number of accounts

ANMTYH/Scope of performance measurement

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MEASURES FOR INNOVATION DIMENSION

Average development cost per service Development cost of individual service % of turnover spent developing new service/products/processes

How many new services developed per annum How many new services that are successful Proportion of new services to total services provided Time to adopt new concept from outside the firm

ANMTYH/Scope of performance measurement

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