An approach for relating total performance improvement with financial results

Abstract

For decades, top and middle managers have been conditioned to evaluate performance mainly with financial indicators. However, for a business to survive and succeed in today's complex and uncertain environment, it is imperative to monitor performance on the basis of measures that relate to quality, response time to market changes and productivity. Such indicators are the 'vital signs' that determine competitiveness, because they reflect the effectiveness of efforts to improve the performance of business processes through total quality management or other approaches. Today, we have no methods to relate improvements in business processes to economic results. This paper proposes such an approach, to assist management in evaluating more reliably the impact of process improvements that lead to greater customer satisfaction on economic results.