If You Can't Measure It You Cant Manage It Essay

1539 Words Sep 12th, 2010 7 Pages
There are many things one can measure in a business; from production costs; employee absenteeism; budget variances; waste; customer satisfaction; business unit performance, the list could go on and on, however how are these measurements relevant and how do they add to business performance, does simply measuring something mean you can influence it? “If you can’t measure it you can’t manage it” has been stated by more than one influential business or academic expert; Deming, Drucker, Kaplan, this is another list that could go on, however, this is a statement that has not been made without critism. This report will have a brief overview of the popularity of accounting measures, and then we will apply the “If you can’t measure
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This is similar for organisational culture, which is a vital part of organisational success (Barney, 1986; Heck & Marcoulides, 1993; and Denison & Mishra, 1995) yet it is hard to measure in quantitative terms. Through recruitment, training, mission statements, social activities and branding organisation’s create a corporate culture that they think will help them be successful. By focusing on these immeasable items firms can manage there outcomes, however, it requires more insight into underlying economic factors than quantitative measures.
The ability of firms to measure many items can also distract managers from what is truly important or bombard them with to much information to process. If managers only focus their attention on the things which can be measured then important aspects of business will go unnoticed and unimproved. Some management accounting tools have gone part way to counteracting these problems. Kaplan & Norton’s balanced scorecard provides a way to integrate non-financial measures, drawing managers attention to some aspects of business which previously went unmeasured and often unmanaged.
Risk provides another way to look into the way measurement and management interact. Risk is an important factor that organisations face, managers need to be proactive in their

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