The effectiveness of management is determined by the ratio of costs and benefits. The lower the costs and the higher the results obtained, the more efficiently the administrative apparatus works. But the concept of efficiency includes not only economic, but also social indicators.
Instructions
Step 1
You can quantify the direct economic impact by increasing profits, lowering costs, improving quality, and lowering scrap rates. Social performance is an indirect indicator that is difficult to quantify. This is an increase in satisfaction with working conditions, motivation to achieve better results, an increase in the welfare of employees of the enterprise.
Step 2
With effective management, there is a direct relationship between the economic and social components. The rise of one of them should immediately serve as a reason for the growth of the other. Those. an increase in the profit of the enterprise should have a positive effect on the growth of the welfare of workers in the form of an increase in wages and bonuses. Violation of such a causal relationship has the most negative impact on the effectiveness of management.
Step 3
In any enterprise, there are departments that are profitable and costly. It is quite simple to evaluate the efficiency of the first ones - this, as mentioned at the beginning, is the ratio of production costs and profit. But there are departments, such as the transport department, the management apparatus, the marketing and warehouse service, the personnel department, the purchasing department and the security service, for which only the amount of costs is known. The results of their activities are more difficult to evaluate explicitly. This can be done by indirect indicators.
Step 4
To determine the effectiveness of management for non-production services, use the division of indicators into financial and non-financial. To the financial ones, refer to those that can be reflected in the budget and financial accounting system: the planned and actually spent amounts of costs for budget items of this unit, the overrun limit for these items.
Step 5
The non-financial indicators that determine the quality of work include those that characterize the specifics of the activities of this unit. For the transport department, for example, this will be the volume of cargo turnover, for the personnel service - indicators of staff turnover, for the delivery service - the average time of delivery of the goods to the customer. Using a system that takes into account several diverse characteristics of the quality of the department's work, you can always assess the effectiveness of management.
