Clearly state what constitutes performance indicators? Why do people :: Economics

Clearly state what constitutes performance indicators? wherefore do people want organisations to modernise these? Suggest your own type of performance indicators that Could be used with a doctors surgery (general practise).ACCOUNTING AND CONTROL IN ORGANISATIONS 2003Q. a) Clearly state what constitutes performance indicators?b) Why do people want organisations to produce these?c) Suggest your own type of performance indicators that Could be used with a doctors surgery (general practise).d) What problems might arise when you hear to use thePerformance indicators that you produced in part c).a) The purpose of performance indicators is to evaluate and monitorhow well a system responsible for providing a service is playactingto report this information in quantitative terms and to direct thesystems efforts and resources towards desirable goals. Thefundamental problem, however, with defining what such a set ofperformance indicators should be do of due to there sometimes beinga lack of consensus on what are desirable goals and, therefore, a lackof definition of what constitutes good performance. Performanceindicators advise consequently be measuring very different aspects ofperformance, yet they are all generally concerned with measuring the mastery of a venture and the success of the people who are managingit.As performance indicators are concerned with the measurement of thesuccess of an organisation, and its management, you need to look atwhat success is to see what constitutes one. The obvious arrange isthat success is earning a profit and that the greater the profit thelarger the success. Profit as measured in accordance with generallyaccepted accounting principles is, however, a somewhat unsure gauge ofsuccess. This is because profits can be kept up for years while abusiness is being milked dry by cutting down on research, maintenanceand certain kinds of advertising, or by realising assets which havebeen steadily appreciating in value. Alternatively pr ofits can be keptdown by stepping up these expenditures and by declining to realiseassets which have appreciated in value. Furthermore, what does thelarger profit actually mean. If it simply means the greatest enactmentof absolute pounds, thus there is the criticism that a manager who hasaccess to unlimited capital, with either a free rate of interest or avery low rate, can probably increase the absolute profit he shows bypumping in more capital, so long as he can show any return at all onit. If, however, it is measured by the rate of return on capitalemployed then is a high rate of return on a small capital better orworse than a lower but liquid satisfactory return on a larger capital.