Efficiency of management, efficiency criteria of enterprise management
The main task of any manager is an effectivecontrol. The efficiency criteria allow us to assess in detail the quality of the manager's work in order to make appropriate adjustments. Evaluation work should be carried out regularly to identify strengths and weaknesses, and then make timely adjustments.
The essence of the concept
The effectiveness of management isThe economic category that demonstrates the contribution of the manager and his environment to the overall result of the organization's activities. Many researchers put this very meaning in this concept. Criteria for the effectiveness of management in this case are presented as the results of activities and the degree of implementation of the goals and objectives that were set for the current period. The main indicator is profit.
It should be noted that the effectiveness of managementis a relative indicator that characterizes the management as a whole or its separate subsystem. For this purpose, various integral indicators are used, which give a more accurate numerical definition of the results.
It should be noted that in the management processinvolved a significant part of the economically active population, which has the appropriate level of education and qualifications. Since a lot of time and money is expended on training such personnel, considerable attention is paid to the evaluation of such a parameter as the effectiveness of management. Performance criteria allow for a more in-depth consideration of this issue.
In theoretical studies, the following varieties are distinguished:
- economic efficiency is the ratio of costs for production and management, as well as the results obtained;
- social efficiency is the satisfaction of different categories of consumers with the assortment and quality of goods and services.
It is also necessary to distinguish the following concepts:
- internal efficiency is the achievement of the organization's own goals at a constant level of costs;
- external efficiency - the company's compliance with the demands and requirements of the external environment.
The evaluation algorithm is as follows:
- determination of the purpose of the effectiveness evaluation;
- the choice of criteria and their detailed justification;
- collection of source data to be used in the analysis;
- development of requirements for the resulting indicators;
- the development or selection of a methodology in accordance with which the calculations will be made;
- carrying out of calculations and an estimation of the received indicators.
Each organization sets itselfspecific goals. In the process of evaluating the final results, certain inconsistencies can be identified. Based on the results of the audit, a decision may be made to adjust the management process or to make changes in the plans.
Economic Criteria for Management Effectiveness
The main goal of management is continuousimproving the performance of the organization. Especially important is the economic efficiency of management. Performance criteria can be general and private. In the first case, the global aspect of performance is considered. It is important to achieve the maximum result with minimal resource costs.
Particular indicators of management effectiveness are as follows:
- the level of labor costs of workers engaged in the production process;
- rational use of material resources;
- minimum expenditure of financial resources;
- indicators that characterize the use and wear of fixed assets;
- the cost of production (should be kept to a minimum);
- profitability of production;
- technical equipment of production workshops (compliance with modern achievements of technological progress);
- labor intensity of workers, which is determined by working conditions and organizational structure;
- compliance with the cost norm with full compliance with all contractual obligations;
- stability of the number and composition of personnel;
- compliance with environmental standards at the same level of costs.
In order to evaluate the efficiency of workenterprises, primarily economic indicators are used. The main one is the ratio of profit to the total costs that were incurred in the reporting period. If deviations or unsatisfactory results were detected, factor analysis is carried out to determine specific causes.
Components of efficiency
In the course of evaluating the effectiveness of the organization's management, the following indicators can be used:
- effectiveness, which is manifested in the degree of achievement of the goals that were set by the management;
- the ability to economically spend material and financial resources, fully satisfying the needs of all structures and units of the organization;
- achievement of an optimum parity of the received economic results to the costs which were carried out in the course of manufacture;
- the degree of influence of direct or indirect factors on the final result.
The criteria for assessing management effectiveness arespecific indicators that allow us to assess the appropriateness and effectiveness of the implementation of certain activities. Modern economic science distributes them into two groups:
- private (local) criteria:
- labor costs of workers involved in the direct production of goods or services;
- Expenditure of material resources for managerial and other purposes;
- costs of financial resources;
- indicators that characterize the use of fixed assets (purpose, wear, efficiency, etc.);
- speed of turnover of funds;
- the payback period of investments (its reduction or increase).
- Qualitative criteria:
- increase in output, which refers to the highest category of quality indicators;
- environmental responsibility of the organization, as well as the introduction of modern energy-saving technologies;
- conformity of the products to the pressing needs of the society;
- continuous improvement of working conditions of employees, as well as their social level;
- saving resources.
It should be noted that all evaluation criteriaThe effectiveness of management should be accompanied by the maximization of output (or the number of services provided). An increase in the level of profit should also be noted.
Criteria and indicators of management effectiveness
In order to assess the economic resultsfrom carrying out managerial measures or making decisions, appropriate methods are used. So, the criteria and indicators of management effectiveness are as follows:
- a general indicator of management effectiveness (the ratio of profit for the reporting period to costs attributed to management);
- the ratio of managerial personnel (the ratio of the number of top managers and the total number of employees employed in the enterprise);
- the ratio of management costs (the ratio of the organization's total costs to management expenses);
- the ratio of managerial expenses to the volume of output (in physical or quantitative terms);
- efficiency of management improvement (the economic effect for the year is divided by the amount of money spent for management activities);
- annual economic effect (the difference between the total savings due to implemented management measures and the costs multiplied by the industry coefficient).
Effectiveness of organization management
Economists identify the following criteria for the effectiveness of the organization's management:
- the organization of management entities, as well as the full validity of their activities;
- the amount of time resources that are expended on the solution of certain issues in the management of senior management;
- style of management activity;
- the structure of governing bodies, as well as the smoothness of the relationship between their various links;
- general costs, which fall on the maintenance of the administrative apparatus.
Any organization seeks to receivemaximum benefit. It is worth noting that the increase in profit is one of the main parameters, according to which the effectiveness of management is determined. Criteria for the effectiveness of the organization in this context imply the final result of the work of the entire enterprise. This is due to the fact that the fulfillment of plans largely depends on the quality work of managers.
Basic approaches to the evaluation of effectiveness
The most important indicator of the functioning of any organization is the effectiveness of management. Performance criteria can be defined and applied in accordance with several basic approaches:
- The goal approach, as it becomes clear fromname, is associated with the evaluation of the degree of achievement of the planned result. At the same time, the operation becomes much more complicated if the enterprise does not produce any tangible products, but deals, for example, with the provision of various kinds of services. Also, we can talk about overlapping goals. Also, the criteria for evaluating the effectiveness of the management of an organization quite often represent a set of formal goals that do not reflect the real state of affairs.
- A systematic approach implies consideration ofmanagerial process as a collection of input, immediate operation, and exit. In this case, management can be considered as the highest level, and the average. Most often the system is considered in the context of its adaptation to internal and external conditions, which are continuously changing. No organization can limit itself only to the release of products and the provision of services, because it must act in accordance with market conditions.
- The multiparametric approach is aimed at covering the interests of all groups formed in the organization.
- The approach of competing estimates allowsuse such criteria for the effectiveness of enterprise management, as a control system, as well as internal and external impacts. At the same time, the head often becomes confronted with a mutually exclusive choice.
Evaluation of the effectiveness of personnel management
Criteria for the effectiveness of personnel managementinclude the quality, timeliness, as well as the completeness of the performance of certain work and the achievement of the set goals. The overall numerical indicator, according to which it is possible to evaluate the performance of workers, is the ratio of achieved indicators to labor costs for a certain period.
Evaluation of the effectiveness of personnel management is usuallyis conducted in order to assess the appropriateness and validity of the introduction of motivational mechanisms or the work of personnel reshuffles. It should be borne in mind that staff costs can be paramount (wages) and secondary (social services and other costs provided for at the legislative level).
Workers must ensure the achievement ofof the goal. Criteria for the effectiveness of personnel management are, for the most part, specific indicators that are calculated per unit of production capacity or produced output.
Assessment of the effectiveness of the management system
The following criteria for assessing the effectiveness of the management system are singled out:
- the complexity of the organizational structure and the rationale for the feasibility of the functioning of each of its links;
- the speed of response to emerging situations and the adoption of appropriate managerial decisions;
- a strategy in accordance with which the organization as a whole and each of its separate subsystems are managed;
- The costs that fall on the content of the management apparatus, as well as their correlation with the results obtained;
- results of continuous monitoring of the activities of senior management;
- Evaluation of the impact of the management apparatus on the final result of the enterprise;
- the numerical and qualitative composition of the management, as well as the ratio with the total number of employees.
It should be noted that the results of activitiesorganizations depend not only on the efficiency of the workforce, but also on how well the organizational structure is properly organized. For this, a periodic check is conducted to identify inconsistencies, as well as to bring the parameters to modern requirements and standards (criteria for the effectiveness of management systems are used).
Classification of methods for assessing management effectiveness
Criteria and indicators for assessing management effectiveness can be applied in accordance with the following approaches:
- orientation on the definition of initially set tasks in order to determine the degree of their implementation;
- the evaluation of the effectiveness of the administrative apparatus, as well as the degree of the provision of managers with information and other resources;
- Evaluation of products or services provided to determine the satisfaction of the end user;
- Involvement of professional experts to identify weak and strong locations of the organization;
- comparative analysis of different points of view of managers or management systems;
- Involvement of all parties and participants in the management and production process to determine the degree of effectiveness.
The evaluation activity can correspond to one of the following types:
- determination of the discrepancy between the desired and real state of affairs;
- evaluation of the production process in order to identify strengths and weaknesses;
- assessment of the extent to which the goals are achieved.
- summing up:
- the definition of varieties of products and services that bring real economic effect with the aim of eliminating irrational directions;
- the study of changes in the welfare of employees and customers as a result of the activities of the organization;
- an estimation of a parity of expenses to actually reached economic results.
The effectiveness of management is the economica category that demonstrates the manager's contribution to the resulting performance indicator of the organization. The determining indicator here is the profit (namely the comparison of the indicator that was achieved and the one that was noted in the plan for the corresponding period).
The effectiveness of management plays a crucial rolefor several reasons. The first of them is that a lot of time is spent on the preparation of this kind of staff, and their number is quite large. In addition, senior management is characterized by the highest level of remuneration in the enterprise, which should be economically justified.
The effectiveness of management can be eithereconomic (recoupment of costs invested in production), and social (the degree of satisfaction of the population with quality, quantity, as well as an assortment of products and services). It is also worth highlighting the internal and external effectiveness of the work.
To assess the effectiveness of organization managementone or more approaches may be used. So, the target involves evaluating the result and comparing it with the target for the period. If we talk about the system approach, then it's about perceiving the work of the organization as a holistic process. Multiparametric evaluation affects all groups that are somehow related to the activities of the enterprise or are interested in its results. Also worth paying attention to the approach of competing estimates, which takes into account the factors of the opposite direction.
During the evaluation of management effectivenessa number of criteria are used that can be used alone or in combination. So, the main indicator is the ratio of costs and profits. Also an important role is played by the optimal ratio of production workers and the number of management personnel, as well as costs that are regularly allocated to management. The latter indicator is important to correlate not only with the level of profit, but also with the real volume of output (in physical or quantitative terms). Also, when calculating the economic efficiency, it is important to adjust the indices of the values of the industry coefficient.
It is important to understand that in achieving successenterprises the main role is played not only by the composition of production personnel, but also by the criteria for the effectiveness of quality management. The correct organizational structure should be chosen, which will ensure optimal interaction between all departments of the enterprise, as well as reducing the time and material costs of communication.