Introduction
In this paper all approaches of performance evaluation are compared. Some SME's evaluate their performance by using goal and system approach. Goal approach measures the extent of an organization to attain its goals. Mainly, goal approach focuses on vision, mission, aim, and objectives, which an SME set before it. In system approach, performance of an organization is evaluated by appraising the knack of an organization to acquire its resources and inputs. Similarly, stakeholder and competitive value approaches are also used for performance evaluation of an SME.
Some SME's used balance scorecard for performance evaluation. In this SME's performance is evaluated on the basis of four aspects in which financial measures, customers, internal processes and learning are integrated. A business organization can also evaluate it's performance by using hybrid approach in which financial measures like net profit, inventory turnover, return on equity ,return on investment and non-financial measures like employee turnover, market share and employee satisfaction are included.
Some SME's compare their performance with that of other SME's. They evaluate their performance by means of comparative analysis. Performance can also be evaluated by means of ineffectiveness approach. In ineffectiveness approach, focus is on the factors that hampers the feat of organizations. In this research paper, pros and cons of all performance evaluation approaches are described and at the end of that white sox #14 white home jersey research paper, it is proved that
Significance of study
Performance evaluation is the most imperative part of performance management. Performance evaluation inculcates on performance improvement. Without knowing "where we are and where we want to go", improvement is never possible. James A. Belasco has fittingly said, "Evaluate what you want - because what gets measured gets produced. When performance is managed, it improves but when performance is evaluated, the velocity of improvement accelerates.
Spotlight of this research is on SME's, because for developing countries like Pakistan, SME's act as pillars of economy. They reduce unemployment and amplify the standard of living in developing countries. SME's have discrete characteristics which discriminate them from large organizations. So, there is a need of identifying the unsurpassed approach of performance evaluation for SME's.
Literature review
Different approaches are used for performance evaluation in which goal approach, time frame approach, balanced scorecard , system approach, and ineffectiveness approach are included (Jean-Francois, 2004). The effectiveness of any organization is measured by using goal approach (Etzioni, 1960). In system approach, performance is evaluated on the basis that an organization has how much access to its inputs (Yucthman and Seashore'1967). In stakeholder approach, centre of attention is the ability of a business to meet the needs and expectations of its stakeholders (Daft, 1995).Competing values approach expands the range of other approaches. By using competing values approach, four other models are developed in which rational goal, internal process, open system and human relations are included (Quinn and Rohrbaugh, 1983). Performance of an organization can be evaluated by focusing on problems and retarding factors that inhibit the performance of organizations (Camaron, 1984). ?Out of the above mentioned approaches, goal approach is the superlative approach to evaluate the performance due to its straightforwardness (Pfeffer and Salancik 1978). ). Most trendy approach of performance evaluation of SME's is balanced scorecard approach. Balanced scorecard has four dimensions in which financial growth, quality, customers and learning growth are built-in. (Kaplan and Norton, 1992).Balance scorecard actually focuses on maintaining a symmetry between monetary and non monetary measures. (Neely et al. 1996a; 1996b). Kaplan and Norton sum up by saying that "The balanced scorecard keeps companies white sox #14 white home jersey looking - and moving - forward instead of backward".?
Data Collection
A sample of six SME's is preferred for data collection. Three organizations were from manufacturing sector, two from services sector and one was merchandising. Semi-structured interviews were conducted from the owners of six SME,s.
Respondent A (Four Seasons restaurant)
Respondent A is the owner of a manufacturing organization (Restaurant). This organization has about 175 recruits. Respondent A explains that the performance of their organization is evaluated by customer satisfaction, return on investment (ROI), novelty and internal business. He said that his organization is using this approach because this approach covers all aspects of performance. In other words, it can be said that this organization is using balance scorecard for performance evaluation.
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