Performance Measurement in a Public Company
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- The administration of a public company involves a variety of disciplines. Generally, there has to be not less than three directors and a competent company secretary. It is a requirement that the public company holds an Annual General Meeting at least once every calendar year, and within 100 days of the close of every year. During such a meeting, the financial reports of the company are availed to the company auditors and board of directors. The shareholders elect the board, which in turn remains accountable to them and runs the company on their behalf. The directors are the actual administrators in the company, but may call voluntary administrators in case the company is about to dissolve. The Chief Executive Officer, however, remains the overall head of the company and makes crucial decisions on the running of the company (Waldron, 2011).
b)
- When a business executive bonuses are based on absolute growth in profits, there may not be enough funds left for investment in employees, plant and machinery, as well as bad debt management
- At times, the company may make minimal profits, or even make losses. In such cases, there might be little or no bonus for the executives, which can demoralize them (Baker, 2007)
c)
- High executive salaries act as an affirmation for the executive hard work, as well as loyalty and achievement of their corporations
- Companies that pay their executives highly are able to attract and retain the best managers (Ferracone, 2010)
- Executives are considered wealth creators, and must be remunerated well to motivate them to continue creating wealth in order to benefit the society (Taticchi, 2010)
- d) Today, most companies link executive performance to customer satisfaction. This trend is becoming increasingly appropriate because the business is likely to do well only when the customers are satisfied (Zairi, 2004). Customer service standards are set in most companies and then executive performance adjusted to be in line with the standards (Watson, 2003).
- e) The Balance Scorecard has four areas that drive business performance. These include financial, internal business processes, learning and growth, as well as the customer section. While the financial part focuses on good financial management, the customer section facilitates benchmarking based on the viewpoint of the customers. The section on business processes encompasses all the activities the business undertakes and its policies. On the other hand, learning and growth entails employee development. The executive package favors the financial perspective because the perspective supports high remuneration for executives as one way of affirming their loyalty to the company (Taticchi, 2010).