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APEX INSTITUTE OF TECHNOLOGY.

AIT-IBM CSE
CHANDIGARH UNIVERSITY, MOHALI
Financial performance
management
 Financial Performance

Financial performance is a subjective measure of how well a

firm can use assets from its primary mode of business and
generate revenues. The term is also used as a general measure
of a firm's overall financial health over a given period.
 4-processes of Financial
performance

• Planning

• Organizing

• Controlling

• Monitoring
 Planning

The planning process provides the information top

management needs to make effective decisions about how to
allocate the resources in a way that will enable the
organization to reach its objectives. Productivity is
maximized and resources are not wasted on projects with
little chance of success.

Planning increases the efficiency of an organization. It

reduces the risks involved in modern business activities. It
facilitates proper coordination within an organization. It aids
in organizing all available resources.
5 Benefits of Strategic Planning

•It allows organizations to be proactive rather than reactive.

•It sets up a sense of direction.

•It increases operational efficiency.

•It helps to increase market share and profitability.

•It can make a business more durable.

 Organizing

Organizing ensures effective role-job-fit for every employee

in the organization. It helps in avoiding confusion and delays,
as well as duplication of work and overlapping of effort.

Organizing creates more departments, and a wider span of

management, and provides better communication, which is
important for the expansion and expansion of the business.
Organizing’s significant importance within an
organization
• Efficient and effective management
• Facilitates specialization
• Avoids overlapping and duplication
• Optimum use of human resources
• Defines authority responsibility relationship
• Basis of coordination
• Establishes channels of communication
• Leads to growth of diversification
• Productivity and job satisfaction
 Controlling

Controlling is regarded as an important management

function. Thus, it is something that every manager
needs to perform in order to exercise control over his
subordinates. Proper controlling measures are often
found to be helpful in improving the effectiveness of the
other functions of the management.
 Various controlling features

i. Forward looking

ii. Exits at all levels

iii. Continuous activity

iv. Positive purpose

 Forward looking

Controlling is a forward-looking process because all of its

efforts dictate future courses of action. Managers often use
experiences from the past to make corrections for the future.
 Exists at all levels
The process of controlling is all-pervasive. In other words,
managers at all levels of management hierarchies have to use
controlling. The nature of controlling measures that managers
use might differ but they all have to use them.

For example, top-level managers use controlling for making

policies and setting organizational goals. On the other hand,
middle and lower level managers use controlling for
effectively carrying out the organization’s activities.
 Continuous activity

Controlling is not a one-off activity that managers have to

perform once in a while. It is generally a continuous process
that goes on permanently in different ways. Managers have to
constantly compare their actual results with their targets and
make changes accordingly.
 Positive purpose

The objective of control is to create positive impacts at both

organizational and individual levels. At the organizational
level, it aims to fulfill the organization’s goals. At an
individual level, control strives to increase productivity and
make individuals benefit as well. Hence, control has a largely
positive purpose in every way.
 Importance of Controlling
within an organization

• Decentralization of authority
• Increasing managerial abilities
• Using resources effectively
• Facilitating coordination
• Structuring human behavior
• Achieving efficiency and effectiveness
 Decentralization of authority

Since managers at every level of an organization have to

exercise control, the controlling process leads to
decentralization. This, in turn, enables middle and lower level
managers to have some autonomy in making decisions. An
organization that distributes authority at every level always
works smoothly and efficiently.
 Increasing managerial abilities

By enabling all managers to possess the autonomy to make

decisions, controlling enhances their managerial abilities.
With these skills, managers can further their organization’s
goals by adapting to diverse situations and problems.
Furthermore, this also helps managers grow and develop at an
individual level by giving them new experiences.
 Using resources effectively

The most important function of controlling is to compare

actual performances with expected results. This, in turn, helps
managers understand where they are lacking and how they
can improve their performances. Using this knowledge,
managers can use all available resources optimally and
prevent their wastage.
 Facilitating coordination

In every business organization, managers and

employees always have to coordinate and work with
each other collectively. Controlling improves this
coordination by basically demarcating all activities and
efforts into fixed boundaries. It brings together all the
resources of an organization and enables its personnel
to work together with unified efforts.
 Structuring human behavior
Since all organizations have to depend on humans for
functioning, they need to regulate human behaviour of
their employees. Controlling rationalizes this human
behavior and prevents employees from behaving
arbitrarily and badly. It basically does so by providing
for sanctions in case employees do not prescribe to
expected standards of behavior. For example,
managers often take disciplinary action against
employees who take unauthorized leaves.
 Achieving efficiency and
effectiveness
A good control system can always greatly boost an
organization’s efficiency and effectiveness. It generally
does this by identifying deficiencies in an organization’s
functioning and suggesting improvement measures.
Managers use control to achieve their targets in this
manner.
 Main purpose of monitoring

• Analyzing the situation in the community and its project;

• Determining whether the inputs in the project are well
utilized;
• Identifying problems facing the community or project and
finding solutions;
• Ensuring all activities are carried out properly by the right
people and in time;