Academic journal article Business: Theory and Practice

Nonfinancial Performance Evaluation as Significant Area of Strategic Business Management

Academic journal article Business: Theory and Practice

Nonfinancial Performance Evaluation as Significant Area of Strategic Business Management

Article excerpt

Abstract. The main aim of this paper is to provide the answer to the questions: Which areas of the company play an important role in the evaluation of the performance? Which areas are considered to be important? Due to the fact that the business environment is constantly changing, changes also occur in the trends relating to performance. Traditional financial performance measures have been highly criticized and the need identified to integrate non-financial perspectives, such as the level of innovation, degree of motivation, intellectual capital, and other criteria. Intellectual capital is often a crucial factor in the creation of value in a company. Based on the research, employees and customers are one of the most important areas in the companies from the selected area. At the same time, dependence among these company's areas and company's profit has been identified. Furthermore, it has been found whether the introduction of social responsibility into business strategy affects responsible behaviour just in the working environment (as this is geared specifically to employment area). Thus, as regards business strategy and support to work environment, in this case no relationship has been indicated, therefore it is not possible to say that if companies apply social responsibility strategy, they support mainly the working environment.

Keywords: performance, business management, competitiveness, intellectual capital; information and communication activities.

JEL Classification: L21, L25, M21.

Introduction

Corporate performance--a concept that very often occurs in the context of various analyses of the enterprise. Why do we hear so often about performance? The performance of the economy indicates the ability of the drive to achieve specific results, comparable on the basis of certain criteria, with the results of other units. In addition, the performance is considered to be the ability to achieve such results after a certain period of time. One of the fundamental problems of the company performance is how to measure the performance, as for different target groups around the company the performance has a different meaning. For this reason, the relevant procedures have been developed as well as the methods measuring the individual ratios and relationships (Kislingerova 2009, Milichovsky 2015). Other authors have reported that the performance management is a continuous process of identifying, measuring, and developing individuals or teams, and of aligning that performance with the strategic goals of an organization (Aguinis 2009, Cascio and Aguinis 2011). Currently, there is a lot of competition in most sectors and businesses are in more and more difficult situation to resist the pressures of these competitors. It is, therefore, necessary to devote more effort to the search for options how to collect better information about customer needs, how to increase the efficiency of business processes and improve their situation.

Measuring and managing business performance is a relatively complex and difficult process. It is possible to undergoing significant changes both in practice and in research. Despite the ongoing effort to improve the methodology used, it seems that the traditional business performance management based primarily on financial management has reached its limits and in recent years we have seen the development of new non-traditional indicators, methods and models based primarily on non-financial methods, in particular on strategic and other qualitative indicators. The current dynamic business environment makes it essential to understand the importance of one of the company's most valuable and volatile intangible assets--it is knowledge. Knowledge is sometimes considered a fifth factor of production in the current economy and its generation plays a critical role in the firm's competitive advantage and its economic performance. Organizations attempt to use knowledge in order to strengthen their competitiveness for both customers and employees (Singh and Samalia 2014, Rajnoha et al. …

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