Prepare performance reports for investment centers using the traditional measures of return on investment and residual

LO 4 Prepare performance reports for investment centers using the traditional measures of return on investment and residual

Managers use multiple

income and the newer measure of economic value added.

DECISION POINT 씰 A MANAGER’S FOCUS

씰 How do managers at Vail Resorts

VAIL RESORTS link performance measures and

set performance targets to achieve performance objectives?

Vail Resorts includes five vacation spots: Vail, Breckenridge, Key- 씰 How do they use the PEAKS stone, Heavenly, and Beaver Creek. To help guests enjoy all the

system and its integrated activities that these places offer, Vail Resorts instituted its PEAKS

database to improve performance management and

system. PEAKS is an all-in-one card that guests at the five resort evaluation? areas can use to pay for lift tickets, skiing and snowboarding les-

sons, equipment rentals, dining, and more. Guests like the PEAKS system’s convenience and its program for earning points toward free or reduced-rate lift tickets, dining, and lodging. After enrolling, members receive a picture identification card with radio frequency technology that is scanned each time they ride the ski lifts, attend ski school, or charge purchases, meals, or lodging. 1

Managers at Vail Resorts like the PEAKS system because it enables them to collect huge amounts of information—both financial and nonfinancial—in a simple way and because the data have so many uses. New data are entered in the system each time a guest’s card is scanned. Those data then become part of an integrated management information system that managers use to measure and evaluate the performance of their resorts in many ways.

CHAPTER 22 Performance Management and Evaluation

Performance

A performance management and evaluation system is a set of procedures

Measurement

that account for and report on both financial and nonfinancial performance so that a company can identify how well it is doing, where it is going, and what

LO 1 Define a performance

improvements will make it more profitable.

management and evaluation

What to Measure, How to Measure

system, and describe how the balanced scorecard aligns

Performance measurement is the use of quantitative tools to gauge an organiza- performance with organizational tion’s performance in relation to a specific goal or an expected outcome. For per- goals.

formance measurement to succeed, managers must be able to distinguish between what is being measured and the actual measures used to monitor performance. For instance, product or service quality is not a performance measure. It is part of a i

m management strategy: Management wants to produce the highest-quality prod- What a manager measures

Study Note

u uct or service possible, given the resources available. Product or service quality for example, quality—is not

thus is what management wants to measure. t

the same as the actual measures To measure product or service quality, managers must collaborate with other used to monitor performance—

m managers to develop a group of measures, such as the balanced scorecard, that for example, the number of

will identify changes in product or service quality and help employees determine w defective units per hour.

w what needs to be done to improve quality.