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What is a performance evaluation system?

Short Answer

Expert verified

A performance evaluation system is systematic performance evaluation of an employees’ job.

Step by step solution

01

Meaning of performance evaluation system

The performance assessment system provides a foundation for retaining control over the entire business for senior management.

02

Explaining the performance evaluation system

Evaluating an employee's execution includes looking at how well they are carrying out their obligations and progressing corporate objectives. To assess execution legitimately, a manager must be mindful of the exact necessities for a position, keep an eye on the employee's activities and yield, compare them to the requirements, and evaluate how closely the watched conduct and yield fit the requirements.

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Most popular questions from this chapter

Refer to the information in Short Exercise S24-7.

Requirements

1. Compute each division’s asset turnover ratio (round to two decimal places). Interpret your results.

2. Use your answers to Requirement 1, along with the profit margin ratio, to recalculate ROI using the expanded formula. Do your answers agree with the basic ROI in Short Exercise S24-7?

List the advantages of decentralization.

What is a key performance indicator?

What is goal congruence?

One subunit of Racer Sports Company had the following financial results last month:

Subunit X Actual Results Flexible Budget Flexible Budget % Variance

Variance (F or U) (F or U)

Net Sales

Revenue \( 476,000 \) 451,000

Variable

Expenses 261,000 251,000

Contribution

Margin 215,000 200,000

Traceable

Fixed Expenses 40,000 26,000

Divisional

Segment Margin \( 175,000 \) 174,000

Requirements

1. Complete the performance evaluation report for this subunit (round to two decimal places).

2. Based on the data presented and your knowledge of the company, what type of responsibility center is this subunit?

3. Which items should be investigated if part of management’s decision criteria is to investigate all variances equal to or exceeding \(8,000 andexceeding 10% (both criteria must be met)?

4. Should only unfavorable variances be investigated? Explain.

5. Is it possible that the variances are due to a higher-than-expected sales volume? Explain.

6. Will management place equal weight on each of the variances exceeding \)8,000? Explain.

7. Which balanced scorecard perspective is being addressed through this performance report? In your opinion, is this performance report a lead or a lag indicator? Explain.

8. List one key performance indicator for the three other balanced scorecard perspectives. Make sure to indicate which perspective is being addressed by the indicators you list.

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