Comparative analysis of company performance evaluation methods

Abstract

The evaluation of a company's performance is an integral part of the management of every company, which allows determining the impact of business management decisions on the performance results, as well as the direction of the results and the decisions that need to be made to improve them. Traditionally, a company's performance is evaluated on the basis of an analysis of financial performance indicators, but it is noted that in today's dynamic business environment the timely control of the performance is crucial, thus, there is an increasing attention on non-financial performance indicators. The aim of the article is to investigate and compare the modern methods for company performance evaluation that are based on the analysis of financial and non-financial performance indicators. The research is carried out using systematic analysis of scientific literature, comparison, and aggregation methods. First of all, the article unfolds the essence of the concept of the company performance evaluation and highlights the differences between traditional and modern performance evaluation systems. Moreover, the advantages of non-financial performance indicators are compared with financial indicators. Furthermore, a classification scheme for performance evaluation methods is provided; by identifying their main advantages and disadvantages the most popular and widely used modern performance evaluation methods are overviewed: economic value added method, balanced scorecard, performance prism, performance pyramid, six-sigma model and multi-criteria company performance evaluation method. Finally, according to certain criteria, a comparative analysis of the latter methods is performed. The comparative analysis confirms that non-financial performance indicators complement financial indicators; therefore, in the process of a company's performance evaluation, modern performance evaluation methods, combining financial and non-financial performance indicators and allowing the performance to be evaluated both quantitatively and qualitatively, should be used. However, there is no single method that would be appropriate for all companies, so further work can be targeted at establishing a multi-criteria performance evaluation method that would satisfy the needs of a particular business' activity and targets for evaluation.

Management by Indicators and Financial Performance of Industrial Companies in Jordan

“…In conclusion and based on the findings of this research, the application of the proposed management approach leads to improvements in performance results. The research results are supported in literature (Badawy et al, 2016;Rodrigues et al, 2017;Kaganskia et al, 2017;Narkunienė and Ulbinaitė, 2018;Thollander, 2019;Asih et al, 2020;Gruzina and Poliukhovych, 2020).…”

“…This study proposes a management approach that can be adopted by both private and public sectors. The proposed approach of management by indicators revolved around the following sequential steps (Meier et al, 2013;Badawy et al, 2016;Dumitrache et al, 2016;Rodrigues et al, 2017;Kaganskia et al, 2017;Narkunienė and Ulbinaitė, 2018;Thollander, 2019;Asih et al, 2020;Gruzina and Poliukhovych, 2020):…”

“…They also mentioned that monitoring the KPIs identifies progress toward sales, marketing and customer service goals. Narkunienė and Ulbinaitė (2018) recommended to use modern performance evaluation methods combining financial and non-financial performance indicators and to evaluate the performance both quantitatively and qualitatively. Andersson and Thollander (2019) indicated that adopting key performance indicators KPIs within Swedish pulp and paper mills enables a state-of-the-art positioning of best practices in relation to energy KPIs in pulp and paper mills.…”

A Credibilistic Mean-Semivariance-Per Portfolio Selection Model for Latin America

“…Such research lines include the use of other selection criteria. In fact, the research context could be expanded in order to include other criteria considered by contemporary investors, who also care about companies' performance evaluation issues, especially after losses caused by the financial crisis (Ahmed, Ali, Ejaz, & Ahmad, 2018;Narkunienė & Ulbinaitė, 2018;Zemguliene & Valukonis, 2018).…”

Multiobjective Approach to Portfolio Optimization in the Light of the Credibility Theory

“…One option is to cherry pick the companies they want to invest in. In this case, they can individually select the companies performing fundamental analysis (Hilkevics & Semakina, 2019;Narkunienė & Ulbinaitė, 2018) and controlling for the proper diversification (Ahmed et al, 2018;Arribas et al, 2019) or apply technical analysis (García et al, 2018b). Another option is to directly manage a portfolio of companies.…”