External Considerations and Behavioral Aspects

External considerations in performance management can have an impact on how the organization performs and the steps to be taken to improve performance.

Stakeholders can have an interest and can be impacted by the organization’s activities. Examples of stakeholders are customers, competitors, employees, suppliers, lenders and the community.

Market conditions can impact performance and include “factors as economic growth, inflation, interest rates, exchange rates, government fiscal policy.”

The allowance for competitors includes monitoring “competitors” prices and cost structures” and features that add value and could lead to increased market share.

Performance measures should ensure that stakeholder needs are met, there are plans in place to deal with changes in the market and provide a basis for comparisons with competitors.

Performance measures vary for each of the external considerations. Examples are:

• Employees: Motivation, morale
• Management: Salaries, profit sharing
• Shareholders: Price of shares, dividend yield, earnings per share
• Customer: Price, quality, service, value for money
• Government: Taxation, inflation, exports, employment
• Community: Environmental impact, employment, social needs