The defects of traditional evaluation methods of enterprise performance evaluation system

Defects of traditional corporate performance evaluation methods:

1, DuPont financial analysis system

DuPont financial analysis system is a kind of factor analysis method, once introduced to the world, for the general, Panasonic and many other large-scale enterprises competing to adopt, and in the next few decades to become a commonly used corporate performance evaluation system. However, the DuPont analysis system on finance on finance, corporate performance evaluation and assessment did not go deep into the process of business management, can not comprehensively and dynamically reflect the process of the problem, and can not be integrated with the strategic objectives of the enterprise and the strategic management tools to achieve organic integration. In addition, due to the limitations of the era in which it was created, the DuPont system is a kind of analysis and evaluation system that emphasizes internal management and ignores the external market.

2. Balanced Scorecard

The Balanced Scorecard is called the most important management accounting innovation in the 1990s, and it is an alternative index system designed to address the shortcomings of the DuPont system. It includes financial metrics that indicate the results of past actions, while supplementing financial metrics with business metrics reflecting the drivers of future financial performance in terms of customer satisfaction, internal operations, and innovation and learning in the organization, while measuring the performance of the enterprise from multiple perspectives.

The Balanced Scorecard is a strategic management system first, and a performance evaluation system second. Performance evaluation is based on strategic management and day-to-day management, so if an enterprise's management level has not yet reached this requirement, it cannot use this method. In addition, its evaluation system does not pay enough attention to stakeholders other than shareholders, employees and customers.

3. State-owned Capital Fund Performance Evaluation System

China's "Rules for Evaluating the Performance of State-owned Capital Funds" and "Operational Rules for Evaluating the Performance of Enterprise Capital Funds" are a set of state-owned capital fund performance evaluation system that is relatively more perfect than the previous one, and for the first time, the non-financial indexes of the enterprise's four aspects of the enterprise's overall quality, internal control, public image, and future potential have been incorporated into the performance evaluation system, and the The performance assessment indicator system for industrial and commercial competitive enterprises is divided into three levels, and also adopts a comprehensive scoring method for the indicators. The introduction and implementation of the system marked the initial establishment of a new type of enterprise performance assessment system and evaluation system in China. However, the system also fails to include the enterprise's stakeholders other than employees and customers in the performance appraisal.

4. EVA Economic Value Added (EVA)

EVA overcomes the above shortcomings of the traditional indicators, and more accurately reflects the value created by the enterprise for its shareholders within a certain period of time. The purpose of the whole EVA system is to focus on the value-driven force and the cost of capital, to determine the basis for the issuance of incentive compensation and to reach a good communication within the enterprise as well as with the investor; applying the EVA is not only in line with the long-term development of the enterprise, but also in line with the long-term development of the enterprise and its stakeholders. EVA is not only in line with the interests of long-term development of enterprises, but also in line with the requirements of the knowledge-based economy.

But EVA, by its nature, is still a comprehensive evaluation index of financial performance, and the performance evaluation system centered on it has the following shortcomings:

(1) it can only reflect the results of the total factor production process, which is too comprehensive and is not conducive to guiding the specific management behaviors;

(2) it focuses on the financial strategy and ignores the evaluation of the strategic process, which is easy to weaken the enterprise's ability to create long-term wealth;

(3) poorly targeted, unable to point out specific non-financial performance drivers and the direction of problem solving;

(4) does not adequately take into account the use of related intangibles and intellectual capital and its performance evaluation.

Two, the connotation of performance budget management

Performance budget management is an important part of the enterprise's overall budget management, enterprise performance budget is a goal-oriented, project cost as a measure of performance evaluation as the core of a budget system, is the increase in the allocation of resources is closely integrated with the performance of the performance improvement of the budget system. The purpose of performance management is to achieve results and efficiency, in performance budget management, the enterprise as a member of the entire social and economic operating system, not only to achieve economic benefits, but also to achieve social benefits in order to fulfill its social mission.

Three, based on the performance of the performance budget management of the enterprise dynamic performance evaluation index system design

The enterprise comprehensive budget management system through the multi-dimensional dynamic based on the design of the enterprise performance evaluation index system, so that the enterprise budgeting and monitoring is established on the basis of dynamic multi-perspective analysis, to make up for the long term on the performance of the enterprise is mainly used in the traditional financial evaluation method of the shortcomings of the enterprise performance evaluation system as a reflection of the performance of the enterprise as a system of evaluation of the performance of the enterprise as a reflection of the social mission. The enterprise performance evaluation system, as a static management behavior reflecting the historical operation status of the enterprise and focusing on ex-post facto, is expanded into a dynamic management behavior adapting to the changes in the enterprise's operation environment, combining financial and non-financial indicators, quantitative indicators and qualitative indicators to promote the enterprise value appreciation and improve the preservation and enhancement of the value of the state-owned capital, and to establish a multi-perspective dynamic performance evaluation system for the social benefits and ecological benefits in addition to the evaluation of the financial indicators. It has established a dynamic performance evaluation system with multiple perspectives in addition to the evaluation of financial indicators.

(I) Economic Benefit Evaluation Indicators

Enterprise performance is multidimensional, and the indicators for evaluating economic benefits can be both financial and non-financial. The economic efficiency evaluation index is the most widely used index, because the long-term goal of the enterprise is almost always purely economic efficiency, economic efficiency evaluation index is directly connected with the enterprise's financial objectives and has the function of comprehensively reflecting the performance of the enterprise. Under the enterprise performance budget management, in order to effectively reflect the comprehensive performance of the enterprise, so that the enterprise's various interests in the enterprise's operating conditions from their own point of view to evaluate the business performance of the enterprise, the economic efficiency indicators from the financial and non-financial aspects of the enterprise's performance.

1, financial indicators: including profitability, solvency, asset management capacity, growth capacity, equity expansion capacity and main business distinctive conditions. The first four of them are the same as those evaluated by China's current enterprise performance evaluation system, and the last two are considered according to the characteristics of listed enterprises.

2. Non-financial indicators: mainly from the innovation ability, R & D expenditure rate, new product sales rate, new product development rate, market share, customer satisfaction and contract delivery rate to reflect the business performance of enterprises.

(II) Social Benefit Evaluation Indicators

The examination of a company's social benefit is mainly carried out from four aspects, namely, economic responsibility, legal responsibility, ethical responsibility and other responsibilities, such as whether it conducts production and operation legally, whether it leads to serious pollution, whether it treats ethnic minority employees correctly, whether it handles social relations appropriately, and whether it correctly handles customers' problems, and so on. This will not only enable the company to be clear about where its social performance stands among its peers and to know which stakeholders the company's resources should be focused on allocating to, but will also facilitate communication between the company's managers and its stakeholders.

Under performance-based budgeting management, enterprises and departments within them should not only aim at accomplishing or exceeding economic budget targets, but also evaluate the performance of enterprises from the perspective of whether they have undertaken their social responsibilities with due diligence and other perspectives. Indicators for evaluating corporate social responsibility such as the rate of major accidents, safety productivity, leakage rate, rate of payment of employee compensation costs, rate of social accumulation, rate of compliance with emission standards and environmental protection status reflect comprehensive performance.

Total cost management and control is of great significance to the enhancement of enterprise value. It is not only the fundamental way to increase profitability, but also the main guarantee for enterprises to resist internal and external pressure and survive, and the basis for enterprise development.