What are the problems in traditional performance evaluation based on financial indicators?

The single traditional enterprise performance evaluation system has completely failed to meet the needs of enterprise management and development, as shown in the following points.

1, short-term unsustainable

Paying attention to the short-term operating results of enterprises in the evaluation process of financial index evaluation system is easy to make enterprise managers have quick success and short-term behavior, which makes enterprises unwilling to invest in behaviors that ostensibly reduce short-term profits but improve long-term sustainable operation ability, and finally leads enterprises to pay attention to short-term operating results and ignore the creation of long-term value.

2, physical and tangible

The traditional financial index evaluation system pays too much attention to the evaluation of physical value, and cannot evaluate those useful intangible assets whose future value will increase. In the current enterprise management process, the modern accounting system strictly regulates the confirmation and measurement of intangible assets of enterprises, which makes those intangible assets that can increase the future value of enterprises unable to be reflected in the financial reports of enterprises. This traditional performance evaluation system based on financial index system is difficult to meet the needs of sustainable operation and long-term development of enterprises.

3. Results rather than foresight

The traditional financial index evaluation system is only based on the evaluation of past business performance, which is difficult to adapt to the increasingly competitive business decisions of enterprises in the information age. Facing the fierce market competition, modern enterprises must also invest in marketing personnel, customers, technology, technology, employers, innovation and so on. , so as to realize the process of enterprise value-added.

4. One-sided rather than comprehensive

The traditional evaluation system only pays attention to the quantitative monetization results of operating performance, but ignores the non-monetization qualitative evaluation of some important non-financial indicators. Modern enterprises must evaluate some non-financial indicators such as creativity, employee satisfaction, customer satisfaction and market share, so as to realize long-term value creation and long-term sustainable development of enterprises.

5. Booster of accounting information distortion.

At present, there are a lot of accounting fraud and accounting distortion problems in our society. Although it is not directly related to the simple financial index evaluation system, the traditional enterprise performance evaluation mainly adopts a relatively single financial index evaluation system, which undoubtedly plays a guiding role in the business behavior of enterprises, making many behaviors rely too much on financial indicators, so that the operators of enterprises can achieve their goals by making false accounts. Therefore, the traditional financial model of enterprise performance evaluation has really contributed to the emergence and development of social accounting fraud and accounting distortion.