How to Evaluate Achievement
Evaluating achievement means checking how far a business has reached what it planned. Measurable objectives make this evaluation easier, because actual results can be compared directly with the targets.
Indicators Used
- Financial indicators: Comparing actual sales, net profit or costs against the target, for example a profit target of RM100,000 against actual profit.
- Non-financial indicators: Customer satisfaction, market share, number of new customers or product quality.
- Key Performance Indicators (KPIs): Specific measures such as the percentage of on-time deliveries.
Steps in Evaluation
- Gather actual performance data over the objective period.
- Compare it against the set target.
- Identify the gap between the target and actual achievement.
- Take corrective action if the objective is not met.
Example
Chosen business: a restaurant. The set objectives are RM120,000 net profit a year and a 90% customer-satisfaction score. At year-end, actual profit is RM126,000 (above target) but customer satisfaction is only 82% (below target). The conclusion is that the financial objective is met but the satisfaction objective is not, so corrective action such as staff training is needed.
Remember
Achieving the mission and vision is ongoing and hard to measure with a single figure; it is judged through the achievement of a series of objectives over time.
Why Evaluation Matters
Evaluation lets a company identify strengths and weaknesses, reward success and improve weak areas. Without evaluation, a company would not know whether it is truly moving closer to its vision.
Periodic Review and Benchmarking
Evaluation is best carried out periodically through meetings and performance reports, not only at year-end. A company can also compare its achievement against industry benchmarks or competitors' performance to judge its position more fairly. The feedback from these evaluations is then used to improve objectives in the next cycle.