A feature of assessing the effectiveness of social evaluation of corporate performance is the low level of manufacturability of management in this area.
What Are the Instruments to Evaluate Corporate Performance?
Corporate performance is understood by different economists and scientists: efficiency, the intensity of the system’s functioning, the degree of achievement of the goal, the evaluation of corporate performance, the level of organization of the system, the level of efficiency in comparison with production costs, etc. its presentation in terms and indicators.
The main tools to evaluate business performance are:
- Management by objectives (MBO).
- Reward and recognition programs.
- Personal development plans (PDP).
- Performance management frameworks.
- Key performance indicators (KPIs) and metrics.
- Performance appraisals.
- 360-degree feedback.
- Where to go from here.
Those tools evaluate the conformity of the structure; the company’s corporate governance model is “shareholder democracy” as opposed to “tyranny of the majority shareholder” or “dictatorship of the CEO”. Independent directors and minority shareholders on the board of directors are the main counterbalances to the influence of management and/or large shareholders. Virtually all international companies with high corporate governance standards have a significant number of active independent directors on the board, effectively protecting the decision-making process from monopolization and abuse by various interest groups.
Instruments to the evaluation of corporate performance are distinguished by a variety of forms, as they reflect the versatility, the complexity of the interaction of objective and subjective factors that interact in production systems. Corporate governance is a kind of system of leadership and control over the activities of companies. The number of voting rights granted to each shareholder and the cumulative influence of minority shareholders on voting results in a company also contribute to the overall system of checks and balances. Outside directors have a clearer vision of their role on the board and greater independence if their appointment reflects a mandate of trust on the part of a significant number of shareholders, rather than the goodwill of a major owner or management.
GIST Corporate Governance Diagnostic, Evaluation and Assessment Tools to Evaluate Business Performance
GIST is a methodology for in-depth risk-based corporate governance analysis. This methodology seeks to assess the corporate governance standards of an individual company in terms of its potential role in creating value in the long term.
Based on recommendations from the evaluation of corporate performance, the GIST tool assesses the overall performance of corporate governance practices based on an analysis of five elements, identifying opportunities for improvement in each of them. The GIST is designed to ensure that its criteria are applicable and that assessment results are comparable across any country’s infrastructure. In particular, GIST summarizes the significant experience in emerging markets and takes into account the specific risks inherent in emerging markets.
In assessing this component, the strategic benchmarks, as well as the policies and structures of the company, are analyzed in terms of their focus on creating value in the long term. Most investors and other external stakeholders value companies’ ability to create value in a sustainable manner, and this approach has become especially prevalent in the wake of the global financial crisis. Analysis of strategic planning practices, company communication of corporate culture and values, risk management procedures, remuneration systems for directors and management, allows us to assess the extent to which the company meets these expectations. In addition to the overall effectiveness of these processes and structures, they focus on the long term, institutionalizing ethical principles in the company.