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Translation of "efficiency, including financial efficiency, in" in English
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He added that small States should seek to streamline processes at the United Nations in order to improve efficiency, including through reform of the Security Council.
He added that small States should work to ensure better streamlining of United Nations processes to improve the Organization"s efficiency, including through reform of the Security Council.
Efficiency, including through reform of the Security Council.">
The possibility of increasing efficiency, including through a global field support strategy and inter-mission cooperation mechanisms.
Efficiency will continue to be explored , including through the global field support strategy and inter-mission cooperation arrangements.">
The working group discussed the usefulness of such activities, as well as ways to improve them efficiency, including procedures for selecting candidates for international expert groups.
The Working Party discussed the usefulness of such activities, and ways to make them more effective, including procedures for selecting candidates for the international expert teams.
More effective, including procedures for selecting candidates for the international expert teams.">
Headquarters and country offices have proposed measures to improve efficiency, including to streamline the programming process and administrative and financial management systems.
Efficiency measures , involving streamlined programming and administrative and financial management.">
The impact of budget cuts on program delivery will be offset by the implementation of five projects in the Office to improve efficiency, including simplification of protocol procedures and accreditation procedures for non-governmental organizations.
The impact of budget reductions on program delivery will be compensated for by the results of five efficiency projects in the Office , including the streamlining of protocol procedures; and procedures for accreditation of non-governmental organizations.
Efficiency projects in the Office , including the streamlining of protocol procedures; and procedures for accreditation of non-governmental organizations.">
She also noted that UNFPA recognizes the need to ensure efficiency, including as far as travel is concerned.
Efficiencies, including as regards travel.">
Cost reduction and increase efficiency, including through the use of premises and services of regional service centers;
To reduce costs and improve efficiency, including by drawing on the facilities and services of Regional Service Centers
Efficiency, including by drawing on the facilities and services of Regional Service Centers">
A) there are appropriate opportunities for advancement efficiency, including cost-effectiveness, activities to prevent major industrial accidents;
Effectiveness, including cost-effectiveness, for major accident prevention;">
A number of measures have been identified to improve efficiency, including several measures taken since the previous workshop.
Efficiency measures were identified , including several that had been carried out since the previous workshop.">
A) if necessary, energy market reforms aimed at increasing efficiency, including through increased competition;
Efficiency including by increasing competition;">
These efforts must be carefully analyzed to better understand their effectiveness and efficiency, including where they are part of a comprehensive approach to addressing violence against women.
These efforts should be rigorously evaluated to gain a better understanding of their impact and effectiveness, including when they form part of a comprehensive approach to addressing violence against women.
Effectiveness, including when they form part of a comprehensive approach to addressing violence against women.">
Several representatives said that only a legally binding instrument could achieve the significant reductions in mercury emissions required and that concerted action among States was needed to achieve efficiency, including in relation to trade-related measures.
Several representatives said that only a legally binding instrument would deliver the substantial reduction in mercury emissions that was required and that harmonization between States was necessary for effectiveness, including on trade-related measures.
Effectiveness, including on trade-related measures.">
Countries undertake benchmarking to improve the quality of services, strengthen accountability and improve overall efficiency, including state-owned enterprises and public-private partnerships.
Countries had turned to benchmarking to improve service quality, enhance accountability and improve overall efficiency, including State-owned enterprises and public - private partnerships.
Efficiency, including State-owned enterprises and public - private partnerships.">
The Committee recommends that the General Assembly request the Secretary-General to seek and provide more complete information on reported savings from increased efficiency, including about the initial capital investment and the overall costs and benefits observed in missions as a result of the implementation of these measures.
The Committee recommends that the General Assembly request the Secretary-General to seek more comprehensive information concerning reported efficiency gains , including the initial capital investment and the overall costs and benefits accruing to missions as a result of the implementation of these measures.
Efficiency gains , including the initial capital investment and the overall costs and benefits accruing to missions as a result of the implementation of these measures.">
E) opportunities for increasing efficiency, including through new ways to attract external partners to participate.
Opportunities for efficiency, gains including through innovative ways to mobilize engagement by external partners, will be investigated.
Efficiency gains, including through innovative ways to mobilize engagement by external partners, will be investigated.">
In addition, initiatives have been taken to ensure that the Mission is managed with maximum economy and efficiency, including based on the use of a number of services provided from outside.
In addition, initiatives had been taken to ensure that the Mission was managed with a maximum of economy and efficiency, including the outsourcing of a number of services.
Efficiency, including the outsourcing of a number of services.">
The Secretary-General recognizes that the main objective of procurement reform is to improve efficiency, including financial efficiency, procurement activities.
Effectiveness, including by means of non-military response, mechanisms of public diplomacy and peacekeeping, and international military cooperation.">
In an effort to strengthen the country's system of checks and balances, UNDP continued to support the Office of the President to enhance its efficiency, including by developing processes to optimize the way it conducts its affairs and enhance its coordination and communication capabilities.
With the aim of strengthening the country's system of checks and balances, UNDP continued to provide support to the Office of the President to increase it effectiveness, including through the development of processes to improve its agenda management and coordination and communications capacities.
Effectiveness, including through the development of processes to improve its agenda management and coordination and communications capacities.">
Post-conflict government must build a foundation of state capacity that will help restore its legitimacy and efficiency, including capacity to provide basic services and ensure a minimum level of public safety, strengthen the rule of law and protect and promote human rights.
The post-conflict government needs to build core State capacities that will help to restore its authority and effectiveness, including the capacity to provide basic services and essential public safety, to strengthen the rule of law, and to protect and promote human rights.
Effectiveness, including the capacity to provide basic services and essential public safety, to strengthen the rule of law, and to protect and promote human rights.">
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In my previous article, I wanted to answer the question: how to quantify the magnitude of efficiency? The discussion showed that the presented material raised more new questions than it answered. It turned out, for example, that at this stage the reader does not need efficiency formula, but rather we need an answer to the question: “What is the effectiveness formula for?” and “What is the essence of efficiency?”
Do I understand that by raising such a serious topic, I risk falling under an incomparably more powerful stream of criticism? Of course there is. But, after all, researchers of the problem of searching for a conceptual and quantitative definition business efficiency, based on the use of classical models and methods, have not answered the question: “What is efficiency?”
How can this publication help management professionals? First of all, understanding the limitations that are imposed on the task associated with determining efficiency, the use of the manager’s tools that are traditionally used when trying to find an acceptable answer to these questions. After all, the conviction that you are really choosing the most profitable investment option cannot be based on the thesis: if a known technique is widely used, it a priori gives reliable results.
Who needs certainty with the concept of “effectiveness”? Certainty is necessary for those who want to achieve maximum rates of business development. If there is no such need, then you need to turn to the topic of saving resources.
1. What are the limits to profitability?
To understand the essence of efficiency, it is best to consider the features of its manifestation using specific examples. Obviously, efficiency is a relative indicator. To see this, consider two types of simple business transactions (Figure 1). Here I is investment; D – income; T – operation time.
Figure 1
It is easy to see that these operations are equivalent in terms of efficiency. Indeed, if we want to invest two monetary units, then the result of their investment in two operations of the first type will be indistinguishable from investing the same investment into one operation of the second type (Figure 2).
Figure 2
- Conclusion 1. If the duration of two simple operations is equal (T 1 = T 2) and their profitability is equal (R 1 = R 2), the efficiency of the studied operations O 1 and O 2 is equivalent, since for operation O 1 with less investment it is always possible to create a paired operation O 1.2 with additional investments O 1.2 = O 2 -O 1, and the result of paired operations will ensure an equal total profit in relation to the O 2 operation.
This fact, and the fact that the profitability indicator, in this case, gives the correct answer to the question related to the assessment of efficiency, based on the basic parameters of each type of operation, is taken by many as proof that profitability is synonymous with efficiency. That this is not the case is shown by a study of two types of operations with different durations (Figure 3).
Figure 3
Thus, each of the operations of the second type is more effective than the operation of the first type, although its profitability is two times lower. Why? Investing in the second type of operation allows you to return it at time t 1 with a profit of one unit and re-invest the received investment in an operation with the same parameters. At time t 2, return the investment again with a profit of one unit.
The total profit from investing in operations of the first type by time t 2 will be two units. The same profit will be received by time t 2 from operations of the second type.
Despite the fact that investments and direct income from processes built on operations of the first and second types are equal, in terms of efficiency these operations are not equivalent. This is due to the fact that the profit from the second type of operation, received at time t 1, can immediately be invested in a new operation or project.
Since, by time t 2, the newly created operation with “parent” profitability will bring additional profit to the investor, the operation of the second type is more effective than the operation of the first type. The duration of the "subsidiary" operation will be determined by the level of demand for its consumer product. In case of low demand and the need to “fit” into a given time interval, new investments can be divided into a number of smaller ones in volume.
- Conclusion 2. Of the two types of simple operations with equal investments (costs) and multiple operation times, the operation with less time is more effective if at the time of the simultaneous completion of processes built on these types of operations, their procedural profit is the same.
After analyzing the second example, the complexity of the problem that the performance indicator “should solve” becomes clear. In particular, he must indicate that the operation of the second type (Figure 3) is more effective than the operation of the first type, taking into account the time of these operations, their profitability and the effect of investing their own profits.
The concepts of “efficiency” and “effective use of resources” within the framework of this work are synonymous. In turn, in order to define the concept of “efficient use of resources”, as well as to conduct a substantive conversation in the future, it is necessary to create a basic terminological foundation. To obtain general conclusions, this terminological base will have a cybernetic orientation.
2. System of symbols and target model of operation
Let us agree to denote the input products of the operation by the basic symbols R1, R2, R3..., and the output products of the operation by the basic symbols P1, P2, P3... (Figure 4).
Figure 4
In cases where we are talking about the quantitative expression of a product, we will add the symbol Q to the symbol R or P. Then we obtain the following notation system in the operation model for the quantitative designation of the quantities of products RQ 1, RQ 2, RQ 3 ... and PQ 1, PQ 2, PQ 3... (Figure 5).
Figure 5
For each significant product of the operation, an expert estimate of the unit of product (unit cost of the product) must be obtained. To indicate the value of a unit of a product, we will append the symbol s to its basic designation in lowercase characters. In this case, the expert assessment of a unit of input product will be denoted for the first product by rs1, and for the first output product by ps 1.
The symbols rs 1 and ps 1 are lowercase because the expert assessment is a parameter that, in general, changes over time and cannot be integrated (just like, for example, temperature).
We will denote the expert assessment of the total investment volume by attaching the symbol E to the basic symbols of input and output products. Now, using the accepted notation system, we can determine the expert assessment of the first input and first output product as RE 1 =rs 1 *RQ 1 and PE 1 =ps 1 *PQ 1 (Figure 6).
Figure 6
It is somewhat more difficult with products whose parameters are distributed over time. Imagine that we are considering a liquid heating operation using natural gas. Then we can talk about the total amount of product consumed, using the symbol RQ g when talking about the volume of consumption, or RE g when talking about the expert estimate or cost of the volume of gas consumed.
If we need a product model distributed over time, and we will need it, then we will move to a system with lower case characters. The designation rq g (t) will indicate that, for example, this is the gas consumption R g per unit time (Figure 7).
Figure 7
At the same time, if we want to see the volume of gas consumption at the current time, we need to integrate the function rq g (t). We will denote the integral value of the function rq g (t) using the symbol i as a prefix to the designation rq g (t) (Figure 8). In this case:
Figure 8
If it is necessary to determine the volume of gas consumed in the interval from t 1 to t 2, then it can be obtained from the following expression:
Most often, information about a system process is presented in discrete form, in particular, in the form of time series. Impulse functions are easier to integrate than continuous functions. The essence of this process is shown in Figure 9, where x(t) is the impulse function, and y(t), its integral:
Figure 9
When considering issues related to the concept of “efficiency,” we will need a model in which the input and output products of the operation are reduced to comparable values. We define such a model as the target model of the operation (Figure 10).
Figure 10
A model with output products distributed over time is not very convenient as an object of study. Therefore, let’s simplify it further and introduce the concept of “simple target operation.”
Such a model has only one input product (investment) with the value of expert assessment RE and one output product (target product - economic profit), with the value of expert assessment PE. The moment of receipt of the product R at the input of the operation corresponds to its beginning, and the moment of transfer of the output product P to the consumer corresponds to the moment of its completion. In this case, any simple target operation can be described by a triple of parameters: RE, PE and T op (Figures 11 and 12).
Figure 11
Figure 12
Which model is best to use depends on the situation. For example, to model a process consisting of several target operations, you will need a vector model (Figure 12). To derive the formula for the effectiveness of the target operation, the first model (Figure 11).
Each indicator of the triple RE, PE and T op is one of its basic parameters.
3. The concept of “system effect” is the first step towards understanding the essence of efficiency
Let us define a system of basic indicators for a simple target operation. We will consider such basic indicators to be indicators that are obtained on a set of basic parameters, without using any additional transformations of the simple operation model.
These basic indicators include:
- AE=PE-RE - added value (added value, profit)
- kAE=(PE-RE)/RE - value added coefficient (profitability)
After completing the target operation, the system under study transfers a consumer product with an expert assessment value equal to PE to the consumption system in exchange for an exchange product of equivalent value. In this case, the resulting exchange product is essentially two parts of resources. One part is the equivalent of added value (AE), the second part is equivalent to the cost part of the previous operation (RE).
The issue of efficient use of resources can only be raised if the “business thinking” of the supersystem (business owner) is aimed at maximizing its capabilities. In this case, for example, the process of the system under study is continuous, and the target product, after receiving it, is invested in the input product of the new system, which, having received it, launches a parallel system process.
If a supersystem allocates part of its resources to the managed system to perform one operation, and upon its completion takes away the entire volume of the exchange product and stops the process, and at the same time the supersystem has a reserve of unused resources, then it makes no sense to talk about the efficient use of resources.
As the history of the development of cybernetics and economics, for which efficiency is the most important indicator [TSB, vol. 29], shows, it was not possible to develop or derive a universal indicator of efficiency based on the existing theoretical framework. This means that the solution to this problem lies beyond the existing ideas about the operation model.
The key to solving this problem may be, for example, the concept of “system effect” (“economic effect”). That is, “system effect” is, on the one hand, a well-known concept, but a concept that turned out to be a Cinderella among the classics of economic and cybernetic theories.
What is unique about the concept and essence defined as “effect”? If we consider the concept of “profit” and determine the relationship of this category to the operation under study, we will notice that profit is directly related to the target operation within the framework of which it was received and determined. The systemic effect is completely different. The effect is not obtained within the framework of the operation under study and, accordingly, is not determined within this framework. The effect is the result of using the resource “profit”, but within the framework another system operation.
This is the first. The second and more significant note is that the systemic effect is not the target product. This is a process over time. Thus, to determine efficiency, the relationship between past and future processes must be established.
But the task of the operation under study is to “care” about its own effectiveness, and not about the effectiveness of some future operation. Therefore, it is necessary to establish a relationship between the potential effect of the future and the processes of resource use in the past. Thinking in this way, we can present the efficiency indicator in general terms as the ratio of the potential effect from the use of profits in the future to the indicator characterizing the use of resources within the framework of the operation under study E = A/RES.
Based on the efficiency formula in general form, we can define the concept of efficiency. To do this, we define the absolute indicator RES, which characterizes the associated resources of the operation under study, as the resource intensity of the operation.
- Definition. The effectiveness of a target operation is determined by the ratio of the absolute potential effect that will be obtained from the investment of the resulting target product within the framework of the target operation being studied to the resource intensity of the target operation being studied.
4. The key to obtaining the efficiency formula is a detailed model of the target operation
To try to derive a formula for the resource intensity of RES, it is necessary to build a model of the target operation of the new class. Let's determine what is special about the models of this new class.
As noted, the systemic effect manifests itself in the process of investment development. And the previously constructed model of the target operation does not display the process in time, but “snapshots” of the process at the time of registration of input and output products (Figure 13).
Figure 13
In order for the operation model to truly reflect the dynamics of processes, it is necessary, based on “snapshots,” to reconstruct the picture of the movement of products within the framework of the operation under study. To transform a “snapshot” of the registration model of an operation into a picture that depicts the process of movement of the input and output product, it is necessary to integrate the functions re(t) and pe(t). As a result, we obtain a detailed model of a simple target operation in the form of functions ire(t) and ipe(t), shown in Figure 14.
Figure 14
If we construct the difference of these functions, we obtain a dynamic model of a simple target operation in the form of a single function ice(t). In turn, the function ice(t) can be represented as two functions: functions ibe(t) and ide(t) - see Figure 15.
Figure 15
The closed flow ibe(t) represents the work of the investment in the operation under study, and the open flow ide(t) represents the work of the target product in the new operation.
5. Comprehensive profitability is almost an “efficiency formula” for simple target operation models
Let us hypothesize that the operation of the target product on a unit interval from the moment the target operation is completed is a potential effect. Its value AET is determined by the area of the rectangle from the relation AET=(PE-RE)xT1. Therefore, it can be assumed that the ratio of the area AET to the area RET=RExTop is the efficiency indicator (ET), which can be used as an efficiency criterion. Then ET=AET/RET. Let us define the resulting indicator by the concept of “comprehensive profitability”.
Let's consider three pairs of operations, the effectiveness of which can be determined using a logical approach.
Table 1
The analysis shows that the resulting indicator of comprehensive profitability (ET) coped with the tasks assigned to it. What happens? Has the problem been solved, and the developed indicator successfully solves the problem of assessing the effectiveness of at least simple target operations?
Here it is very easy to make the mistaken assumption that the ET indicator is an indicator of efficiency for the entire class of simple target operations. To prove its inability to quantitatively compare the effectiveness of different classes of simple target operations, it is enough to evaluate the effectiveness of the operations (Figure 3).
As previously defined, E1>E2. Calculations show that ET1=ET2. This means that the criterion of complex profitability is not a criterion of efficiency, the indicator AET is not a potential effect, and the indicator RET is not resource intensity.
Is the result obtained useless from a practical point of view? Obviously not. The ET indicator makes it possible to use one universal test tool for comparative assessment of the effectiveness of simple target operations within one narrow class. What does it give from a scientific point of view? From a scientific point of view, the obtained result shows the potential of an expanded (dynamic) model of the target operation.
6. How to determine the real break-even point of the target operation?
In economics there is the concept of break-even point. Using the accepted notation system, such a point can be defined as the point at which the function ice(t) intersects the time axis, as shown in Figure 17. But the method for determining the economic break-even point suffers from a significant flaw. She does not feel all the subtleties associated with the losses of the process under study.
Let's look at the logic of the relationship between the process of resource consumption of the operation under study and the process of resource productivity from the use of its target product as a result of new investments.
The closed resource consumption flow ibe(t) depends on two parameters. This is the amount of investment and the time of its associated state. When does the work of the target product (profit) compensate for this complex cost part? Given that we are considering a simple target operation model, the answer can be easily obtained using a grid. The number of rectangles inside the grid is four. Consequently, the moment of compensation of the resource consumption flow by the resource output flow will be at point ta.
In general, the position of this point on the time axis can be determined graphically as the intersection point of the functions vbe(t) and vde(t), as shown in Figure 16.
Figure 16
What does the new break-even point indicate? It says that in order to obtain a new class of indicators of target operations, including efficiency formulas, it is necessary to study the model of the target operation not on the Top interval, but within the Ta interval. The formula presented in the previous article “Is the game worth the candle: how to mathematically evaluate efficiency”, let’s call it the EFFLI formula, was obtained as a result of studying the dynamic model of the target operation.
The profitability indicator was obtained using data from the accounting model of the operation (Fig. 13). Different “parents”, different indicators, different areas of application.
This is why profitability is not efficiency.
Establishing clear performance criteria in effective contracts, on the basis of which the performance of a particular employee can be realistically assessed and incentive payments of the appropriate amount can be assigned to him, still causes difficulties in practice. The Ministry of Culture proposed its approach to solving this problem. The Federal Ministry issued methodological recommendations in which it clearly showed what the interconnection of indicators from the federal level to a specific employee is.
The introduction of interconnected systems of performance indicators in sectors of the social sphere from the federal level to a specific institution and employee has been discussed for a long time. In particular, the need for such a step in order to improve the system of incentive payments in institutions was indicated in sectionIV Programs, approved By Order of the Government of the Russian Federation dated November 26, 2012 No. 2190-r(hereinafter - Program No. 2190-r).
However, how exactly the general targets established at the federal level can be transformed into specific indicators applicable in the work of institutions and their employees has not been further explained. This gap was filled by the Ministry of Culture, proposing a methodology for “translating” indicators “from general to specific.” And although the recommendations are intended for use by cultural institutions and their founders, they may also be useful to institutions of other types of activities. Let us dwell on the main provisions of this methodology and support them with the regulatory framework related to different industries.
Where to look for indicators?
The main targets that determine the development of a particular industry are approved in state and federal target programs . Thus, the state program “Development of Culture and Tourism” provides the following indicators:- the number of visits to cultural organizations in relation to the level of 2010 (reflects the demand among the population for state and municipal services in the field of culture);
- an increase in the number of cultural and educational events held by cultural organizations in educational institutions compared to 2012 (demonstrates the success of involving students and pupils of educational institutions in cultural activities);
- an increase in the number of Russian laureates of international competitions and festivals in the field of culture compared to 2012 (indicating an increase in the level of professional skills of Russian participants in these competitions and festivals); etc.
- accessibility of preschool education;
- the ratio of the average USE score in 10% of schools with the best results to the average USE score in 10% of schools with the worst results;
- the proportion of graduates of vocational education organizations in the last year of graduation who were employed in their specialty;
- coverage of the population with programs of additional professional education.
Next level - departmental lists of state (municipal) services (works) formed by the founders. These lists indicate the names of services, categories of consumers, units of measurement of services and indicators characterizing their quality. These points correspond to the targets set in state programs and are the main indicators of the effectiveness of institutions. It is important that the indicators given in the lists are quantitatively measurable and can be compared over similar reporting periods (month, quarter, half-year, year).
Then comes a level even closer to institutions - establishment by the founder state (municipal) assignment . It defines “targeted” performance targets for each specific institution.
An effective contract concluded with the head and employees of institutions is based on this basis. Targets from the state assignment are either directly reflected in the specified contract (this is possible in the case of a manager, whose performance efficiency is often equated to the effectiveness of the institution), or are broken down into more specific indicators (for employees).
We present the relationship between performance indicators established in federal regulations and descending to the level of a specific employee of an institution in the form of a diagram.
Thus, a unified system of performance indicators is being built . It defines the goals, objectives and indicators for the development of a particular industry, measures to achieve them at the institutional level and a mechanism for communicating performance indicators to each employee. In turn, fulfilling the parameters established for the employee and the institution contributes to the achievement of the overall goals specified in state programs and road maps.
Criteria for managers
The establishment of indicators at the top four levels shown in the diagram relates to the powers of authorities and founders. As a rule, performance indicators are communicated to institutions in the appropriate columns of the state (municipal) task (or in an agreement on the provision of a subsidy for financial support for the implementation of the state task). However, difficulties often arise precisely when “translating” indicators to the lower level, that is, when establishing criteria in effective contracts.For top officials of institutions, performance criteria are also determined by the founder. These positions directly affect the amount of incentive payments, the conditions for receiving which must be reflected in the employment contract with the manager (the standard form of the contract has been approved Decree of the Government of the Russian Federation dated April 12, 2013 No. 329). Such a relationship will help improve the manager’s work efficiency, and therefore, the implementation of the goals and objectives set for the institution.
The Ministry of Culture in the recommendations under consideration notes that the performance indicators of institutions, provided by statistical accounting, serve as the basis for the development of appropriate criteria for managers and are disaggregated into performance indicators of the main category of employees. Converting the aggregated indicator into the original components (that is, disaggregation) is the essence of the methodology proposed by the ministry.
However, the effectiveness of a manager’s work is still determined based on the achievement of indicators set for the institution for the corresponding period, as well as on the basis of the use of material resources and labor capital of the institution (in other words, performance indicators in this case are usually not disaggregated). And here it is important to take into account indicators in two planes:
- mandatory achievement of volume indicators at the expense of the financial capabilities of the institution (budget allocations, funds received from optimization measures, funds from income-generating activities);
- mandatory achievement of quality indicators through more efficient use of all resources of the institution (material, financial capabilities, as well as labor capital and the human factor).
In addition, in order to objectively evaluate the work of the top officials of institutions, according to the Ministry of Culture, when developing regulations on the remuneration of heads of subordinate institutions, it is advisable for the founders to provide for:
Criteria for deputies and heads of departments
The development of performance indicators for specific employees, linked to the performance indicators of the institution, is the prerogative of the head of the institution. According to the provisions sectionIVProgram No. 2190-r such indicators are established by local regulations of institutions, collective agreements, agreements and employment contracts.When developing these criteria, the manager needs to take into account that the institution’s performance indicators are achieved through the individual work of each employee, as well as through their joint activities. Therefore, there is a need to disaggregate some indicators into others.
In particular, when determining criteria for deputy managers and heads of structural divisions, it is proposed to take into account the distribution of areas of activity between management employees. And since in this case the results of collective work should be evaluated , for the management level, both aggregated (defined by the institution in the state or municipal assignment) and disaggregated indicators should be established. If necessary, you can summarize the disaggregated performance indicators of employees of the relevant department.
For example, if the state assignment for a theater sets the indicator “Average occupancy of a hospital hall (main stage), with the exception of experimental performances (%),” the head of the audience relations department, the head of the sales department, and the manager will also participate in the work to achieve it. press service. For these employees, this indicator can be transformed into the following: “Number of spectators according to tickets sold (planned/actual)”, “Number of events for information work with spectators (planned/actual)”.
Criteria for workers
With regard to employee performance indicators, the Ministry of Culture also proposes to use two levels of their calculation and, accordingly, assessments when remunerating:- regulatory (included in the terms of payment according to the official salary);
- stimulating (provides for various incentive payments for achieving parameters that exceed standard levels of fulfillment of job duties).
In addition, they can be used additional criteria (in the case when the degree of their manifestation in an employee exceeds the average):
- initiative;
- reduction of deadlines for completing work against established deadlines;
- promoting the achievement of overall performance results of the unit in which the employee works;
- transfer of work experience to other team members;
- laudable reviews of the employee from consumers of the institution’s services; etc.
Disaggregation Method
The essence of this method, used primarily in establishing employee performance indicators, is to identify in the job description of a particular employee the types of work or job function that directly affect the implementation of the corresponding indicator. Quantitative and qualitative characteristics of work that determine the effectiveness of a specialist’s work are taken as disaggregated indicators of his effectiveness.The Ministry of Culture gives an example of disaggregation. One of the indicators established to evaluate the activities of cultural and leisure institutions is the number of cultural and leisure events held by the institution (units). The fulfillment of this indicator depends on the employees of the following positions: specialist in club work methods, director of mass performances, manager of cultural and leisure activities, cultural organizer, leaders of club formations, manager of a dance evening, host of a disco, head of the musical part of a disco. For these employees, the following indicator of their activity can be established: “The number (share) of cultural and leisure events prepared or carried out with the participation of the employee (as planned/actually).” This criterion, like the indicator for the institution, has a quantitative measurement.
Several disaggregated indicators can be established for a specific employee. For example, for leaders of club formations the criteria may be as follows.
| Disaggregated indicator | Performance indicator set for an employee |
| Number of participants in club formations compared to the previous year (%) | Number of regular visitors served by a specialist, including on a paid basis (as planned/actually) |
| Number of cultural and leisure events held by the institution (units) | Number (share) of cultural and leisure events prepared or carried out with the participation of the employee (planned/actual) |
| Share of activities aimed at developing the creative potential of children and youth in the total volume of activities of the institution (%) | Number of regular visitors - children - served by a specialist, including on a paid basis (as planned/actually) |
| Number of laureates of international, all-Russian, interregional and regional competitions and festivals (people) | Number of members of relevant club formations who participated in international, all-Russian, interregional and regional competitions and festivals (people) |
Incentive conditions
Based on information about the achievement of performance indicators, incentive payments are assigned to employees. To do this, the institution should adopt an appropriate regulation that sets out the procedure and conditions for making such payments.For example, the regulation may indicate that bonuses are paid based on:
- submitted reporting data on the implementation of employee performance indicators for the reporting period (month, quarter, year);
- established deadlines for submitting reports;
- an explanatory note that describes the work performed to achieve each indicator and indicates the reasons for the decrease (increase) in the implementation of indicators.
Conclusion
Let's summarize what has been said. To switch to effective contracts with employees, an institution must have:- state (municipal) task and performance targets approved by the founder;
- a system for assessing the performance of employees (a set of indicators and criteria that allow assessing the quantity and quality of labor expended). When developing such a system, a disaggregation method can be used;
- a remuneration system that takes into account differences in the complexity of the work performed, as well as the quantity and quality of labor expended.
Methodological recommendations on the interconnection of the system of industry performance indicators in the field of culture from the federal level to a specific institution and approved employee. Circular letter from the Ministry of Culture of the Russian Federation dated 08/05/2014 (published on the official website of the department mkrf.ru).
“Program for the gradual improvement of the wage system in state (municipal) institutions for 2012 - 2018.”
See, for example, state programs for the development of culture and tourism, education, healthcare, sports, approved. according to the resolutions of the Government of the Russian Federation dated April 15, 2014 No. 317, No. 295, No. 294, No. 302.
For example, at the federal level, orders of the Government of the Russian Federation approved. “road maps” in the field of culture (dated December 28, 2012 No. 2606-r), education and science (dated April 30, 2014 No. 722-r), healthcare (dated December 28, 2012 No. 2599-r).
For federal government institutions, departmental lists are approved, for example, by orders of the Ministry of Culture of the Russian Federation dated December 15, 2010 No. 781, the Ministry of Health of the Russian Federation dated December 24, 2013 No. 1058n, the Ministry of Sports of the Russian Federation dated October 14, 2013 No. 801, as well as the Ministry of Education and Science of the Russian Federation dated July 18, 2014 No. AP- 47/18.
This requirement complies with the provisions of clause 9 of the Regulations on the establishment of remuneration systems for employees of federal budgetary, autonomous and government institutions, approved. Decree of the Government of the Russian Federation dated August 5, 2008 No. 583.
An approximate form of an employment contract with an employee of an institution, taking into account the principles of an effective contract, is given in Appendix 3 to Program No. 2190-r.
When studying issues regarding the prospects of investing in a particular endeavor, the most important criterion is the economic efficiency of the project. In order to avoid misunderstandings in the business environment, there are generally accepted indicators of the economic efficiency of investment projects. They characterize the initiative from different angles, including from the point of view of lean production, which helps the investor make informed decisions.
What key performance indicators are used?
Any project according to design standards consists of two parts: descriptive and calculation. If the first describes the very essence of the idea, the prospects for its implementation and promotion of the product on the market, then the second contains technical and financial calculations, including the calculation of performance indicators. The definition of economic efficiency is understood as a certain result obtained after a comparison is made of the level of profitability of production in relation to the resources used and the total costs for it.
The essence of economic efficiency is to obtain the maximum amount of products from available resources, subject to their recoupment and profit. This concept is multifaceted, it is impossible to evaluate it by any one indicator; the issue should be approached comprehensively.
The economic efficiency of an investment project is usually assessed according to the following criteria:
- net present value (), or NPV;
- internal rate of return (IRR);
- modified internal rate of return (MIRR);
- profitability index (PI);
- payback period for initial investments (PP);
- payback period discounted by changes in the value of money (DPP);
- weighted average rate of return on investment (ARR).
Many specialists, when analyzing the economic efficiency of an investment project, do not study all the indicators in detail, limiting themselves to the 3-4 most significant of them. This mainly depends on the business or industry in which the investment is to be made.
- a separate enterprise;
- a legal entity or individual acting as an investor;
- shareholders who invested in the venture;
- higher level structures;
- budgets of different levels;
- society in general.
This leads to different criteria for the effectiveness of investment projects for different participants:
- The effectiveness of an undertaking as a whole is characterized by a project implemented by a single participant at his own expense. It is being analyzed in order to find additional sources of funding or attract other participants.
- The effectiveness of participation in a common project includes indicators of participation of shareholders, banks, enterprises, various structures (industrial or regional) and budgets (from local to federal).
If there are several participants in the implementation of the initiative, then their interests will not necessarily coincide, especially in terms of the priority of carrying out certain processes. Special cash flows are generated for each participant, and they can expect different results. Consequently, for each participant separately, an analysis of the effectiveness of the investment project is carried out.
Absolute criteria by which the project is analyzed
Let us dwell in more detail on those indicators of the effectiveness of an investment project that characterize the success of investing in the proposed initiative.
First of all, it is considered present net worth, since it characterizes in absolute terms the amount of money that an investor can receive during the life cycle of an endeavor. To calculate the economic efficiency of a project according to this criterion, you need to have information about the nature of cash flows (expenses or income) and their distribution over time.
Typically, the most significant expense occurs during the pre-production period (preparation of documentation and product development), as well as the start of production. Subsequently, costs decrease sharply (or stop altogether), and income increases. To calculate this indicator, use the following formula:
- NPV – current net value of invested money;
- ICo – the size of the initial investment;
- CFt – cash flow from investment in t – year;
- n – duration of the initiative (its life cycle);
- r is the value of the discount rate, this can be the alternative or weighted average cost of capital, the rate of return or the bank lending rate.
Let's look at an example of calculating present net value. The owner invested $200 thousand in modernizing the equipment. We will set the discount rate at the level of profitability of the enterprise - 12%. The return by year, starting from the first accounting year, is:
- 1 year – 40 thousand dollars;
- 2 year – 60 thousand dollars;
- 3rd year – 80 thousand dollars;
- 4th year – 100 thousand dollars
If we substitute these values into the formula, we get the following picture:
NPV = - 200000 + 40000 / (1 + 0.12) + 60000 / (1 + 0.12)2 + 80000 / (1 + 0.12)3 + 100000 / (1 + 0.12)4 = - 200000 + 35714 + 47831 + 56943 + 63552 = $4040.
The net present value of the investment is positive, but its size is small, which should alert the investor, since with any market fluctuations the indicator may become negative. In addition, the discount rate, which we considered constant, is a dynamic indicator and can change depending on various factors (refinancing rate, inflation rate, market prices in a particular industry). Therefore, the assessment of the effectiveness of such an initiative is generally positive; the cash flows it generates offset costs and increases the value of the company. However, if the main goal is to obtain maximum profit, then in this case, with a low positive result, the risks of losses are quite high.
The considered formula shows a situation in which the investor makes only an initial contribution (at one time), but in practice this rarely happens, since in most industries it is impossible to do without operating capital and overhead costs. Therefore, taking these factors into account, the formula will take the following form:
- ICt = investment in the period from i (0) to t;
- r – discount rate;
- n – investment life cycle.
No less important for investors is the issue of how quickly they will return their capital invested in the project. No one wants to freeze their assets in a long-term initiative with a high degree of depreciation of money. Therefore, the faster the investment returns, the greater the chances of putting this money into circulation again.
Calculation of efficiency necessarily includes calculation payback period of initial investment. There is a general formula that looks like this:
- PP – payback period of initial investments;
- Io – volume of initial investment;
- CFt is the flow of funds in the t-year;
- t – time periods.
The calculation is further simplified if the conditions allow you to calculate the average investment income over the period. Then the following formula is applied:
in which CFcr is the average annual (average monthly, average quarterly) income from the starting investment.
However, this approach has a significant drawback - it does not take into account changes in the value of money in the time aspect. Therefore, a more effective method for determining the payback period is taking into account discounting.
- r – money discount rate;
- CFt – flow size in year t.
Based on the formulas under consideration, you can see that the refund period taking into account the discount is always higher than in the simple formula. For clarity, let’s solve a simple problem using both methods. The initial parameters are as follows: the purchase of new equipment cost the owner of the plant 150 thousand euros, income for the first three years is 50, 100 and 150 thousand euros, respectively.
In a simple method, summing up the income of the first and second years (50,000 + 100,000), we get an indicator of 150 thousand, which indicates that the payback period is exactly two years, and starting from the third year, the owner will recoup the investment and make a profit, you can don't even count according to the formula.
What will we see if we introduce a discount rate of 15% into the calculation? All annual income will have to be reduced to present value:
1 year – 50,000 / (1 + 0.15) = 43,478 euros;
Year 2 – 100,000 / (1 + 0.15) = 86,956 euros;
Year 3 – 150,000 / (1 + 0.15) = 130,435 euros.
Accordingly, the average annual return for the first 2 years will be:
CFcr = (43478 + 86956) / 2 = 65217.
DPP = 150000 / 65217 = 2.3 years, or 2 years 4 months.
This indicator gives a clear vision of how long it will take to cover the costs incurred, but it has a significant drawback: it makes it impossible to understand how financial flows will be formed outside the payback period. Consequently, the understanding that is being studied may be distorted.
The above indicators of economic efficiency differ in that they show the result in absolute values (monetary units and time units). In addition to them, there are a number of criteria for the potential success of an undertaking, which take the form of numerical coefficients and are more difficult to understand.
Relative project success rates
Calculation of the effectiveness of an investment undertaking can be characterized by several more indicators.
Profitability index is a coefficient that gives the concept of profitability of each invested monetary unit at a specific point in time. It is calculated this way:
If we apply this formula to the initial data of the problem, from which we calculated
NPV, then the profitability index can be determined:
PI = (35714 + 47831 + 56943 + 63552) / 200000 = 1,02
Thus, we get a result indicating that every dollar invested brings 2 cents of income.
Internal rate of return is calculated based on the condition that the investments are equal to the cash flows they generate, taking into account discounting.
- IRR – internal rate of return.
This criterion represents the rate of return (average) for the full life cycle of the initiative. In addition, it indicates the maximum rate of return of the undertaking, below which it is unacceptable to fall. If the IRR value is lower than or equal to the discount rate, then the project may become unprofitable; this indicator is used when deciding which business proposal to accept.
In relation to our example, we will try to determine the IRR value using the successive approximation method. Let's take into account that the NPV at a rate of 12% was very small ($4040), so let's try to calculate the indicator using a discount rate of 13%:
NPV = - 200000 + 40000 / (1 + 0.13) + 60000 / (1 + 0.13)2 + 80000 / (1 + 0.13)3 + 100000 / (1 + 0.13)4 = - 200000 + 35938 + 46989 + 55444 + 61330 = - $299.
Based on this result, we can conclude that the rate proposed in the initial condition of 12% is equal to the IRR, since when the rate changes upward, the net cost taking into account the discount acquires negative values. Therefore, it is not worth investing at a rate greater than 12% in this project.
If the project is large-scale and requires large investments, then the owner or shareholders may decide to invest part of the profit in the implementation of the initiative (reinvestment). In such cases, a modified calculation mechanism is used. Formula for internal modified rate of return:
- r – discount rate;
- d – weighted average cost of capital;
- CFt – cash flows in year t;
- ICt – investment flows in year t;
- n – number of periods.
At the same time, MIRR always has a smaller value than IRR, since investments of each year are also given at the rate at the start of the project, and all income is at the end of the initiative. It evaluates the state of an investment more accurately than IRR, taking into account positive and negative inflows.
There is another criterion for the success of an undertaking - investment project efficiency coefficient(ARR), which is tied to the payback period and is its reciprocal value.
If there is an indicator of the average annual return on capital CFcr, the coefficient is calculated as follows:
PP is the payback period of the initiative.
If the entire life cycle is calculated, then the formula looks like this:
where If denotes the liquidation cost of the project, which is determined as a result of the sale of all equipment and property after completion of all work. The PP/1 formula is applicable when If is equal to zero.
We calculate the coefficient in our problem:
ARR = 280 / 4 / 200 = 0.35, or 35%.
Applying the principles of analysis that were discussed in the article, you can consider different options and choose the most suitable one. In addition, a comprehensive study of the proposed initiatives at an early stage will allow you to avoid some risks and control the increase in the efficiency of the investment project.
Controlling efficiency in lean manufacturing
In recent decades, in developed countries, and now in Russia, there are more and more supporters of the so-called lean production in industry. The most common systems of this kind are: 5S, TQS, Just-in-time, TPM, Multi-process work.
The essence of lean manufacturing is to improve productivity and economic performance through quality management and reduction of waste. Based on this, management develops a policy and strategy for the enterprise, which is aimed at using resources only for purposes that provide real returns. At the same time, not only the work of the entire company is assessed, but also each of its structural divisions, which requires the development of a unified assessment methodology (qualitative and quantitative):
- a qualitative assessment is made based on production indicators and quality of products;
- quantitative assessment - based on economic indicators, based on financial statements.
General reporting when assessing lean production at an enterprise may include the following sections:
- completeness of implementation of planned activities;
- losses in a specific division at the beginning and end of the reporting period;
- the effectiveness of the introduction of new technologies (in volume, kind and monetary terms) and the justification of their costs;
- methodological and factual materials (drawings, diagrams, methods, regulatory documents, technological processes).
Problems can be minimized or completely resolved only through the integrated use of all the tools inherent in lean manufacturing.
At the same time, it is important to identify hidden losses and neutralize them. Analysis of the efficiency criteria of lean production is carried out after defining goals and priorities, as well as determining the relationship between the tools of such production and hidden losses, i.e. which tool reduces certain losses how. The closer the planned and actual values, the better.
This page displays employee performance information based on the tasks included in the performance report:
Tasks not included in the performance report will not be taken into account when calculating performance.
Note: except when the option is checked show report for all tasks, which you can read about below.
Let's take a closer look at the table columns:
- New- the number of tasks created during the period specified in the filter.
- In progress- the number of active tasks during the period specified in the filter.
- Done- the number of tasks that were completed during the period specified in the filter.
- Overdue- indicates the percentage of tasks not completed on time out of the total number of tasks In progress.
- Rated- percentage of tasks that were rated to the total number of tasks In progress.
- Efficiency- percentage of positively rated tasks out of the total number of tasks In progress.
- By time period - select the time period for which you want to display a task report.
- By company structure - click on the downward arrow and select the company division for which you want to view the performance report.
Note: You can select only those departments that are subordinate to the employee under whose profile the sorting is performed.
- By working groups - click on the downward arrow and select the portal groups whose members you want to display a performance report on.
Note: You can select only those groups of which the employee under whose profile you are sorting is a member.
- By employee - in this field you can specify a specific employee whose performance report you want to view. This is done in the same way as selecting a contact described in the lesson
The most important column is Efficiency. Its values are calculated using the formula:
Efficiency= (number of positively rated tasks) / (total number of tasks in work) * 100%.
The higher the number in this column for a particular employee, the higher his effectiveness in completing tasks.
Attention! We are talking only about the assigned tasks. This tool does not remove subjectivism in assessment. You can assign an employee an extremely difficult task and a dozen simple ones. He will solve the super-difficult one and get a plus, but he will fail the simple ones (due to being distracted by the super-difficult one) and get a minus. As a result, the efficiency assessment will be low, although the real return to production will be high.
To compare the presented indicators with the total number of tasks, i.e. including those not included in the performance report, check the following option:
After this, the report will approximately look like this:
Note: in the column Overdue the second percentage indicated shows the number of overdue tasks out of the total number of available ones.
Filter
To sort tasks in the performance report, you can use a filter:
Sorting can be done according to the following parameters.
