Application of Variance Analysis for Performance Evaluation: A Cost/Benefit Approach.

Abstract

Every organization seeks to maximize its benefits and achieve its goals and objectives. In a bid to ensure this, they employ different measures in their performance evaluation. The purpose of this performance evaluation is to ensure that every person in the organization is working towards achieving a common organizational goal. In the process of carrying out their performance evaluation, they employ several performance measures. Some of the measures may be financial or non-financial. This study examined the cost and benefits associated with the use of variance analysis as a performance evaluation tool. Extensive literature review was made and it was recommended that managers should employ the balance scorecard performance measure because it strikes a balance between the financial and non-financial measure.

Keywords: Performance Evaluation, Variance Analysis, Cost/Benefit