The evaluation system of JetSuite is flawed. Profits are not the only means of measuring the performance of a department or an organization. Other measures such as customer satisfaction and the motivation of the employees are also important. Unfortunately, the intangible measures of progress and growth of the division cannot be determined using numerals. The various divisions of the organization are interdependent. Some of them such as sales have better odds of posting profits compared to marketing or research and development. Many of the departments of the corporation contribute to the expenditures of the organization as opposed to bringing in profits (Patidar, 2015). The functions of each of the divisions towards the bottom-line of the firm should be considered carefully before the metrics for the performance of the organization are established.
Divisional income does not consider the resources that have been invested in each of the divisions in a firm; thus, it is unfair to compare the revenues of divisions that have received little resources with the ones that are characterized by substantial investment. A good method of measuring the performance of a division in an organization is the Return on Investment (ROI)< which evens the field for divisions that have received varying volumes of investment from the management of the company (Feng, Hsieh, Zou, Chiu, & Chen, 2018). Another numerical measure that can be used to evaluate the performance of divisions is the economic value added (EVA) that is defined as a refined calculation of the residual income that serves as an excellent tool for accurate comparative analysis of the various departments (Soliman & Buehler, 2018). Companies should consider alternative measures such as the quality of products and services, as well as dominance in the market and innovation.
Feng, Y., Hsieh, J., Zou, W., Chiu, Y., & Chen, H. (2018). Evaluating performance of logistics in the FMCG industry. International Journal of Organizational Innovation (Online), 10(4), 121-139.
Patidar, R. (2015). Divisional performance measurement. SlideShare. Retrieved from https://www.slideshare.net/RohitPatidar6/accounting-project-group-5
Soliman, M., & Buehler, R. (2018). Evaluating performance over time: Is improving better than being consistently good? The Journal of Social Psychology, 158(3), 271-284.