PART II

Business Performance

What is the measurement of performance in a business? The bottom line is the standard answer. But how does one truly measure the bottom line? Everyone talks of profit—for some it is the executive’s Holy Grail, for others it is a dirty word. But what is profit really? How does any business, its executives, its investors, its employees, know whether a company’s reported profit is good or inadequate? Actually, the record profits trumpeted by many companies’ managements fall far short of covering genuine and identifiable costs, inflation, the costs of staying in business, costs which while not payable until tomorrow have already been incurred.

This section deals with performance within a business. But much of it applies equally to nonbusiness and not-for-profit institutions. For they, too, exist to perform.