Attainable standards

Definition

Attainable standards refer to performance benchmarks that are realistic and achievable under normal operating conditions. They are set based on the best possible performance of a company, considering historical data and expected future conditions, allowing for a degree of efficiency while still being realistic enough to motivate employees.

5 Must Know Facts For Your Next Test

1. Attainable standards take into account both historical performance and future projections, ensuring they reflect realistic expectations.
2. When attainable standards are set, they can help motivate employees by providing clear goals that challenge them without being impossible to reach.
3. Setting attainable standards is crucial for effective budgeting as it aligns expectations with what can realistically be achieved.
4. These standards can vary between different departments within an organization, as each area may have different capabilities and conditions.
5. Regularly reviewing and updating attainable standards helps ensure that they remain relevant in changing business environments.

Review Questions

• How do attainable standards influence employee motivation within an organization?
  • Attainable standards are designed to be challenging yet achievable, which plays a key role in motivating employees. When employees believe they can meet these standards, they are more likely to engage in their tasks and strive for better performance. Achieving these standards not only boosts morale but also enhances overall productivity as individuals work towards common goals that are realistic.
• Discuss the role of attainable standards in the context of variance analysis and how they help in performance evaluation.
  • Attainable standards serve as benchmarks against which actual performance can be measured during variance analysis. By comparing actual costs or production levels to these standards, organizations can identify variances that indicate areas of inefficiency or improvement. This evaluation process allows management to take corrective actions, adjust future standards, and ultimately drive better performance within the organization.
• Evaluate the impact of setting overly ambitious standards compared to attainable standards on organizational performance.
  • Setting overly ambitious standards can lead to frustration and disengagement among employees, as they may perceive these goals as unattainable. This could result in decreased morale, increased turnover rates, and ultimately lower productivity. In contrast, attainable standards foster an environment where employees feel challenged yet capable of success. Thus, finding the right balance is crucial for sustaining motivation and achieving overall organizational objectives.

Related terms

standard costs: Standard costs are predetermined costs of manufacturing or delivering a product or service, used as a benchmark for measuring performance.

budgeting: Budgeting is the process of creating a plan to spend your money, setting forth expected revenues and expenditures over a specific period.

variance analysis: Variance analysis is the process of investigating the differences between actual financial performance and budgeted or standard costs, helping to identify areas for improvement.