What is cause, performance and effect?

Unfortunately, we humans often look for “culprits” instead of true causes. And we often emphasize (our own) performance instead of the effects that are (supposed to be) achieved.

These are
cause

and effect are very simpleand usefulconcepts:

• Cause: rain -> Effect: we get wet
• Cause: too much sunlight -> Effect: we get sunburnt
• Cause: too little sleep -> Effect: we are tired

There are often many causes that can trigger an effect, or one cause has many effects, or both:

• Causes: Development of a product, marketing and sales -> Effect: We achieve sales targets
• Causes: Good cooperation, planning and control -> Effects: We have a successful project and a good atmosphere
• Cause: Investment in renewable energies -> Effects: We reduce pollution, generate clean electricity and create jobs

At the end of the day, a company is there to deliver“results” or benefits. This corresponds to the effects and effectiveness. Examples are high customer satisfaction and a respectable profit.

It takes performance to produce results. They correspond to the causes of the effects. Services should be provided as efficiently as possible, because they are only a means to an end. Services can be time expenditure, energy costs, other expenses, etc..

In the finance department,“performance accounting” plays a major role in corporate practice. For example, for pricing, production planning and cost control. It helps to optimize performance in order to gain a competitive edge.