(i) Setting Performance Standards:
1. Standards are the criteria against which actual performance can be measured.
2. Standards are the benchmarks towards which an enterprise strive to work.
3. Due to the changes in business environment the standards should be flexible enough to be modified according to the situation.
4. Time standards are specific standards that are set on the basis of time taken to do a particular activity in a business unit.
(ii) Measurement of Actual Performance:
1. First performance standards are set and then actual performance is measured.
2. Performance should be measured in an objective and reliable manner which includes personal observation and sample checking.
3. Performance is to be measured in the same terms in which standards have been established, this will facilitate comparison.