While making a profit remains the ultimate goal of every business enterprise. it is considered that financial performance is not the only one that has an impact on revenues. In other words, the ‘rule of the bottom line’, which was popular in the early XX century has much less weight nowadays.
Taking into account overall organisational performance implies the increasing role of management to business success. Top managers bring to the administrative setting a variety of idiosyncratic values, beliefs and behaviours the posture of the organisation, its actions and, consequently, its performance, reflect the bounded rationality, multiple goals, competencies and skills of its leaders. (Ramaswami and Thomas 1994, p. 74).
Multiple management concepts developed in past decades tend to determine key factors and to use them effectively to increase organisational performance. For example, TQM (Total Quality Management) focuses on the quality of the final product as a way to increase competitive advantage and performance of the company. Among others, the concept of HRM (Human Resource Management) operates an assumption that the performance of the business can be increased through people working in it.
One of the key accents in HMR is made on the importance of balancing between outsourcing jobs to external workers and completing them within the company: firms must choose between alternative governance structures. When firms rely on outside suppliers, they are relying on market contracting as a form of governance. When they rely on internal employees, they are relying on organizational hierarchy. (Gainey et al 1999, p. 113) Outsourcing has always been and will be the best way to complete a job, in which your company does not tend to specialise.