What is the baseline reason for analyzing variances in performance?

Analyzing variances in performance fundamentally aims to understand the differences between expected outcomes and actual results. This understanding allows managers and staff to identify the causes of these variances, whether they stem from external factors, operational inefficiencies, or shifts in market conditions. By assessing the impact of these variances, organizations can make informed decisions about adjustments and improvements in processes, strategy, or resource allocation.

In essence, without knowing why performance has varied, it becomes challenging to implement effective solutions or improve future outcomes. This analysis provides the basis for targeted interventions that can enhance efficiency and effectiveness within an organization.