Performance Management in Business

The Measurement System used by my Employer and Suggestions for Improvement

My employer uses a balanced scorecard system as a guide for each staff and team to understand the company’s strategies; in the form of objectives, metrics, initiatives and tasks. Using the performance dashboard alerts, the employer is aware of any potential problems arising from critical business processes (Bose & Thomas, 2007). Secondly, the system provides a mechanism of finding out the cause of the problem by viewing information from multiple perspectives (Eckerson, 2011).

Performance has now been integrated into the quality management system of the organization. Effective performance measurement influences efficacy of the use of information and communication technology (Phusavat et al., 2009). Performance measurement plays a key role in achieving desirable behavior, referred to as capability and maturity in process management. The company needs to strengthen its financial indicators, which are different from other Key Performance Indicators because they give a prompt appraisal of financial performance (Fritzen, 2007). Their utility can therefore be in the short-term or long-term for decision making by company management (Lavy, Garcia & Dixit, 2010).

Phusavat et al. (2009) point out four factors that enhance the efficacy of performance measurement. Empowerment of staff to infuse their expertise in problem solving gives them a sense of ownership. Budget practice changes diminish performance measurement impact. Workers should be encouraged to gain external knowledge, and management should ensure that performance measurement motivates staff to be open and willing to seek external knowledge. Lastly, performance measurement should look out for obstacles presented by the need to comply with software requirements, especially in construction projects that compel project managers to request excess resources to prevent a shortage. The organization needs to focus on the key performance indicators that have the most impact to the overall competitiveness in the business (Craft & Leake, 2002). Management measurement systems should be seen as strategies and change management processes. As companies move along the life cycle curve, they experience dramatic changes in their environment and management measurement systems should aid in adjusting the company focus in tandem with its competitive advantage in the industry (Nugent, 2002).

Reasons for a Bottom up Design Approach to Measurement Dashboards

According to Malik (2005), it is best for companies to design their dashboards using a bottom up approach. This view is informed by the need to streamline connection between business processes and those of customers and suppliers. A bottom up design allows later input in the dashboard system as new relations are developed to add on or replace existing relations with customers and suppliers. A bottom up design also ensures that the company remains lean enough to navigate the changing business environment affecting its growth and development. For dashboards, the quality of information is more important than the quantity. Furthermore, the focus of the dashboard is much more important than the volume of the data (Alexander, 2007). Dashboards strictly obey the Pareto rule of 20/80 and companies have to ensure that they structure their strategic performance dashboards to focus on the key indicators, which have the most profound impact on the organization’s bottom line of quality and efficiency (Craft & Leake, 2002).

A bottom up approach provides the opportunity for the company to exploit the chance of collaboration with customers and co-suppliers because it allows room for customization to the company needs. Lastly, businesses do not exist as self-contained entities but require the extended ecosystem comprising other enterprises.Thus, a bottom up approach to designing a performance dashboard allows for creation of key bridges to tap into the external resources that assist to create customer value (Malik, 2005). Agostino & Arnaboldi (2011) indicate that a bottom up design gives an opportunity for line managers to be part of the decision making process of the company. For companies to link strategy and actions, they require collaborative participation of every level of the organization that facilitate clear perspectives and choice of Key Performance Indicators (KPIs).

References

Ackerson, W. W. (2011). Performance dashboards: measuring, monitoring, and managing your business (2nd ed.). Hoboken, NJ: John Wiley & Sons.

Agostino, D. and Arnaboldi, M. (2011). How the BSC implementation process shapes its outcome. International Journal of Productivity and Performance Management, 60(2): 99-114.

Alexander, J. (2007). Performance dashboards and analysis for value creation. Hoboken, NJ: John Wiley & Sons, Inc.

Bose, S. and Thomas, K. (2007). Applying the balanced scorecard for better performance of intellectual capital. Journal of Intellectual Capital, 8(4): 653-665.

Craft, R. C. and Leake, C. (2002). The Pareto principle in organization decision making. Management Decision, 40(8): 729-733.

Fritzen, S. A. (2007). Crafting performance measurement systems to reduce corruption risks in complex organization: the case of the World Bank. Measuring Business Excellence, 11(4): 23-32.

Lavy, S., Garcia, J. A. and Dixit, M. K. (2010). Establishment of KPIs for facility performance measurement: review of literature. Facilities, 28(9/10): 440-464.

Malik, S. (2005). Enterprise dashboards: design and best practices for IT. Hoboken, NJ: John Wiley & Sons, Inc.

Nugent, J. H. (2002). Plan to win: Analytical and operational tools – Gaining competitive advantage. New York, NY: McGraw-Hill.

Phusavat, K., Anussornnitisarn, P., Helo, P. and Dwight, R. (2009). Performance measurement: roles and challenges. Industrial Management & Data Systems, 109(5): 646-664.

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