Performance Measurements and Strategic Planning
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
: To prepare for this essay please read the required article
((The impact of performance measurement in strategic planning�, International Journal of Productivity
and Performance Management)))
that is attached then answer the following questions:
1)Evaluate the finding that PM is one of the key success factors in strategic planning.
2)What effect do you think a) the size of the organisation and b) the rate of change have on the
effectiveness of performance measurement?
3)Support your argument with evidence from the study and other real examples where possible.
Performance Measurements and Strategic Planning
A company’s success depends highly on proper planning of organization activities,
efficient and effective management as well as having a motivated team of employees.
Therefore, corporate planning is paramount for ensuring that business activities are thriving,
and organization is driven towards corporate sustainability. Employees and other stakeholders
should work together to ensure that the organization is effective in its organization activities.
And hence enable an organization achieves the company’s goals and mission. This is possible
through performance measurement to help the organization in evaluating individual employee
and motivate the employees to perform optimally. However, the paper discusses the notion that
performance measurement is important in strategic planning. Further, the article provides
insights on the relationship between the company size and how the rate of change impact on the
efficiency of PM.
Performance measurement can be defined as a process by which the management in
conjunction with the employees work as a team to plan, monitor and review employee’s work
goals, and the overall contribution of each and every employee to the organization(Sena
Ferreira et al., 2012) . On the flipside, strategic planning refers to a set of processes performed
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
in an organization to conceptualize multiple plans that can help an organization achieve its goal
and provide organizational direction (In Osman et al., 2014).
Empirical studies establish that performance measurement and organization strategy
should be aligned together to help an organization achieve its strategic goals. Be as it may,
performance measurement is paramount in enhancing the efficiency of strategic planning (De
Waal, 2013). Performance measurement provides critical data and controls that enhance the
development and implementation of strategic planning. Performance measurement’s is used by
the organization as a tool that helps to provide a sense of direction for the company by directing
on the allocation of resources appropriately (Tapinos et al., 2015). Proper allocation helps an
organization to utilize the scarce resources to produce optimum services and increase the
company’s revenue (Taticchi, 2011). This feature also enables an organization to allocate the
resources according to the strategic plans put developed to govern the organization.
Performance measurement is also an important tool to help an organization to
communicate and assess the development of an organization towards achieving strategic goals.
Evaluation of managerial performance through balanced scorecard and assessment of
employees based on their job performance is important in ensuring that the organization is
working towards achieving what is laid down in the strategic plan. Having a well laid out
performance measurement program addresses individual employees and organization
performance issues that are necessary to develop an effective and sustainable strategic plan.
Strategic planning is essentially a disciplined effort geared to produce fundamental
actions based on sound decision that help to provide direction. Therefore, performance
measurement plays the important role of raising individual performance to help foster the
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
overall development of employees. This tendency complements strategic planning efforts to
increase the overall company effectiveness.
Performance measurement has a key role of translating strategy into practical plans.
Managers develop overarching metrics to help track organization activities through
performance measurements. Such metrics translates to the larger goals of the organization. The
individual department focuses on specific performance measurement metrics to help improve
the departmental performance. For instance, the marketing team is concerned more with the
number of sales generated, qualified leads and the conversion rates within the sales department.
The customer care department focuses on measuring performance relating to customer
satisfaction. And finally, the operation department may focus on measuring performance based
on quality fulfillment, delivery time, and number of orders filled. All these measurement
metrics are geared towards achieving the overall strategic goals by translating strategy into
action.
With increasing organization size the significance and strength of performance
measurement decreases. According to Tapinos et al. (2005) influence of performance
measurement is quite stronger in strategic planning for large organizations. Most performance
management paradigms are designed to help address needs in large organizations compared to
smaller organizations. Performance measurement is not as effective in small businesses as
compared to the larger business organization. Smaller business organization lack proper
reference to strategic planning, and their success depends much on entrepreneurial skills and
strategies as compared to strategic planning.
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
Be as it may, small and medium enterprises lack effective and formal feedback system.
Therefore, information gathered by performance management may not be effectively employed
in strategic planning (Tapinos et al., 2005). Performance management and strategic planning
are not linked effectively in a smaller organization as compared to larger organizations. On the
flipside, performance measurement is more effective also in a larger organization because of its
complexity in nature. Information is collected as feedback based on performance measurement.
Large organizations require more information to help in coordinating activities and making
decisions that are multilayered in nature between its complicated structures.
With respect to the rapidly changing environment, performance measurement influences
strategic planning of organizations that operates in a rapidly changing environment more as
compared to organizations in a slowly changing environment. Organizations operating in a
competitive sector relies more on performance measurements to develop strategies to gain
competitive advantage (Teeratansirikool et al., 2013). Organizations operating in the dynamic
environment need to take a careful approach to the effective management of their investments.
Performance measurement is imperative to help management develop strategic plans based on
the judgment of organization ability through the performance of the employees compared to
competitors.
Rapid changes in the business environment imply that organizations need to undergo
strategic changes. Evidence shows that performance measurement provides a benchmark for
developing strategic changes by providing constant feedback from the business environment.
According to Tapinos et al(2005), performance measurement has a greater impact on
effectiveness as compared to efficiency in organizations. This tendency is because of the
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
potential challenges arising as a result of bureaucracy and slowing down of business activities
(As cited Tapinos et al., 2005).
In conclusion, based on the discussion above, it is evident that performance
measurements are paramount when it comes to development and strategic planning in an
organization. Performance measurement’s complements strategic planning by providing
information necessary and controls that are essential for developing and implementing strategic
plans (Tapinos et al., 2015). The impact of performance measurement is greater in large
companies as compared to small and medium enterprises. This trend is because of the nature of
performance measurement’s paradigms and the nature of the larger organization to process and
use feedback from their complex structure. However, performance measurement is often
critical in ensuring that strategic planning and implementation is a success.
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
References
Taticchi, P. (2010). Business performance measurement and management: New contents,
themes and challenges. Berlin: Springer.
In Osman, I. H., In Anouze, A. L., & In Emrouznejad, A. (2014). Handbook of research on
strategic performance management and measurement using data envelopment analysis.
Teeratansirikool, L., Siengthai, S., Badir, Y., & Charoenngam, C. (2013). Competitive
strategies and firm performance: the mediating role of performance
measurement. International Journal of Productivity and Performance
Management, 62(2), 168-184.
De Waal, A. (2013). Strategic Performance Management: A managerial and behavioral
approach. Palgrave Macmillan.
PERFORMANCE MEASUREMENTS AND STRATEGIC PLANNING
Sena Ferreira, P., Shamsuzzoha, A. H. M., Toscano, C., & Cunha, P. (2012). Framework for
performance measurement and management in a collaborative business
environment. International Journal of Productivity and Performance
Management, 61(6), 672-690.
E. Tapinos R.G. Dyson M. Meadows, (2005),”The impact of performance measurement in
strategic planning”, International Journal of Productivity and Performance Management,
Vol. 54 Iss 5/6 pp. 370 – 384.
