Performance Measurement Essay Sample
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Performance measuring day of the months back many old ages and its coming accrue from the economic displacement from industrial age to knowledge based economic system. ( Sampson. 1992 ) . While the industrial ages depended on fiscal steps and supply concatenation production the cognition based economic system suffered because of deficiency of concern intelligence and hapless executing techniques and deficiency of steps to estimate impact of non fiscal constituents. ( Sunden & A ; Stralton. 2006. Chrystal & A ; Lipsey. 1997 ) . There are several theoretical accounts that have been used by direction to mensurate the public presentation of their direction of both touchable and intangible assets for case the balanced scorecard and prism theoretical accounts of mensurating public presentation.
This leads to the most logical inquiry why step public presentation? Well the intent of enganging in public presentation measuring is to supply feedback to direction every bit good as employees in the schemes employed and the work they are making. ( Smith. 2005 ) . This helps the direction to easy place countries of failing and better where possible. It besides helps direction to aline employee undertakings with schemes so that the aims of the organisation are met. Back to the issue at manus. this paper sets out to compare and contrast two public presentation measuring tools. that is. the prism theoretical account and the balanced scorecards in a command to happen major commonalties every bit good as differences. In add-on. the critical facets of a good public presentation measuring system shall besides be explored. This paper besides highlights definitions. of important footings. and issues. statements and grounds of the issues explored throughout the paper and eventually offers personal sentiment to the issues in inquiry.
First and foremost a clear definition of the two public presentation measuring systems is in order if for no other ground than to acquire a clear image of where we are coming from. The two public presentation measuring systems are supposedly alone and yet both tend to hold a comprehensive position on what constitutes good public presentation. Possibly. a expression at each of the public presentation measuring will assist in make fulling in the inquiry of the similarities and differences of between the two. In order to understand clearly what a balanced scorecard is it is worthwhile to get down with what it is non. Balanced scorecard is non the new direction craze. it is non a signifier of undertaking direction or employee rating system. and it is non a tool or a soft ware and is it neither a control system nor process betterment systems. ( Meyer. 2002 ) .
A balanced scorecard is a strategic direction attack that was developed by Harvard concern school bookmans Dr Robert Kaplan and David Norton in the 1990s. This was in response to the noteworthy failings that were built-in in old direction systems. The balanced scorecard provided a manner of clearly mensurating public presentation so as to equilibrate the fiscal positions with the organisation ends and vision. ( Kaplan & A ; Norton. 2001. Lipe & A ; Salterio. 2000 ) Notably. a balanced scorecard doubles as a direction system and as a measuring system. It basically helps the direction to hold a clear vision for the organisation. strategize and finally interpret that vision and schemes into actions. ( Smith. 2005 ) . This helps to give comprehensive feedback on both the internal and external procedures and results as that uninterrupted betterments and public presentation are realized as a consequence. ( Neely. 2002 ) . A balanced scorecard does non work entirely ; instead it depends on the committedness and cooperation of undertaking directors for its success to be realized. ( Artley & A ; Stroh. 2001 ) . This means binding public presentation to scheme or actions to results.
That said. what is a prism theoretical account? A prism theoretical account is a public presentation measuring system that comprises of five important aspects. These aspects represent the cardinal facets in the organisation that need to invariably be monitored to find the public presentation of the company. ( Fagerhaug & A ; Andersen. 2002 ) . The top and bottom aspects of the prism represent stakeholder’s relation with the company while the bottom represents stakeholders’ part to the company. The staying side aspects represent schemes procedures and capablenesss of the company. The prism theoretical accounts of public presentation plants in more or less the same manner as the balanced scorecard in that they facilitate direction acquire a clear image of who their stakeholders are and what they need from the company. ( Artley & A ; Stroh. 2001 ) . This lays basis to developing schemes that will present what the stakeholders want and the procedures required to back up schemes that deliver stakeholders demands. Additionally. a prism theoretical account highlights the company’s capablenesss and specifically the capablenesss needed to prosecute and put to death the procedures and schemes in the satisfaction of stakeholder. These public presentations steps facilitate the organisations to be successful in the long term particularly in today’s competitory concern environment where lucidity of what the company has and outlooks of stakeholders are critical to guaranting endurance of the organisation. ( Smith. 2005 ) .
The prism theoretical account besides places a company in a manner that it has a clear apprehension of what it expects from the stakeholders for case. employee trueness. long term investing from stockholders profitableness and so on ( Sunden & A ; Stralton. 2006 ) . In existent fact this is what constitutes the focussed thrust for good public presentation.
Differences and Similarities
As pointed out earlier. the public presentation prism theoretical account is five faceted and it starts with the stakeholders instead than the schemes. On the other manus the balance scorecard starts with the schemes so the stockholders follow at the vertex. The principle behind get downing with the stakeholders in the public presentation prism is that a public presentation steps is non meant to track whether the path an organisation is traveling to take will take it to their finish. A public presentation step is indispensable used to state the organisation whether or non it is traveling in the way of its finish. The public presentation prism takes note of that by ranking the stakeholders’ satisfaction and part extremely. The rule stakeholders here include the providers. clients and investors to the company. employees. mediators. jurisprudence and the external community. By sing what the stakeholder’s demands and wants are every bit good as what the company’s outlooks and demands desired to be derived from the stakeholders are. so a scheme to complement or run into them is designed. The balance scorecard and the public presentation prism theoretical account provides a Windowss to imagine future public presentation which facilitate the organisation to realine its assets and construct new schemes to accomplish interruption through public presentation ( Kallas & A ; Sauaia. 2003 ) .
The prism theoretical account ranks its five positions in order of precedence as the stakeholders’ satisfaction and part. schemes. procedures and capablenesss severally. The balanced scorecard views the organisation in a different positions viz. the client. fiscal concern procedure and larning growing position ( Dilla & A ; Steinbart. 2005 ) . The major inquiries that guide the user of a prism theoretical account of public presentation measuring are who are the cardinal stakeholders. what are their demands and wants. what schemes are needed in topographic point to run into these demands and wants? What processes are needed or should be improved to ease executing of the schemes? What nucleus competences should we run to heighten procedure and what parts from stakeholders are indispensable in helping the company to keep and develop capablenesss?
Notably the public presentation prism theoretical account is non one that is a ‘one size tantrums all’ theoretical account and it accords the users flexibleness to orient the theoretical account to suit organisational demands establishing from the five rule dimensions. i. e. hereafter. people development. procedure. market/customer and fiscal. The prism theoretical account tackles the defect of the balanced scorecard by turn toing the stakeholder value instead than the stockholder value entirely. On the other manus a balanced scorecard focuses on usage of scheme maps to find good public presentation. The balance scorecard is more interested in the cause-effect relationship between the positions of public presentation step and the strategic aims. Kaplan & A ; Norton. 2001 ) . Additionally. the balanced scorecard is built on the premiss that bringing high quality value leads to fiscal public presentation. ( Pray et al. 2003 ) . In order for this to go on. the balance scorecard proposes designation of internal procedures that need to stand out. Another difference between balanced scorecard and the public presentation prism is that the balanced mark card underpins the value of intangible assets in lending to procedure and costumier propositions ( Smith. 2005 ) . This intangible assets include the cognition accomplishments and competences of the employees in the organisation. information capital and organisation civilization. ( Smith. 2005 )
One major similarity between the balanced scorecard and the public presentation prism is that they both have similar attack in stressing analysis of non-financial steps of public presentation. Both the public presentation prism and the balance scorecard place the importance of the human resource in part to the success of the organisation.
Generic critical facets of good public presentation measuring system
A good public presentation measuring system is across-the-board and comprehensive. This means that the major constituents of public presentation step should be included in the designing for case. it should hold a elaborate analysis of the stakeholders’ needs. the cardinal procedures. capablenesss. results. senior direction engagement. A good public presentation measuring system is clear on what it wants to mensurate and where it intends to travel. It may sound cliche the organisation must cognize where it is traveling and therefore the public presentation measuring system must be as such. If this is non clear so the balanced scorecard or the prism theoretical account makes no sense to the administrations. ( Fagerhaug & A ; Andersen. 2002 )
More to that. a good public presentation measuring system must be straight linked to the organisation scheme so that the two act as benchmarks to estimate public presentation. It must be whole in the sense that all the variables that communicate ‘good performance’ must be included in the theoretical account. A good public presentation measuring system has both fiscal steps incorporated in it although chiefly. a non-financial step is the most dominant facets in the public presentation measuring theoretical accounts. ( Kirkegaad. 1997 ) . Additionally. it is flexible and able to alter with clip as demands and demands alteration. This is because a inactive public presentation measurings system is likely to be rendered disused within a short clip. Furthermore. it should be simple and easy to utilize so that about all stakeholders can utilize it to mensurate single public presentation. It will besides let for customization depending on the assorted organisation divisions and maps every bit good as demands. A good public presentation measuring system must supply feedback to the user and this means timely and accurate feedback. In a universe where velocity is of the kernel. lagging steps are of small or no usage to the organisation. Besides. truth is of import non necessary in absolute footings but in footings of consistence. This is because betterment in public presentation extremely depends on this.
A good public presentation measuring system is developed for the intent of bettering public presentation in all important countries and non simply to supervise public presentation. Thus it should be actively used and referred to clip and once more to happen countries of betterment. ( Zairi. 1994 ) Furthermore and most significantly. a good public presentation measuring system identifies spreads between the coveted and existent results and explains the spreads in a clear manner and goes in front to interrupt it down to little constituents that can be addressed to contract the spread. A good public presentation measuring system is sufficiently detailed in footings of supplying high-ranking information on countries justifying betterment and the actions to be taken in a concise overview. On top of that a good public presentation measuring system should non transfuse fright of penalty in the stakeholders for hapless public presentation. This means that the informations therein should non be sabotaged or distorted to justify such a thing. Besides. a good public presentation measuring system enables answerability and enhances taking duty for both good and bad public presentation. ( Fagerhaug & A ; Andersen. 2002 ) . This means that members in the organisation take state of affairss in their manus accept incrimination and do stairss to rectifying the job. These critical facets of public presentation step act as mention list and non a manner of frightening organisations to believing twice or thrice on whether to follow the system.
Any successful organisation starts with good public presentation steps and non the frailty versa. By and big. the balanced scorecard and the public presentation prism theoretical accounts are all direction system that enables organisations to clear up their visions and schemes and interpret them into actions. A company should non shy away from uniting the public presentation measuring systems with other fiscal measuring tools such as EVA. SVA. EFQM. IAM and Business excellence theoretical account as they can be safely used analogue. ( Hatry. 1999 ) . The success of the public presentation measuring theoretical accounts lies in how good a company intergrates the theoretical accounts with the day-to-day operations of the organisation and particularly with the human resource undertakings. Additionally. the support of the top-level direction every bit good as the organisation staff facilitates the effectivity of the public presentation direction systems. Last. the organisation should avoid the enticement or copying the systems used by other companies instead should put in developing one that meets the company objectives efficaciously. Last. and more significantly the PMS should be revised invariably to non be disused.
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