Performance Pyramid
From Wikireedia
The Performance Pyramid also know as the SMART Strategic Measurement and Reporting Technique by Cross and Lynch 1991 viewed businesses as performance pyramids. The attractiveness of this framework is that it links the business strategy with day-to-day operations.
- Objectives are top down and measurements are top up
- Quality and delivery should equal Customer satisfaction but watch that Reducing costs do not lead to a fall in staisfaction
- The left side are external influences and the right is internal
- It starts at the individual level all the way to corporate level
- Provides a more integrated approach than Fitzgerald and Moon
- Focuses on the right priorities
- Uses both financial and operational information to support the decision-making process
Performance measurements Benefits and Problems
- Develops agreed Measures
- Clarifies the Objectives of the Organisation
- Greater understanding of Process
- Helps faciitate comparison between divisions
- Promotes Accountability to stakeholder
- Helps sets Targets for managers
Problems
- Tunnel Vision - Undue focus on measurements to the detriment of other areas (e.g Doctors must see a patient in 48 hours)
- Sub-optimizatoin - focus on one measurement to the dertiment of others
- Myopia. Focusing too much on short-term measures and not looking looking long-term
- Measurement fixation- meeting student quotas but leading to higher drop out rates
- Misrepresentation - Not presenting the data correctly
- Mis-intrepreting the data -
- Ossification - keeping of out of date measures
Stakeholders
Who are they?, how many?, what to they want?, do they want the same things?, what is the time frame?
Criticisms
- Terms are so broad that it is difficult to put in to practice.
- Shareholders are not explicitly considered (just the stakeholders), hence performance measurement is not extended to include Shareholders objectives. At least not directly
See also
- Balanced Scorecard
- Fitzgerald and Moon
- http://www.som.cranfield.ac.uk/som/dinamic-content/research/cbp/IJOPM2010.pdf
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