Week 1: The Building Blocks of Performance Management Flashcards
What is Performance Measurement
it allows for managers to gauge how well an organisation is doing against its short-term goals and targets
What are the two contemporary performance measurement systems?
- Results and Determinants Framework (Fitzgerald et al., 1991)
- The Balanced Scorecard (Kaplan and Norton., XXX)
Explain why companies measure performance
EIMLA
1. Evaluation
2. Improvement
3. Motivate
4. Learning
5. Accountability
What is the Results and Determinants Framework?
The Results and Determinants Framework (Fitzgerald et al., 1991) is a performance measurement framework based on the service sector
What are the characteristics of the service sector?
“I Have Super Powers”
1. Intangibility
2. Heterogeneity
3. Simultaneity
4. Perishability
What is the results category of the results and determinants framework (Fitzgerald et al., 1991)
- financial measures
- competitiveness
The framework conceptualises these measures as LAGGING measures that reflect the ultimate objectives of an organisation
What is the determinants category of the results and determinants framework (Fitzgerald et al., 1991)?
- Quality
- Resource Utilisation
- Flexibility
- Innovation
The determinants category includes performance measures which are conceptualised as LEADING indicators
Distinguish performance measurement from the broader process of performance management
Fitzgerald and Moon (1996) made a significant contribution by extending the focus from performance measurement to performance management using their Buildings Block Model
What does Otley (1987) suggest about performance measurement systems?
Otley (1987) suggests that common to all systems is the need to answer 3 basic questions, which can be viewed as forming the basic building blocks of a performance measurement system:
- What are the dimensions of performance that the organisation is seeking to encourage?
- How are the appropriate standards set?
- What rewards and/or penalties are to be associated with the achievement of performance targets
What are the 3 building blocks of the building blocks model?
Fitzgerald and Moon (1996) put forward the building blocks model comprising of three blocks:
1. Dimensions
2. Standards
3. Rewards
What characteristics should the ‘Rewards’ block have in the Building Blocks Model (Fitzgerald and Moon, 1996)?
CCM
1. Clarity
2. Controllability
3. Motivation
What characteristics should the ‘Standards’ block have in the Building Blocks Model (Fitzgerald and Moon, 1996)?
OAF
1. Ownership
2. Achievability
3. Fairness
What is the service classification scheme?
The service classification scheme developed by Silvestro et al. (1992) is a framework designed to categorise different types of services based on their operational characteristics.
This classification helps organisations understand the nature of their service operations and design appropriate management and performance systems.
What can we conclude about the service classification scheme>
Whislt we can measure the companies on the same metrics for financial results, we need to differentiate when it comes to the determinants.
Different Services = Different Performance Measures
What are three things to consider when applying the Results and Determinants Framework to an organisation?
- Service Type - as this influences measurement mechanisms
- Business Strategy - Influences mix and weighting of measures
- Competitive Environment - Influences the nature of the control and measurement system
