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Performance Measurement And Sustainable System

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Question:

Discuss about the Performance Measurement and Sustainable System.
 
 

Answer:

Introduction

Performance measurement can be considered as a procedure of acquiring, assessing and reporting specific information as regards the performance of a particular individual, system/component, organization and group. In essence, performance management system can also be considered as a system of communication that can be designed to assist members of the staff to succeed and help them perform principle functions, meet expected levels of performance, acquire timely feedback and receive ratings of performance as well as rewards. The current study elucidates performance measurement and management system with special reference to the operations of the corporation Tesco Plc. The company reference of Tesco plc necessarily refers to a British transnational grocery as well as general merchandise retailer headquartered in England, United Kingdom. 

Performance measurement system can be regarded as an iterative procedure that essentially have the need to be repeated on a regular basis with special focus on customers and undertaking the right things.

The measurement cycle necessarily starts as well as ends at activities and functionalities of a specific corporation and passes through four different stages. The stages namely include measurement of performance, reporting performance, learning and improving. In essence, the first step involves usage of key performance metrics or in other words performance indicators for determining progress of a corporation in attainment of strategic as well as operational goals/objectives. Thereafter, the second stage involves utilization of a specific customer metric that is necessarily a simple measurement technique that can be used to assess what matters most to all the customers (Leyer et al. 2015). Thus, the corporation might have an appropriate strategic plan in a bid to attract as well as maintain customers and meet the needs of the customers. Additionally, this process also includes usage of process metric that refers to measurement techniques and instruments that can help in monitoring, evaluating and enhancing performance. Furthermore, people metric also refers to measurement technique that can be used for determination of value as well as effectiveness of initiatives of people. 

 

The management of Tesco Plc utilizes 6 big Key performance indicators/measures for the entire business. Increasing volume of sales can be considered to be an important factor towards success of business model. Reports reveals that both volumes as well as business transactions is used as performance dimension indicating enhancement of customer purchases as more number of products and more frequent purchases at Tesco Plc (Leyer et al. 2015).

Group operating profit of Tesco Plc helps in understanding profitability of corporation Tesco Plc.

In addition to this, retail cash that is generated from Tesco’s operations indicates performance from the perspective of cash flow.

The group net promoter score helps in understanding customer centricity of Tesco that helps in understanding the extent to which customers recommend shopping from Tesco Plc

In addition to this, the management of Tesco plc also implements Group Supplier Satisfaction for understanding Tesco Plc’s commitment towards strong partnership (Bennett et al. 2014).

Moving further, the performance measurement system of Tesco Plc also involves development of a strategic plan for the same. Essentially, the management of the corporation has developed a strategic plan that focuses on both alignment and concentrates on selecting the right actions for better delivery to customers and attainment of success for business.

In addition to this, the business also has performance measurement dimension for monitoring performance. The findings deduced from the dimensions include the following:

Repeated recommendation by Customers (for example, frequency of shopping) - This measure can help in delivering indication regarding progress in attaining competitiveness (Bennett et al. 2014).

 


Recommendation by colleagues as a good place of work as well as shop – This measure helps in monitoring openness, transparency along with responsiveness of business environment.

Building Trusted Partnerships – This measure helps in understanding relationship of Tesco with diverse suppliers, objective of restoring trust as well as transparency.

Grow sales – The growth in sales helps in monitoring performance of corporation from the perspective of growth in sales and attainment of stronger financial condition (Bennett et al. 2014)

Delivering Profit- The process of delivering profit can assist in understanding level of profitability of corporation

The monitoring procedure helps in explaining the extent of effectiveness of operational performance. Subsequently, this can help in controlling and improving the performance by rectification.

Influence of performance measurement system on operations of corporation

Analysis of the reports on Tesco Plc reveals the fact that in a bid to deliver superior strategy and enhance performance of business the management of Tesco Plc designed a strategic performance management structure. Performance framework tools helps in aligning corporate vision of Tesco Plc and permit corporations to make certain monitoring of delivery strategy and management. Nevertheless, it is significant to make the frameworks proper documents that can be regularly revised as well as updated to replicate the altering nature of the entire business (Leyer et al. 2015).  However, at the time when the strategic priorities of a corporation shift, the strategic performance structure needs to be altered too. Originally, the performance measurement framework of Tesco counting the Steering Wheel consisted of four different perspectives namely Finance, People, Customer as well as Operations. The operation perspective of Tesco mainly contains four different goals:

Shopping can be considered to be superior for different clientele

Work is necessarily simpler for members of the staff

The manner in which company operates is necessarily cheaper for the company Tesco

The manner in which company operate is very responsible and at the same time safe

 


The management of Tesco has updated framework of performance and replicate alterations as per the revised goals. There are several corporations that develop great framework of performance and then allows getting the framework stale (Bennett et al. 2014). Therefore, the framework fails to alter them in order to replicate alterations in the company’s strategy. However, management of the firm Tesco Plc evolved the performance framework in line with the organization’s strategic goals. Essentially, appropriate analysis of performance framework revealed the fact that the performance measurement structure fails to identify and take into account the perspective of the community.

However, one of the primary alterations is to add the community perspective to the existing performance framework of Steering Wheel of Tesco Plc. In itself, it can be hereby mentioned that the Tesco realised that issues namely climate alterations and the influence its presence has mainly on the regional community can be considered to be significant challenges that required strategic concentration as well as focus (Teeratansirikool et al. 2013). Analysis and elaborate review of the performance framework reflects the iteration of the particular Steering Wheel along with the community perspective that mainly two specific objectives mentioned below:

The addition of the new community perspective has necessarily led to initiatives that include reduction of the usage of carrier bags by around 50%, use of more regionally sourced raw materials and products and decrease in the overall carbon footprint. Thus, in this connection it can be hereby stated that the new operational perspective in the framework help the company Tesco plc to achieve the objectives of doing it right in the first time, delivering consistently, making jobs easier, understanding importance of jobs, saving time as well as money (Micheli  and Mari 2014).  

Evaluation of efficacy and efficiency of performance management practices in the light of academic framework

The SMART framework also known as strategic as well as reporting system pyramid that refers to a results determinants structure and input output and process framework. In addition to this, balanced scorecard can be regarded as an important performance measurement structure implemented within corporations. This framework is involved in the process of assessing individual level as well as department level performance. This mainly includes cycle time, waste management and ensuring delivery as well as quality. Analysis of the SMART framework thereby helps market as well as financial units of the business of Tesco Plc in measuring flexibility, level of productivity along with level of satisfaction of customers (Tätilä et al. 2014).

The corporate vision of Tesco plc is to attain long term success that is mainly focussed on business. Essentially, vision of the company is to become highly valued business by way of serving the customers, enhancing the communities, serving loyal colleagues and shareholders. The management of Tesco helps in recognizing the main role that mainly mission, vision as well as stratagems play in attainment of success and utilize a wide range of performance indicators for monitoring and evaluating the performance. The management essentially utilizes indicators such as frequency of shopping that can be used for defining loyal customers and customer satisfaction (Melnyk et al. 2014).

As rightly indicated by Pekkola et al. (2016), the results determination framework refers to a construct of mainly causality, stressing that the present business outcomes are primarily the product of prior business performance in regard to specific determinants. Furthermore, the results-determinant model primarily meets all the necessities of business to detect primary drivers of organizational performance for attainment of favourable results.

 

Input-Process-Output-Outcomes Framework

As correctly mentioned by Keong Choong (2013), Brown first introduced the notion of effect as well as cause associations in a specific performance measurement structure. In this case, there is a distinct linkage between five diverse stages of business procedures and their performance dimensions. In essence, inputs, system of processing, business outputs, business outcomes along with goals can be regarded as five diverse stages that can assist business concerns in distinguishing both input as well as output dimensions. This in turn can help in the process of identification of different factors that lessen or reduce the level of organizational performance and thereby hinder the progress. In itself, satisfaction level of employees, performance level of suppliers, financial dimensions can be regarded as input dimensions and system of processing. In essence, input along with system of processing along with output dimensions intend to attain higher level of satisfaction among diverse customers and maintain contented base of customers.

Becker et al. (2013) asserts that the balanced scorecard framework can be regarded as the most extensively utilized performance measurement structure in corporations. This helps in assimilating four different dimensions for the evaluation of performance of corporation. In essence, internal business perspective, customer perspective, financial perspective along with the learning perspective has the need to be enumerated for the purpose of determination of real performance of a specific corporation.  Fundamentally, the structure reflects the fact that the internal operations along with financial performance, diverse drivers of business performance need to have equal weight (Rosemann and vom Brocke 2015). As such, different perspectives of this framework is said to be interlinked. However, for the purpose of maximization of advantages of implementing the balanced scorecard tactic, corporations need to be associated to diverse measures through clear recognition of important facets that can help in driving the overall performance of the corporation.

The management utilizes the balanced scorecard approach for management of operations of corporation. Again, Tesco intended to deliver its strategy and needed to present a performance management structure that can outline company’s goals (Jeston and Nelis 2014). Thus, Tesco plc came up with a customised version of the balance scorecard also known as the steering wheel. Analysis of operations of firm reveals the fact that the five different sections of Tesco’s steering wheel help in balancing out both the effort along with resources that in turn can assist in operating as per the requirements of the stakeholders. Again, the steering wheel of Tesco essentially contains 20 objectives across five different perspectives that have helped in tracking and monitoring the firm’s performance. As a result of enhanced performance management system as well as practices, the company Tesco plc has recorded increase in sales, increase in price of shares along with greater share in stiffly competitive market of UK.

Performance Management Theories

Wheelen and Hunger (2017) assert that issues due to inadequate productivity mainly stem from inefficiencyof performance management system. This is so because appropriate performance management can be referred to as the a persistent process of detecting, enumerating as well as developing a specific benchmark/yardstick for mainly individual performance and bringing into line individual performance with specific strategic goals. Fundamentally, reward system is founded on performance outcomes of diverse members of the staff and feedback is provided to diverse individuals for carrying out any further augmentation in organizational performance. Essentially, in this connection, prior academic theories namely goal setting theory as well as the expectancy theory can be considered as two important theories of performance management that can be implemented within a specific corporation. Brocke and Rosemann (2014) asserts that the goal setting theory elucidates in detail the significance of establishing objectives of performance for different members of the staff since these objectives inspire the members of the staff to enhance their performance. Again, the expectancy theory can be regarded as a theory centred around a specific hypothesis that states that individual performance can get hugely affected by the anticipations as regards future outcomes (Jenkins and Williamson 2015). However, in a bid to eliminate the issues related to productivity at the level of organization, it is essential to eradicate the same from the individual level by persistently motivating employees to execute better performance.

 

References

Becker, J., Kugeler, M. and Rosemann, M. eds., 2013. Process management: a guide for the design of business processes. Springer Science & Business Media.

Bennett, W., Lance, C.E. and Woehr, D.J., 2014. Performance measurement: Current perspectives and future challenges. Psychology Press.

Brocke, J.V. and Rosemann, M., 2014. Business process management. Wiley Encyclopedia of Management.

Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.

Jeston, J. and Nelis, J., 2014. Business process management. Routledge.

Keong Choong, K., 2013. Understanding the features of performance measurement system: a literature review. Measuring Business Excellence, 17(4), pp.102-121.

Leyer, M., Heckl, D. and Moormann, J., 2015. Process performance measurement. In Handbook on Business Process Management 2 (pp. 227-241). Springer Berlin Heidelberg.

Melnyk, S.A., Bititci, U., Platts, K., Tobias, J. and Andersen, B., 2014. Is performance measurement and management fit for the future?. Management Accounting Research, 25(2), pp.173-186.

Micheli, P. and Mari, L., 2014. The theory and practice of performance measurement. Management accounting research, 25(2), pp.147-156.

Pekkola, S., Pekkola, S., Ukko, J. and Ukko, J., 2016. Designing a performance measurement system for collaborative network. International Journal of Operations & Production Management, 36(11), pp.1410-1434.

Rosemann, M. and vom Brocke, J., 2015. The six core elements of business process management. In Handbook on business process management 1 (pp. 105-122). Springer Berlin Heidelberg.

Szabo, S. and Sidor, J., 2014. The performance measurement system–potentials and barriers for its implementation in healthcare facilities. Journal of Applied Economic Sciences, 9(4), pp.728-735.

Taticchi, P., Garengo, P., Nudurupati, S.S., Tonelli, F. and Pasqualino, R., 2015. A review of decision-support tools and performance measurement and sustainable supply chain management. International Journal of Production Research, 53(21), pp.6473-6494.

Tätilä, J., Helkiö, P. and Holmström, J., 2014. Exploring the performance effects of performance measurement system use in maintenance process. Journal of Quality in Maintenance Engineering, 20(4), pp.377-401.

Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), pp.168-184.

Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.

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