Introduction
Performance measurement has been described as a key tool in the achievement of TQM (Total Quality Management) in all types of organizations. The traditional approach to performance measurement has been focused on the examination of financial performance of an organization. This has mainly focused on a performance indicator that is available through changes in either profits or losses.
However, researchers who work in this area indicate that cost accounting information does not avail a complete bundle of information to support quality journeys. This is because they do not consider a contingent of issues, such as improvements, seen by the customer.
Furthermore, they focus on the examination of a stakeholder from the view of an investor or shareholder. This has presented a number of challenges for non-profit organizations with the main aim to serve a specific segment of the society. Furthermore, performance is best measured through an examination of all perspectives of an organization.
Regardless of the industry, organizations have the responsibility to come up with strategies that make it easy for customers to not only know about their goods and services, but also have the desire to provide assistance with them (Armstrong, 2007). This feat is not easy to accomplish because of challenges businesses have to face.
There is the issue of stiff competition from other businesses in the same industry, economic problems that hinder the customersâ willingness to buy some products, and the presence of several distractions, which have the potential to come in between the customer and the companyâs products. These are just some of the challenges that managers have to deal with in their bid to reach out to the intended audience.
Need For Performance Measurement
Many organizations in the today’s business world recognize that there is the need to capture a complete picture of organizational performance. This has led to the incorporation of a whole cocktail of performance measurement tools in attempts to capture their organizationsâ performances.
It is within this perspective that the need to institute effective performance measurement mechanisms has attracted a host of organizations and researchers. General understanding is that through the entrenchment of a culture that takes cognizance of organizational objectives, a cocktail of benefits and efforts focused on better organizational performance can be implemented.
According to Kaplan and Norton (1992), the focus of these performance measurement initiatives should revolve around finances, internal processes, learning, growth and, of course, customers.
In fact, empirical research on performance measurement shows that undertaking this process can help management with implementing the process that supports process improvement and development of a cost-effective product design (Turney, 1991), and avail managers with an integrative framework to manage organizational activities.
WWP (Wounded Warrior Project) stands at a vantage position to meet the expectations of the stakeholders by examining the performance of the four major organizational perspectives i.e., learning and growth, customers, internal business processes and finances.
The learning and growth perspectives âwill be viewed as an attempt at promoting growth and development by creating an enabling atmosphere that supports change and innovationâ (Amstrong, 2007). According to Armstrong’s opinion (2007), this strategy should be boned in mind of any Chief Executive Officer of the organization in order to ensure an overall efficiency of the business process.
This may be implemented through the modernization of the services or goods, especially through the employment of modern technology and replacement of obsolete equipments in order to cultivate and enhance better quality of services to clientsâ satisfaction. Focus on infrastructure improvement should be paid cognizance to.
The development of staff should also be carried out through creation of a learning organization and where organizational learning takes place at the same time as advocated for by Armstrong (2007). This should be carried out through the provision of avenues that promote learning, training, and development. It should be understood that while technology, products, and services can be replicated, knowledge cannot.
In the global competition today, attention to the human capital has grown in bounds. To move forward and drive successful business, staff focus, engagement and involvement should be paid cognizance. Subsequent benefits would include better quality of services to achieve total customer satisfaction, increase business, obtain lesser complaints, and a train a fully engaged workforce that is fully committed to its responsibilities.
The internal business perspective, on the other hand, addresses issues related to how business processes are adopted to the needs of the customers and shareholders. This should be implemented through the creation of an internal infrastructure that supports high quality of services in time at a cost effective manner with registered benefits in overall businesses performance.
Clients’ focus should ideally center on better service delivery and should reflect the companyâs value attached to the customers (Armstrong, 2007). This should be applied through improvement of service delivery and creation of better efficiency in the delivery of services to the clients. Essentially, this should be geared towards timely and efficient services delivery to clients in a cost effective manner that ensures for sustained competitiveness.
Ideally, the management should embrace strategies that ensure the delivery of high quality service and integrity, development of products that really match with the needs of the clients, ensure value for money spent and devise mechanisms that make it easier to do business with the clients.
Finally, the financial perspective addresses how WWP wishes to be viewed by the stakeholders. The management can implement this though several initiatives. The first one would be the establishment of a price control that would allow for significant improvements in investment in the services that ensure better advantage. WWP will create strategy maps highlighting the areas it want to measure.
This will act as the overall architectural framework specifying the critical elements and associated linkages for the overall strategy. This, in essence, acts as a universal message presentation forum for the top executives towards specification and subsequent presentation of the envisaged destination, mapping of the route to be followed and communication mechanisms.
Stakeholder Analysis and Recommendation for Participation
With the mission to honor and empower wounded soldiers, WWP consists of a number of stakeholders whose interests and views must be given cognizance in performance measurement program.
These include the wounded soldiers, donors, families of the wounded soldiers, the government, and social welfare organizations. This is because for WWP to achieve its objectives, it must develop links with other industry players and enlist the support of its stakeholders.
Ideally, the focus on well defined performance dimensions should require that the development of specific measures to be done, that helps to effectively monitor and progress in the articulated dimensions (Armstrong, 2007). As Kanji (1997) has noted, the dynamics of the operational environments dictates that the changing needs of all the stakeholders be captured in the performance measures.
Consequently, it is important for WWP to examine performance from an internal as well as external perspectives, listen to customers, suppliers and other stakeholders, and not fall into the trap of building a self-centered performance measurement system.
It is therefore necessary that WWP develop an ideal system that leads to the development, which supports learning and innovation. This should be the essential and final aim of a good performance measurement system that captures the interests and expectations of the stakeholders (Kanji, 1997).
The complexity of an organizational management entails the need for managers to view performance in a holistic manner, where several areas are captured simultaneously (Kanji, 1997). This should be structured around the tenets of several factors that provide performance of a multi and interrelated perspective, and is linked to organizationsâ values and strategies.
Furthermore, WWPâs performance measurement should be based on critical success factors or performance driver, valid, reliable, and easy to use, one that facilitates comparisons to be made and progress to be monitored, that is linked to the rewards system and encourages the appropriate behaviors and finally, one that highlights the improvement areas or recognizes the opportunities and suggests improvement strategies.
As it can be deduced form the above presentations, it appears that the approach to performance management needs to be holistic, inclusive, and systematic. Essentially, a good performance system should present the combined effect of measuring different aspects or dimensions that are interacting or interrelating with each other.
SWOC analysis of WWP
A SWOC analysis is a major way to examine the position of a business and examine areas of weaknesses and challenges it needs to focus on and areas of strengths and opportunities it needs to explore. A SWOT analysis simply means looking at the strengths, weaknesses, opportunities, and challenges to the business in order to achieve its strategic intents (Hill and Westbrook,1997).
WWP has several strengths, a couple of weaknesses, several opportunities, and a small number of challenges. For example, WWP has the capacity to attract highly trained personnel from a large pool of wounded soldiers it seeks to serve. Furthermore, WWP has a well-established knowledge base, makes use of technology in its programs, and has extensive contacts with its clients.
However, it is encompassed by a number of weaknesses that hinder to strive towards meeting its objectives. These include possible lack of motivation and low reputation. This because WWP is still in its formative years and as such, has not developed extensive networks and attain reputation of high status.
On the other hand, WWP has a number of opportunities, thus it can ensure that it lives up to the expectations of the stakeholders. These include availability of technological innovations to reach larger donor bases and increasing levels of understanding and empathy shown towards wounded soldiers.
A number of challenges that reduce its capacity for competence can also be pointed out. WWP relies on donors for support and as such may suffer from the challenge of adequate resources to undertake its programs. Furthermore, it must be subjected to a number of government regulations that may limit its scope in soliciting funds and operations.
Performance Measurement
Performance management (PM) refers to the assessment of progress at different organizational levels, toward achieving predetermined goals, as well as communication and action in response to actual progress (Bourne, 2003). Within this perspective, it is fundamental to recognize that PM is not merely a tool for operational management.
On the contrary, it is, at its best, an overall, integrative approach, linking operational activities to strategic outcomes. Organizations in the business world employ some type of strategic planning in the development of objectives or initiatives.
It has been advanced that the key to achieving success in the organizationâs performance is an accurate and insightful linkage of the organizational visions and daily activities within the organization.
Empirical evidence would however paint the picture that is not always easy or attainable (Armstrong, 2007). One of the chief bottlenecks has been cited as the use of poor performance measures (Kaplan and Norton, 2007).
Several researchers have buttressed this point and pointed out that the lack of appropriate measurement tools as positively correlated to organizationâs failure to attain envisaged goals (Kaplan, 2007). For example, Armstrong (2007) in his study on organizationâs use of performance measures has concluded that a majority of organizations fail to link their firmsâ strategies with the performance measures.
In the opinion of Kaplan (2007), the failure to encapsulate the strategic intents in performance measures has proved to be a major headache to many managers.
This is particularly worrying when an effective measurement system provides the managers with an ample tool that can be employed in the assessment of whether activities occurring within a facility, division or department are in support of the attainment of the firms overall objectives as stipulated in the vision and missions of the firm.
Brotherton and Hacker (2006) have pointed out that what is missing out in most management strategies may not be the planning aspect but rather the implementation. In their opinions, the implementation should encapsulate an effective measurement system in order that the actions and plans are appropriately linked and are in tandem with the envisaged corporate objectives.
This should ideally present an accurate presentation of where WWP is now and where it intends to be. A salient limitation has conversely been cited as the failure to link other aspects of organizational activities such as internal business organization, employeesâ development, learning and organizational growth and customer relations in performance measures and the sole reliant on financial assessments of organizational performance.
As Kaplan (2007) has pointed out, âover 70% of CEO failures came, not as a result of poor strategy, but the inability to execute.â Indeed, the departure from traditional financial measures as the anchorage on which organizational wellbeing is grounded has been pointed out as the reason for the invention of the Balanced Score Cards (Kaplan, 2007).
According to Brotherton and Hacker (2006), putting the organization vision and linking this to the strategy of organizations is the key ingredient to success in performance measurements, and thus, the strategic planning process should ideally encapsulate the strategic intents of the organization. This, to the author’s opinion should be the starting point in effective measurement system.
Essentially, the vision of the organization needs to be translated into specific, measurable objectives or initiatives. This is because by quantifying the vision through measurable objectives, an organization is able to determine whether it is on the right track.
This will enable WWP to assess the rate of progress towards the attainment of the stipulated objectives. Unfortunately, majority of organizations appears not to pay heed to these sentiments (Armstrong, 2007).
Armstrong (2007) has pointed out that performance measurements at their broadest forms that should involve the setting up of performance goals and the subsequent measurements of the organizationâs attainment or lack of such goals against a set criteria (Brotherton & Hacker, 2006).
Towards this, performance metrics are developed for each level and function within the organization, structured around the frameworks in order to facilitate the attainment of the envisaged goals and objectives.
Thus, while the specific steps and verbiages may vary among the performance management methodologies and systems, the general bearing is essentially the same among the multitudes of organizations that claim to measure their performances.
Kanji (1997) has observed that accounting figures alone do not provide a clear direction or an emphasis on whether the particular elements under scrutiny will result in good or poor financial results. This is because these financial measures may not pay cognizance to the need for improving customer satisfaction, quality, cycle time, or even employeesâ motivation.
Indicators of the Achievement for the Projected Outcomes
As it has been stated above, performance measurement has been described as a key tool for the achievement of TQM (Total Quality Management). The main indicator for the achievement of the projected outcomes of the performance measurement in WWP will be the attainment of TQM constructs.
These include leadership, management, and empowerment. In essence, TQM attainment in WWP as a non-profit organization calls for the inclusion of all stakeholders in decision-making.
Total quality management (TQM) has been considered an important theme in business and management studies over the years due to its capability of influencing the desired outcomes of individuals and organizations alike (Kaplan, 2007). Various definitions of TQM have been used in numerous studies and no general definition of TQM exists in todayâs literature. So far, the concept of TQM has different meanings to different individuals.
Dale (1999) states that TQM refers to the overall participation of organizational members to effectively make use of their business processes and generate the products and/or services necessary for accommodating the needs and desires of customers. Meanwhile, Yang (2005) defined TQM as âa philosophy and a set of guiding principles that represent the foundation of a continuous improving foundation.â
TQM can also be described as a continual process that aims at providing excellence by developing and maintaining the proper skills and characteristics among organizational members, so they can generate satisfaction among their customers (Lakhe and Mohanty, 1994). Similarly, Yang (2005) believes that TQM is a set of practices that promotes improvement, frequent evaluation of results, as well as long-term planning.
Though there have been different definitions for TQM that have been mentioned above, the conceptâs general principles and values are still described in each of them (Yang, 2005).
TQMâs philosophy of management is centered on customers that encourages members of a TQM organization to efficiently facilitate the improvement of their company through the active involvement of employees. Within WWP, the individual concepts of process control, service quality, and quality improvement are all integrated into the TQM approach.
Conclusion and Recommendations
Many organizations in the business world today are recognizing that there is a need to adopt performance measurement tools that present a complete picture of organizational performance and are mushrooming towards effective tools in their performance measurements.
WWP stands to reap a cocktail of benefits through the initiation, development, and implementation of effective performance measurement mechanisms that have the capacity to enhance its performances levels. As it has been stated above, critical organizational perspectives that should emphasize on this program include finances, internal processes, customers, growth and learning.
These may be adjustable providing particular organizational contexts in terms of the number and perspectives. WWP is best placed to create strategy maps highlighting the areas they want to measure. This will act as the overall architectural framework specifying the critical elements and associated linkages of the overall strategy.
This in essence acts as a universal message presentation forum for the top executives towards specification and subsequent presentation of the envisaged destination, mapping of the route to be followed and the communication mechanisms.
The philosophy behind this step is developing a measure that goes beyond just financial performance. The advantages are that the manager can adopt a holistic view of the organizational performance, a cohesive and ongoing assessment is also possible, a focused connection of the top level and mid levels strategies is established, and it improves the organizational performance reporting system.
The benefits of adopting performance measurement program outweigh its limitations, chief among them the fact that the process of design and implementation is all-inclusive. While being a top down approach, the strategic intents still have to involve the mid level and floor employees.
The key to success are therefore reliant on proper planning, implementation, and follow up and the performance measurement tool must have the capacity to present a more holistic approach to the organizational performances that would essentially encapsulate all the key elements of performance.
References
Armstrong, A. (2007). A hard book of human resources management. Kogan Page Publishers: London.
Bourne, O. (2003). The balanced scorecard: translating strategy into action. Cambridge, MA: Harvard Business School Press.
Brotherton, L and Hacker, L. (2006). The golden rules for implementing the balanced business scorecard. ,Information Management & Computer Security, 45 (3): 12-25.
Hill, T. & Westbrook, R. (1997). SWOT Analysis: Itâs Time for a Product Recall. Long Range Planning, 30 (1): 46â52.
Kanji, Y. (1997). Total quality management and the performance measurement barrier. The TQM Magazine, 10 (2): 45-63.
Kaplan, R. and Norton, D. (1992).The balance scorecard-measure that drive performance. Harvard business Review: Harvard.
Lakhe, R.R. and Mohanty, R.P. (1994). Total quality management concepts, evolution and acceptability in developing economies. International Journal of Quality & Reliability Management, 11 (9), 9-33.
Turney, K. (1991). Essays on performance measurement models, Universitat Pompeu Fabra, Australia.
Yang, C.C. (2005). An integrated model of TQM and GE-Six Sigma. International Journal of Six Sigma and Competitive Advantage, 1 (1), 97-105.