Strstegic Control and Performance Measurement System

Topics: Strategic management, Management, Balanced scorecard Pages: 11 (2925 words) Published: December 6, 2012
Cr ciun Liviu
University of Craiova,Faculty of Economics and Business Administration, A.I. Cuza ,no. 13,, 0744197459
Gîrboveanu Sorina
University of Craiova,Faculty of Economics and Business Administration, A.I. Cuza ,no. 13,, 0723577164)
Ogarc Radu
University of Craiova,Faculty of Economics and Business Administration, A.I. Cuza ,no. 13,, 0723188836)
Abstract:Performance measurement techniques historically developed as a means of monitoring and maintaining organisational control, which is the process of ensuring that an organization pursues strategies that lead to the achievement of overall goals and objectives. This paper compares two of the most widely adopted performance management frameworks – EQFM and Balanced Scorecard. These methods are used to explain how strategic control and performance measurement can aid in the implementation of strategy and the improvement of organizational performance. Key words: Performance measurement, Strategic control, EQFM, Balanced Scorecard

Competitive pressures from within the industry, as well as external political, economic and other considerations are forcing the industry to re-examine and improve its modus operandi. The Royal Society of Arts, Manufactures and Commerce (RSA) said about the role of tomorrow's company: ,,To achieve sustainable business success in the demanding world marketplace, a company must use relevant performance measures .’’

The weaknesses in the current practice and highlighted areas of further work necessary to ensure the use of performance measurement is sustained and adds value to the industry.Andy Neely gives seven reasons why performance measurement is now on the management agenda. All of the points are relevant to any industry: the changing nature of work; increasing competition; specific improvement initiatives; national and international quality awards; changing organisational roles; changing external demands; and the power of information technology.

Performance Measurement Systems(PMS) and Strategic Control
Traditionally businesses have measured their performance in financial terms, profit, turnover, etc. These financial measures of performance have been the sole measures of a company's success. Performance measurement that has been based around financial measures has been deemed to be out of step with recent changes in industry, particularly relating to new technologies and increased competition. Performance measurement is furthermore criticized because it often focuses narrowly on easily quantifiable criteria such as cost and productivity, while neglecting other criteria important to competitive success .The traditional performance measures, developed from costing and accounting systems, have been criticized for encouraging short-termism; lacking strategic focus; encouraging local optimization; encouraging minimisation of variance rather than continuous improvement; not being externally focused. The subject of performance measurement is vast and numerous authors continuously add to the body of literature on the subject. The amount of literature on the subject demonstrates the problems that exist with performance measurement and its importance within the business community. Most authors agree that managers measure for two main reasons. Either they want to know where there are and what they have to improve; or they want to influence their subordinate's behaviour. Strategic control includes both of these 189

reasons. Initially strategic control was seen as enabling managers to see if their chosen strategies were being successfully implemented. This view has since been extended. Humans can be seen as "calculative receptors", their behaviour can be influenced by a strategic control system. They receive a stimulus, interpret this, assessing the perceived costs and benefits of various responses and...
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