Understanding Organizational Performance

Topics: Management, Strategic management, Balanced scorecard Pages: 12 (3307 words) Published: May 12, 2014
1.0 – Introduction
The focus of this paper will be on investigating an organization, their performance management system and our recommendations for the future. Historically performance management is defined as evaluation a firm through metrics such as return on investment and economic value added. Our analysis will cover not only the financial performance of our chosen firm, but also their values in behaviors as well as their objectives. Thus, we will ascertain if the current system of performance management held by the firm is aligned with their objectives and appropriate for their situation. 1.1 – Why is strategic performance management important?

Strategic performance management is a process where an organization develops its objectives, mission, and strategy, and measures and guides itself through management of key performance indicators or other success factors. Czarnecki (1999), states that measuring your organizations performance through each of the areas of most impact is essential for thoroughly assessing your performance. Thus when a firm like TESCO is preparing to make decisions they need to analyze a relevant data which can be converted into actionable information on their performance objectives. 1.2 – Describe the structure and plan of the investigation The structure of this investigation will be to first discuss the organization and its activities in the sector. Secondly, we will discuss the history of performance management of the organization and the relation between their systems and the actual performance. Finally, we conclude with highlighting any areas of improvement and making recommendations for senior management. 2.0 – Performance Management in TESCO

TESCO has employed a system called the TESCO steering wheel to handle performance measurement. This process is similar to the balanced scorecard created by Norton and Kaplan. The TESCO steering wheel was implemented in the late 1990’s and served as part of the critical expansion that the firm underwent as they explored innovative retail formats, product lines, and geographic areas. It can be attributed to their newfound success. 2.1 – Introduction to TESCO

The organization that we will be investigating will be TESCO. TESCO is one of the largest retailers in the world and an organization which has shown success in utilizing strategic performance management. There are several styles of performance management which range from Porter’s five forces, to lean management, to the chaos model. The model which was discovered in 1996 and has been one of the most popular is the balanced scorecard. This model which was discovered by Norton and Kaplan has been used by ¾ of European and Fortune 500 organizations (Balanced Scorecard, 2010). TESCO is unique in that it has implemented this model successfully.   In 1995, Tesco surpassed its competitors Sainsbury’s as the top superstore in the United Kingdom. This catapulted its market shares from 15.4% in 1988 to about 29% in 2004. Acquisitions include the famed convenience superstore, T&S plc and almost 900 stores around the UK. TESCO has a 30% market share in the United Kingdom and is dominating the market over its competitors. 2.2 – Why are they in business (Stakeholder or Shareholder?) TESCO is in business and highly successful because their founder was a driving force in setting up a foundation of a thriving market in the UK early on. He believed in piling products high and selling them at a cheap price. Since, the company has gone public they have placed close attention to the desires of the shareholders and places the fifth perspective of the steering wheel (financial) as a big component in the performance of their executives. Spitzer (2007) stated that holistic performance measurement enables management to continually assess the fruits of their labor with conducting a review. 2.3 – Strategic performance management of TESCO

In regard to investing in their workforce, TESCO believes strongly that human capital...

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