Nature of Strategic Performance Measurement Systems
In the present time, it is more valuable, significant and essential for all the kinds of business firms to effectively and adequately use SPMSs (Strategic Performance Measurement Systems) in order to improve firm’s performance, reduce costs, motivate employees and attain competitive advantages. In addition to this, it should also be noted down that, SPMSs not only improve organizational performance but also bring innovation and development at the workplace that is more important to motivate and encourage the employees. Hence, it helps the business firms and their employees to attain core and strategic organizational objectives in a more dynamic manner. For example, with the effective use of SPMSs, a company could be able to improve different business areas and bring necessary improvements quickly. On the other hand, SPMSs are also strategic management or planning tools that assist a company to overcome several serious business challenges and issues effectively. At the same time, it is also analyzed that, Strategic Performance Measurement Systems are also major tools of growth for a company that directly or indirectly improves decision making abilities of a company, its staff and management (Shim, and Siegel, 2005). For example, SPMSs allows companies to take decisions in more complicated business situation and achieve competitive advantages. In the same way, SPMSs provides a lot of tangible and intangible business opportunities to the business firms to improve their financial and non financial performance.
Basically, this research paper is characterized with the different objectives and purposes. For case, this research study would discuss and analyze the key issues faced by the financial services organizations in the implementation of Strategic Performance Measurement Systems (SPMSs). On the other hand, this research study would also explain and address the nature of SPMSs by considering its application, concepts and principles. Moreover, the roles, importance, and significance of using SPMSs would be discussed with regards to the financial service organizations. Finally, specific methods, ways and strategies would be proposed to the financial service organizations in order to overcome the implementation issues in an effective and proper manner.
Generally, SPMSs (Strategic Performance Measurement Systems) are the strategic planning tools or strategies or methods used by the company to measure the organizational performance for the purpose to improve organizational productivity, profitability and innovation. Moreover, SPMSs can also be defined as strategic performance measurement tools that provide strategic direction to the management of a company about how to bring innovation, development at the workplace by improving the current and future business performance (Blokdijk, 2008). It provides a direct overview to the management about the different business areas. In addition to this, it should also be noted down that, these allow companies to tract their business functions and performance against the determined standards. In the same way, it can be said that, SPMSs are the strategic management framework that assists business firms or organizations to measure their strategic performance in an effective and proper manner (Parsons, and Oja, 2012).
Key Issues in Implementing SPMSs
SPMSs (Strategic Performance Measurement Systems) can be functional and dysfunctional in the nature for the business firms or organizations that used by to explain, analyze, define and attain strategic business objectives. As dysfunctional in the nature, SPMSs align attitude, behavior and opinion of employees with the company’s strategy. This has a more positive impact on the overall success and performance of a financial service company. On the other hand, it should also be noted down that, SPMSs could also be innovative, and dynamic in the nature that collect, analyze, report, store information and generate results in a meaningful manner. Moreover, it is found that, SPMSs is also play dysfunctional roles by aligning the business strategy with the individual employee’s goals and objectives effectively. This brings innovation and development within the company and motivates and encourage employee to attain their targets and objectives on the pre-determined time period (Needles, Powers, and Crosson, 2010).
Additionally, both functional and dysfunctional nature of SPMSs is allows business firms and their management to determine gaps among the actual and target performance. In the same way, it helps a company in determining the cusses and improving the operational efficiency. At the same time, it should also be noted down that, there are different types of SPMSs that used to measure the performance and attain the competitive advantages (Burney, and Paul, 2008). For example, gap analysis, budgetary control, KPI, balance score card etc are the major examples of SPMSs that play significant roles in improving the performance, reducing the costs and providing the competitive advantages over the competitors. Balance score card tools allow the management to look into the various areas of business and bring necessary improvements in an effective and proper manner. Overall, it can be said that, SPMSs are more comprehensive tools in determining the success of a company (Morley, and Parker, 2009).
SPMSs play a lot of innovative and specific roles in enhancing the performance of financial service organizations. For example, SPMSs assists the financial service organizations to achieve competitive advantages from the market by reducing business issues and overhead costs. It is because SPMSs allows financial companies to look into the different areas of business. In addition to this, it is accessed that, with the effective use of SPMSs, financial service companies could be able to reduce several overhead costs and improve business performance (Chai, 2009). Moreover, SPMSs is also improves decision making abilities of a financial company and its management so that they could take strategic decisions in more complex business situation. On the other hand, it is also found that, SPMSs is provides strategic direction to the financial companies about how to create, formulate and design business strategy for the total success of the organization. For case, SPMSs is also allows the financial companies to enhance the motivation of their employees by aligning the core organizational strategy with the behavior and attitude of their employees (Kumar, and Lu,2010).
Roles and Significance of SPMSs in Business Firms and Employees
SPMS is also play a wide range of fundamental roles in communicating the business objectives in the company and provide strategic alignment to the financial companies so that it can take strategic actions. Moreover, it is also bring incremental improvements, innovation and development within the organizational process, strategies and methods. For example, through the use of SPMSs, a financial company can be able to communicate its financial as well as non financial outcomes to the key stakeholders. In this way, it improves flexibility, accountability, and creditability of the company in the eyes of its key stakeholders and results in performance improvements (Monks, and Minow, 2008). SPMS is also assume a key part in enhancing the corporate brand image and reputation. For example, with the help of SPMSs, a financial service company could motivate and encourage all the level of employees and promote performance improvement culture at the workplace. It indicates that, SPMSs has ability to foster organizational learning and improving performance (Kerzner, 2010).
It is also promote open communication and improve organizational communication process that is important to develop strong relationships with the external stakeholders. SPMSs is also work as communication tools for the financial service companies and these tools used by the companies to introduce core and strategic value of the organization in the market. SPM is also play a key role in contributing new and significant business opportunities for the financial service firms so that they can grow and expand their business operation and function at the global level (Friedrichs, 2011). Moreover, SPM is also allows the company to collect and use important information and data about the performance in order to implement strategic objectives effectively. SPM is also assist the financial service firms in communicating their key goals, vision, mission, long term objectives in the market. On the other hand, by using SPM, a financial company could also allocate its financial and non financial resources including money, equipment and time (Mather, 2005).
Additionally, SPM is also assists the financial companies to set the targets, objectives and goals of their employees. This help in improving the current and future performance. In addition to this, it is also important to know that, in the current time, most of financial service companies are using balance score card as a strategic planning approach of SPMSs that allows the financial companies to improve their business performance in the different business areas (Grossman, and Livingstone, 2009). For instance, a financial company improves its performance by viewing on the different aspects of their business including financial, customers, internal business and learning and growth. For example, the financial perspective is helps the financial companies in adding the value for its key stakeholders. This is also allows the company to access its key financial strategy and determine whether the strategy is generating and adding the value for their customer or not. If not, then the company uses different specific methods or ways to add the value for their key shareholders (Harmon, and Auseklis, 2009).
Methods to Overcome Implementation Issues
On the other hand, the customer view provides information to the financial service companies that their financial products and services are as per the expectations or not. Are the company’s products and services fulfilling the needs and wants of their customer or not. If the current products/services are not satisfying the expectation of their customers, the financial companies introduce and launch new products/services as per the expectation, wants and needs of their clients (Daniel, 2011).
At the same time, the business & production process view is provides valuable information to the financial service companies about the internal performance of the company. Finally, learning and growth perspective is offer significant information to a financial service company about organization’s potential future performance. Overall, it can be said that, a balance score card is a most significant tool or framework and strategy for the management of a financial service firm to measure the current and future performance (Griffin, 2009).
In addition to this, it can be said that, SPMs helps the financial service firms in tracking their financial health of the organization. For case, a balance score card offers a clear picture about the current and future firm performance directly or indirectly. It is also indicate a financial company that their goals and objectives are as per organizational vision and mission statements. If not, specific methods could be used to overcome such issues. Moreover, the stakeholders of the financial service companies could also access the financial and non financial performance of the company (Goel et al., 2011). Additionally, it is also allows the employees of a company to have a look into their own goals and objectives and bring essential improvements to attain the key goals. With the effective use of SPMs, the financial service firms are able to gain tangible and intangible benefits including reduction in the time frames, improve decision making, provide better solution of the problems and improve current business process by bringing innovation and development (Foster, Zhao, Raicu, and Lu, 2009).
It is true that, when a financial service organization is use and implement any types of SPMSs at the workplace, several kinds of issues are encountered by them. It means the implementation process bring different issues and challenges in the front of financial service companies that have a negative impact on the success of business firms. For instance, the implementation process brings various types of direct and indirect cost for the financial service organizations. In order to successfully execute the new system within the company, there would be need of special people such as: technical staff, IT professionals. In hiring these people, a company has to invest huge money that negatively affects the success and productivity of the company. On the other hand, implementation process is also required more efforts and time that adversely affects individual and organizational performance (Brookson, 2009).
SPMSs and Financial Services Organizations
Moreover, the company would also have to spend much more money in conducting the training and development program for the staff so that they could be able understands the advantages and disadvantages of new system at the workplace. This would also increase operational cost for the company. The proper and sufficient support from the top management would also be needed to properly and effectively execute the new system. If there would be no proper support from the company’s management, it would affect entire system directly. So, it can be said that, lack of support from higher management is a key factor that have a direct impact on the implementation process (Binu, and Meenakumari, 2012).
Along with this, it is also important to know that, most of financial service firms are facing issues related to lack of financial support from the company. If there would be no sufficient financial resources at the workplace, a financial company could not be success in implementing the new system. Moreover, the implementation process is always requires high investment in the infrastructure so it is the major factor that negatively affect the success of new system in the company (Gitman, and McDaniel, 2007). Apart from this; financial companies are also security the issues related to security. For example, when a financial company uses a new system, there may be chance of fraud and misuse of information and the company could face several security issues that would have negative impact on the firm’s performance. For instance, the confidential and important information and data can be misused by the third party with the unauthorized and unethical access. This may bring cyber crime related issues for a financial company (Carol, 2009).
At the same time, it is also analyzed that, in the implementation process, financial service firms are facing various technical issues, data quality issues, selection issues, issues related to business Philosophy change, employee mind set issues, repair and maintenance costs related issues etc. In the same way, it can be said that, in the current time of globalization, different issues and challenges are faced by the financial service organizations when the implement any new system and technology at the workplace. Moreover, it is also accessed that, these issues directly or indirectly affecting the success and growth of the financial service firms not only in the national market but also in the global and international market (Furht, 2010).
On the basis of above analysis and facts identified, it is suggested to the financial service organizations that they should adopt and use innovative, dynamic and effective ways and methods in order to avoid implementation issues. For example, it is suggested that, the financial companies should analyze and address all the aspects related to SPMs in advance in order to avoid the issues related to time, cost and efforts. It indicates that, the top management should prepare financial plans or chart to estimate the total cost of the new system. This strategy would provide a clear overview about the implementation cost of new system (Chu, Chen, and Cheng, 2011). On the other hand, they should also develop timelines for the implementation process. Moreover, it is also important for the financial companies to adopt best and specific security strategies/policies in order to deal with the several security issues brought by the new system. Moreover, the top management should also provide proper suggestion to implement the new system at the workplace. It is only possible if the top management would provide proper support. At the same time, the management should also arrange and conduct the training programs for their staff in order to get benefits for the longer time (Aiton, and Russell, 2011).
Conclusion
On the basis of above discussion, it can be concluded that, SPMSs (Strategic Performance Measurement Systems) are the most valuable tools and framework for the financial service firms to improve and measure the current and future firm’s performance. Furthermore, it can be concluded that, SPMSs tolls are playing major role in improving the performance of financial service organizations. Moreover, it is also analyzed that, in today’s globalized business era, different types of issues are encountered by the financial service firms. So, in order to overcome such issues, they should adopt effective measures and methods in an effective and proper manner.
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