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Performance and effectiveness - Coggle Diagram
Performance and effectiveness
Taking an analysis approach
Strategic control requires an analytical understanding of the status quo within an organisation, both at the outset of the strategy and at the point where objectives appear to have been realised
The word performance is used to describe the actual working out on a perpetual basis of that strategic intent. As all strategy exists in the unknown of the future, we need to be able to analyse, assess and measure how the actual performance compares to the strategic perception
Organisational effectieness:
does the performance enable the realisation of the organisation's strategic goals?
Organisational efficiency:
has the performance made optimal use of the stakeholder resources in the implementation of the strategic plan?
Qualitative:
a consideration of performance from the collection and consideration of narrative data (human views and opinions) - often referred to as a subjective approach
Quantitative:
a consideration of perofmrance from the collection and consideration of numerical data - often referred to as an objective approach
In the assessment of any organisation, it is important to understand
How to measure and assess performance and behaviour
The different levels at which such performance and behaviour can be measured
What is going to change as a result of having made the measurement and assessment
Areas to evaluate and measure
Evaluation of performance will need to be related to the original drivers of the strategy
Were there specific objectives or goals that needed to be met?
Was there a particular manner in which such objectives or goals needed to be met?
Were there other criteria that the strategy presumed would be delivered?
Financial measures
Profitability: has the performance delivered the anticipated return in line with the projected benchmark target?
Liquidity: has the performance delivered the anticipated liqudity?
Wealth: has the performance delivered the anticipated longer term wealth for shareholders and stakeholders?
Productivity measures
People: is the existing human resource being used to enable individuals to work to their full potential?
Product: is the product or service in line with the organisational and stakeholder quality and performance?
Resources: are all resources being utilised at their optimal level?
The development of control within any organisation requires measures to be developed that are in themselves
Effective: they deliver meaingful awareness of operatonal performance that can influence future strategy
Efficient: they are understood by all users and are based on easily obtainable and accurate data
Goals
If we are setting strategic goals, then these should be a clear way of measuring both progress along the strategic path and utilmate success - this is referred to as an output measure. its usefulness as a control measure will depend on the clarity and precision of individual goals
It is important that the goals are aligned with each other with a clear recongition of mutual impact
Resources
An alternative appraoch to organisational control is to consider how effectively the stakeholder resources are being used. This is referred to as an input measure and assumes that an organisation will derive success through maximising the efficient use of the resources that it is feeding into its transformation process
Stakeholder influence
Dependent on the organisation's structure. the goals and objectives may be set by differing stakeholders with clear measures of control built into their expectations and based around their anticipated return on their stake
Daft (2013)
researched the impact of the following stakeholder expectations as measures of effectiveness, finding that organisations sometimes experienced difficulty in satisfying all seven stakeholder expectations at the same time, requiring the strategist to consider prioritisation for the anticipated performance of the organisation
Owners: financial return
Employyees: worker satisfaction, pay, supervision
Customers: Quality of goods and services
Creditors: Creditworthiness
Community: Contribution to community affairs
Suppliers: Satisfactory transactions
Government: Compliance with laws and regulations