Strategic Performance Management is a strategic application of related methods of systematically enhancing the overall business performance. It is a comprehensive strategic management and performance management of the new formulation is the integration of high-end business management that is strategic management and performance management-based management of the new model. It is a balanced scorecard for strategic performance management and business strategic management to provide strong support. Performance management is not so much a method, a tool, but rather that performance management is a kind of thinking, a philosophy. Performance management gives methods and tools that can provide managers with the management and staff to facilitate the examination, so that the results of performance appraisal is more equitable.
As information technology and the development of economic globalization, a single financial evaluation system can not meet the needs of enterprise performance evaluation, to explore a set of effective enterprise performance evaluation system is a priority. A balanced scorecard can be used in the retention of financial target, through the introduction of customer, internal processes and learning and growth in three areas of evaluation indicators make up the deficiencies of traditional performance measurement systems.
In recent years, evaluating performance approach has been more and more salient feature of the evaluation indicators increase in the number of non-financial indicators. The main advantage of non-financial indicators in the then future-oriented, better able to reflect management’s performance and business prospects. It can guide the manager’s point of view from a long-term development to proceed, to overcome the short-term, historic shortcomings of the financial evaluation system to better reflect the company’s future ability to create value. In the 20th century, with 90 years at Harvard Business School, Robert. S Kaplan and David. P Norton used performance measurement aspects of leading companies over a one-year research project to design a “balanced scorecard measurement method. “This information on senior managers quickly and comprehensively examined the measurement indicators of business. In its view, companies should examine our own four point performance: learning and growth, business processes, customer and financial. Provides a comprehensive measurement framework, an ability to enterprise strength, and create value for customers and the future financial performance of the resulting framework for establishing linkages.
The use of a balanced scorecard within the enterprise and its various departments and decision-making tasks into multiple, interrelated goals, objectives and then broken down into a number of indicators of diversity performance evaluation systems. So that the operators enterprise strategic objectives as a starting point, from the most critical four areas to assess performance:
1. The financial point of view: covers the elements of the traditional performance evaluation, the evaluation aims to effectively control the short-term corporate profitability. Financial targets despite its limitations, but can show the action already taken easily measurable results. The balanced scorecard retains financial indicators, to show business strategy and its implementation and enforcement of whether the ultimate improvement in operating results, to contribute.
2. The customer point of view: a modern enterprise competition based on customer service and customer satisfaction, help customers realize their value proposition, a company’s business strategy should be based on customer and market-oriented, should be determined for the customers and market value, and accordingly to determine the appropriate level of evaluation elements to measure customer performance. The balanced scorecard demands from the customer point of view to confirm with the customer-related objectives and evaluation elements, so the market share, customer access to rates and customer satisfaction is a measure of the importance of performance evaluation of the level of the elements, they reflect the enterprise in the market to provide customers with the value of size.
3. The internal point of view: The internal business process is the measurement of attention to customer satisfaction and achieve the greatest impact their financial goals of those internal processes. To meet customer requirements, companies in their internal business processes, decision-making and action should have good performance, with a certain degree of market competitiveness, and ultimately to the customer by providing the appropriate products and services to meet existing and future target customers needs. The balanced scorecard is able to provide customers with a high strategic value of capabilities.
4. Innovation and learning perspective: Emphasis on enterprises to maintain their competitive edge and future development, enterprise management and staff should continue to explore the learning and growth opportunities. Learning and innovation capability of enterprises in the financial level, customer level, as well as internal dimensions of the drive to achieve a higher level of performance factors, evaluation of their aim is to reflect whether the business can continue to improve and create future value of capacity.
Thus, the balanced scorecard provides not only the outcome of the financial indicators in the past at the same time from the customer, internal processes and learning and the growth of three areas make up less than traditional methods. It also gives the performance assessment and strategic objectives, the performance appraisal as a tool for implementation of the strategy, integrating strategy in the performance appraisal among so not only became a performance appraisal tool that is a strategy implementation tool. We can assert that there is no absolute perfection of the performance management system, there is no need to improve the performance management system, which also requires us to continuous improvement as an idea to introduce performance management, to make it continue to develop and improve, to become corporate strategy booster.
“The Balanced Scorecard – Measures that Drive Performance”, Harvard Business Review, Feb. 1992
Maisel, L.S., “Performance measurement: the balanced scorecard approach”, Journal of Cost Management, Vol. 6 No. 2, 1992, pp. 47-52.
“Putting the Balanced Scorecard to Work”, Harvard Business Review, Sept. 1993
The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston (1996).