ASSIGNMENT THREE
Business Objectives and Performance Measurement
Introduction
Performance measurement is a process used by businesses to evaluate whether they are in a position to achieve their set goals. It can also be defined as the process through which executives and their employees work together in planning, monitoring, and reviewing the overall contribution of employees towards achieving the business objectives. To carry out performance management, business managers are required to be well armed with performance measurement techniques. Performance measurement is critical for any business because it is through it that businesses can identify likely issues and address them. A well taken performance measurement considers previous reports on accomplishment and compares them with current accomplishment. In so doing it becomes easy for executives to identify areas they are lagging behind and set goals that will match the skills of their workforce. Successful performance measurement encompasses the principles of business objectives, principles of performance measurement and the relationship between measuring performance and achieving set business objective.
Purposes of Setting-Up Business Objectives
Business objectives are also made because they are important in motivating people within the organisation. Every organisation needs to have employees that are guided and motivated. One of the ways to ensure that employees stay motivated is through giving them targets to achieve and matching the targets with a reward. In so doing, the business shall have provided the employees with a reason to prove themselves worthy of being in the organisation (Canals, 2010). Without business objective employees would have no idea of what is expected of them or other where the organisation is supposed to go. Setting up objectives gives them a target they can achieve and a sense of direction on how to advance in their career. Employees get motivated once they are satisfied with the goal of the business and when they are aware they have a chance to advance their careers.
Setting up business objectives is also important as it helps the company keep its performance in check. Having set goals to be achieved enables the company to monitor its progress subsequently ensuring that it is able to review its progress and how far they are from achieving their set goal (Canals, 2010). The objectives are used to measure results against and determine the progress made by the organisation. It is more likely that businesses do not meet their objectives when they measure their performance against them. However, this should not be an issue as long as the company keeps itself in check and is still in the right direction towards achieving its goals (Canals, 2010). In cases where the company is not meeting its objectives, they can use their findings on why they are not meeting their goals to improve their performance before their competitors and clients notice they are slacking.
Business objectives are also used to allow the organisation to plan its marketing techniques towards achieving a common goal. The marketing process of any business involves several factors that are needed to accomplish any marketing campaigns, research, strategies, content creation, reporting and development (Lockwood and Walton, 2010). By setting common goals, a business would be able to easily integrate and aim all the marketing factors towards the same purpose. In so doing the brand becomes much stronger as all their energy is geared towards achieving the same outcome.
Objectives in business are also important as they set and encourage regular communications with the company. Effective communication within any organisation is the backbone of the success of the organisation. Consistently, businesses revise and re-evaluate their objectives finding ways with which they can improve their business or increase their output (Lockwood and Walton, 2010). For this to happen successfully, departments within the organisation have to be in constant communication with each other. Each department or every employee within the organisation must be able to communicate with one another in ensuring that they are working towards achieving the set business objective.
The objectives are also used as key drivers for the business strategies. Companies use their objectives to come up with the main strategies that are used to steer the organisation towards achieving its goals. Well, defined strategies are important for any business and make the company look like they are in control of their operations. Without business objectives, the strategies would have no meaning as they would not have any purpose.
Elements Used to Set-Up Business Objectives
Business objectives are derived from a wide range of information that includes the vision and mission statements, business strategies and legal compliance of the company. The mission and vision statements provide the business with the goals that the objectives have to meet. The vision of the company is used to set up objectives that will help the business strategically achieve its aims. Having a robust and straightforward mission and vision statement is imperative for the organisation as it helps the agency formulate business objectives that are aligned to achieving them (Lockwood and Walton, 2010). Apart from the mission and vision statement business objectives are also derived from the business strategies. The strategies are used in setting of business objectives in that they are responsible for determining how the organisation will be run. In aligning the business objectives to the business strategy, the organisation will be well placed in ensuring that their operations target their set goals. The strategies are necessary for determining what objectives should be considered first before the other as they provide the general procedures that the organisation should follow in achieving their goals. Finally, objectives are set with consideration of their legality (Canals, 2010). It would be illogical for organisations to have business objectives that are not aligned to the legal requirements of the area they plan to operate in. Business objectives must meet the legal requirements for them to be achieved without the organisation having to run into legal battle with authorities.
Techniques Used in Performance Measurement
Performance measurement is the measuring of one's progress or the measuring of a business performance of a set period. It is used to find out the progress made by individuals or business against their set goals. The world today requires that people and organisations continually improve in what they do (Canals, 2010). Performance measurement plays a significant role in determining the progress made by individuals or organisations. Performance measurement is used by corporations to identify and ensure their client's requirements are met. They are also used to help organisations in setting their goals and be able to comply with them. Performance measurement can also be used to determine the effectiveness and efficiency of the business. It determines what the business is doing right and whether they are delivering their goods and services on schedule, with quality, within set standards and with the right resources (Canals, 2010). It is used to ensure that businesses achieve their set objectives using their set strategies. It involves the use of different tools that enable companies to identify whether they are meeting their set goals. Businesses measure the performance of both individuals and teams within the organisation. They also measure how their suppliers and assets perform towards achieving their goals. Performance measurement is also used to determine the general facilities manager functions.
Measuring Individuals and Team Performance
In measuring people, performance measurement considers the individual achievement in their set job roles, the ability of the individual to develop new and improved skills and the general behaviour of the person within the organisation (Canals, 2010). As for teams’ performance measurement considers whether the organisation has built the right team by matching the right skills and capabilities to the right activity. It also recognises the leadership within the team and whether the team can work independently. The team should have shared vision, and set goals while at the same time build a strong relationship that ensures they work efficiently. Individual and team performance is determined by their objectives (Morris, 2013). If they can achieve their objective in a timely manner, then they are considered as performers. However, if they fall short, then the organisation is forced to find ways that it can help them achieve their full potential.
Key Performance Indicators (KPI’s) are also used to measure performance within individuals and teams. This involves determining if the individuals or the team has reached its goals and targets and how they have managed to do so. Quality and time of delivery are significant factors considered as key performance indicators. KPI’s are important in measuring performance as they determine if an objective is being met within the time frame it was set to be achieved and in the manner it is supposed to be achieved. Individuals performance is also measured using their personal development plans (Morris, 2013). This is important because it helps businesses determine the career paths of their employees and figure out best ways they can help their employees achieve the best within their organisation. In so doing companies keep their employees motivated as the employees develop a sense of belonging to the organisation. Individuals performance is also measured using appraisals and customer feedback. Organisations have been found to look into their employee’s evaluations and the feedback they get from customers to measure the performances of individuals or teams that have received assessments (Morris, 2013). Apart from customer feedback, feedbacks from line manages and peers are also paramount in measuring returns as it determines the working relation the employee has with other. It is in the interest of every business to have a healthy working environment, therefore, getting positive line managers and peers feedback serves as an effective way to measure the performance of any business.
Measuring Suppliers Performance
While measuring the performance of suppliers, it is imperative to consider their contractual performance and their operational performance. Contractual performance includes their performance with regards to any contract they have entered in while operational performance is determined by their service level agreements and the manner in which they deliver their services (Khan, 2011). To effectively measure the performance of suppliers, it is important to consider the service level agreement the supplier entered. It is imperative for the person measuring the performance to determine whether the suppliers have met all the service requirements of the service they offer. Key performance indicators are also vital in measuring the performance of suppliers as they determine the manner in which the suppliers carry out their work. KPI’s determines the quality of the supplier’s works and considers whether the suppliers are in line with their service proposal (Morris, 2013). Supplier’s compliance with contracts and health and safety standards are also tools used to determine and measure their performance.
Measuring Assets Performance
Measuring assets performance is based on measuring the assets return on investment measures. This involves the finding out and calculating the payback period of the asset. For example, a manufacturing company can gauge the return on investment of its production machine by considering how long the machine will have to work before it breaks even. Assets profitability is also used to determine its performance (Morris, 2013). This is done through reviewing the revenue generated through the use of the machine against its cost. If the income is more than the cost, the asset is deemed profitable to the company. Assets performance is also measured using its operational measures which include its repair and maintenance cost, availability, utilisation and the efficiency of using the asset. In measuring the performance of assets it is important for the company to also consider the assets mean time between failures. Lower mean time means the assets is performing well but if the assets takes long to recover after failure then that should be a concern to the company.
Measuring the Performance of the FM Function
Two models used to measure the performance of the FM function. These models are the balanced scorecard model and the EFQM excellence model. The balance scorecard model looks at the financial, customer, internal business and innovation and learning perspectives of the company (Morris, 2013). Financial perspective is used to identify high-level financial measures that help the organisation appeal to shareholders. Customer perspective is used to help set the organisation image to their clients. To measure this it is important for the organization to continually seek their customers feedback about the business processes The internal business perspective of the model is used to identify the measure that the organisation must take for them to excel at a specified objective. The best way to measure internal business perspective is through the employee feedbacks and assessment. It is the employees who understand the business better and they are well placed to identify challenges within the business. Finally, the innovation and learning perspective is used to identify areas the organisation can improve on to add value to their business. The organization can do this through benchmarking and comparing their business processes with other organization in the same line of business. Benchmarking will help the business identify its strengths and utilize it while at the same time identify its weaknesses and find ways to handle them. The EFQM excellence model is useful for the measurement of the effectiveness of the organisation's processes (Morris, 2013). It also measures how results are obtained and the subsequent impact the results have on stakeholders. The model is also used to gauge the sustainability of performances of the organisations.
How Performance Measure Can Be Used to Achieve Business Objective
Business processes tend to be measured by comparing performances against set specifications or averages. Often, business processes are tracked by measuring the ability of the company to achieve its goals. Continuous considerations of patterns and trends are used to help businesses recognise problems and resolve them (Glavan, 2011). Performance measurement helps companies to determine between common and unusual variations of processes within the organisations. Higher differences are determinants that the business is no longer aligned to achieving its set goal. Therefore, to reduce the number of variations businesses need to compare their results against their set standards. The performance of the company is therefore determined by the progress the business is making. A performing business can meet its targets and keep their customers happy with their services (Glavan, 2011). Companies that do not achieve this are considered not to be progressing and therefore the need for the company to re-examine itself. It is during re-examinations that companies can identify and move around resources so that they can align them to meet their objectives.
How Result from Performance Measure can be used to Support a Program of Continuous Improvement
Continuous improvement is a circle that involves planning for an activity, doing the activity, checking the results of the activity and acting on any problems that might arise. It includes establishing objectives required to deliver results considering the expected output (Patelli, 2014). With set objectives, the circle moves to implementing new processes. It also involves measuring the new processes and comparing them to expected results to ascertain if there are any problems or differences. The cycle then moves to analysing the differences and determining the causes of the differences. The differences identify where change is needed and how they can be implemented to bring about change.
Businesses continuous improvement is important as it adds values to the organisation's operations and helps the organisation meet its client's needs. Performance measuring can be used to identify the areas the organisation is falling short and have these areas addressed. It is, therefore, important to continuously monitor, review, and evaluate the business performance to ensure the company is not lagging behind in meeting its client's needs (Patelli, 2014). It is only through performance measuring that organisations can identify and rectify areas that they are not operating at their full potential. Through performance measurement, the organisation will also be in a position to identify its areas of excellence and figure out ways with which they can steer the organisations to operate in equal measure in areas they are failing.
Conclusion
Business objectives are very important for any organisations. They provide the plan and set goals that companies need to achieve. For businesses to set their objectives they have to consider their mission and vision statements. Apart from the statements the company must also consider its strategy and the legal environment they operate in. Setting business goals is not enough for business to achieve them. It is, therefore, imperative that every business continually carries out performance measurement to determine areas they might not be doing well. Performance measurement ensures that businesses are in line with their goals. It is through performance measurement that businesses can find out what objectives they are meeting and which ones the business us not meeting. In so doing business can relocate their resources towards unmet objectives while ensuring the met objectives are not tempered with. It is therefore important that business continuously carry out performance measurement for them to keep track of their objectives.
Bibliography
Canals, J. (2010) Building respected companies: Rethinking business leadership and the purpose of the company. Cambridge: Cambridge University Press.
Glavan, L. (2011) ‘Understanding process performance measurement systems’, Business Systems Research, 2(2). doi: 10.2478/v10305-012-0014-0.
Khan, K. (2011) ‘Understanding performance measurement through the literature’, AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 5(35). doi: 10.5897/ajbmx11.020.
Lockwood, T. and Walton, T. (2010) Building design strategy: Using design to achieve key business objectives. New York: Allworth Press.
Morris, S. (2013) ‘Understanding Performance Measurement in FM’, 1, pp. 1–69.
Patelli, L. (2014) ‘The relationship between performance measurement systems and strategic Proactiveness in multinational companies’, SSRN Electronic Journal, doi: 10.2139/ssrn.2312619.
