Strategic Performance Management and Measurement for Planning and Control

Strategic Performance Management and Measurement for Planning and Control

Strategic Performance Management and Measurement for Planning and Control

1.1 Difference between strategy and performance management:

  • Strategy like map, performance management like compass.
  • Performance measurement reveals progress and narrative.
  • Numbers tell a story about organizational advancement.
  • Every organization deals with balancing long-term goals and short-term needs. Finding the right balance is like creating art, shaping the company's future.

1.2 Planning and Control: Strategic vs. Operational Levels:

1.2.1 Strategic Level:

  • Visionary Thinking: Begin with a broad vision or mission.
  • Long-Term Goal Setting: Define 3-5 year objectives.
  • Resource Allocation: Allocate capital to R&D, acquisitions, etc.
  • Stakeholder Engagement: Align with investors and major stakeholders.

1.2.2 Tactical Level:

  • Initiative Execution: Strategy breaks into initiatives.
  • Resource Allocation: Assign resources to initiatives.
  • Department Coordination: Coordinate inter-departmentally.
  • Progress Monitoring: Regular checks to adjust and report.

1.2.3 Operational Level:

  • Task Efficiency: Manage daily operations, track progress.
  • Budget Control: Ensure departmental budget adherence.
  • Performance Tracking: Monitor KPIs like sales, response times.
  • Adaptive Response: Quick feedback leads to adjustments.

1.3 What gets measured, gets done.

1.3.1 Similar Phrases:

  • "You can't manage what you can't measure."
  • "If you're not keeping score, you're just practicing."
  • "What's inspected is respected."
  • "If it matters, measure it."

1.3.2 What it means: (taking the past exam question Freuchie as an example)

  1. Attention on Priority (1 mark):
    • Central Idea: Metrics guide the allocation of company resources, making measured areas a focal point.
    • Freuchie Context: If Freuchie continuously measures inventory losses, it indicates that inventory management is a priority, which could lead to decisions like limiting the clothing range.
  2. Behavioral Influence (1 mark):
    • Central Idea: The measurement criteria can dictate the behavior of employees, especially if their evaluations or rewards are based on these metrics.
    • Freuchie Context: If Freuchie focuses on revenue and dividends in its performance evaluations, this may inadvertently result in staff neglecting other crucial aspects like profit margins.
  3. Accountability (1 mark):
    • Central Idea: What gets measured holds someone accountable because the performance against those metrics is visible.
    • Freuchie Context: Without metrics on individual store profitability, there's a lack of accountability for store managers regarding the performance of their individual stores.
  4. Continuous Improvement (1 mark):
    • Central Idea: By measuring regularly, companies can spot trends and adjust strategies accordingly.
    • Freuchie Context: If Freuchie were to track trends in store appearance and clothing range attractiveness, they might make continuous improvements in these areas.
  5. Impact of Wrong Metrics (1 mark):
    • Central Idea: Incorrect metrics can misdirect resources and focus.
    • Freuchie Context: Over-monitoring inventory losses might detract from the main goal of having diverse and attractive clothing collections.
  6. Limitations of Over-Focusing (1 mark):
    • Central Idea: Relying heavily on a few metrics can lead to neglecting others.
    • Freuchie Context: Concentrating solely on revenue might lead to overlooking other important metrics like customer satisfaction or store aesthetics.
  7. Tunnel Vision (1 mark):
    • Central Idea: Overemphasis on specific metrics can lead to tunnel vision, where broader goals are overlooked.
    • Freuchie Context: Focusing only on measurable aspects might misalign with Freuchie's broader objectives like overall profitability or customer satisfaction.
  8. Relevance of Balanced Approach (1 mark):
    • Central Idea: While measurement is essential, a holistic view is equally important.
    • Freuchie Context: Freuchie's management should ensure a balance between measured outcomes and broader business goals for overall growth.

1.3.3 A useful framework to put into practice:

  1. Define: Clearly define what needs to be achieved. This gives clarity about what exactly needs to be measured.
    • Example: Instead of a vague goal like "increase sales," be specific: "Increase online sales by 10% in Q3."
  2. Determine Metrics: Decide on the metrics or KPIs (Key Performance Indicators) that will provide insights into the progress or success of the defined objective.
    • Example: For the above goal, the metric could be "Percentage increase in online sales."
  3. Data Collection: Ensure that there are systems, tools, and processes in place to collect relevant data.
    • Example: Use web analytics tools to track online sales data.
  4. Analyze: Evaluate the collected data to ascertain progress, trends, and areas of improvement.
    • Example: Comparing monthly online sales figures to determine if there's an upward trend.
  5. Adjust: Based on the analysis, make necessary adjustments or changes to strategies or processes to better achieve the objectives.
    • Example: If online sales are not increasing, consider revising marketing strategies or improving the user experience on the website.
  6. Review: Periodically review the metrics and KPIs to ensure they're still relevant to the objectives. As business goals evolve, what you measure might also need to change.
    • Example: As the business grows, focus might shift from just increasing sales to improving profit margins.

Past exam question reference: Sept/Dec 2021 Freuchie (iii)

1.4 Problems of Performance Measurement:


  • Tweaking reports to show good results. Example: Saying 98% of customers are happy, but only asking a few customers.


  • Changing actions to meet rewarded targets, even if not beneficial long-term. Example: Cutting costs to show better short-term profits, but it harms long-term growth.


  • Overlooking the bigger picture and only seeing one aspect. Example: Seeing good financial results but ignoring poor customer feedback.

Short-termism (myopia):

  • Focusing only on immediate results and ignoring the future. Example: Prioritizing quick profits (ROCE) over long-term company growth.

Measure Fixation:

  • Obsessing over one target, ignoring other important aspects. Example: Only focusing on cutting costs, sacrificing product quality.

Tunnel Vision:

  • Only paying attention to measured targets and ignoring unmeasured areas. Example: Focusing solely on financial returns and neglecting employee well-being.


  • Only pushing what's measured, missing out on overall best results. Example: Overemphasizing new customer acquisition and neglecting current customer satisfaction.


  • Sticking to an outdated measurement system, especially if it shows good results. Example: Only surveying certain customers who usually give positive feedback.

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Categories: : Advanced Performance Management (APM)