Strategic Performance Management System: Strategic Alignment Tool

This essay provides a comprehensive overview of the Strategic Performance Management System (SPMS), detailing its objectives, goals, and its connection to performance-based incentive systems. It emphasizes the role of SPMS in evaluating performance, managing multinational companies, and aligning individual and organizational objectives. The essay also discusses the implications of strategic alignment, the tools for converting strategy into action plans, and the use of the Balanced Scorecard as an innovative management approach. Furthermore, it identifies potential challenges in implementing SPMS, such as wrong design, lack of integration, absence of leadership commitment, and incompetence. The essay concludes by highlighting the importance of SPMS in ensuring organizational effectiveness and accountability.

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Strategic management
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The strategic performance management system is a method which create a connection
between the performance of the employee and the performance of the organization in order to
boost the performance of the compensation system. It aims at ensuring that all the employees
working in an organization must achieve the goals and objectives set by the organization and
on the contrary the organization aims at achieving the objectives which is based on the set
target plans and strategic plans as well (Soltanizadeh et al., 2016).
The strategic performance management system is also called as SMPS in short. The major
objectives and goals of SMPS is to concretize the connection between the performance of
organization and Agency strategic plan, Organizational performance indicator and other
development plans as well. It is also connected with the performance-based incentive system
i.e. PBIS which include Productivity Enhancement incentive and the performance-based
bonus i.e. PBB as well (Kaplan and Norton, 1995).
The SMPS is a tool which aims at evaluating the performance and creating new ways of
managing the performance in the Muliti National Companies. It aims at serving and working
as an evaluation strategy for in order to assess unit performance or the combined performance
of an individual inside the smallest operating unit. To boost the goals of an individual
performance evaluation, the management has introduced a tool of setting some criteria and
standards which will match with the objectives of an individual as well as the performance of
the organization. The SMPS is majorly applied on output manufacturing units and it has a
major goal to measure the combined performance by focusing on the outputs by using
standard units of measurement. This permits to compare and evaluate performance which will
focus on both the factors i.e. productivity as well as efficiency of an individual as well as
operational units. By the use of SPMS, the companies find out the actual demand to introduce
tangible results which will focus on the performance at many levels with a motive to decrease
the subjective factors. Each accomplishment is provided due credit and rewards by the
provision of an additional objective measurement (LeRoux and Wright, 2010). This can
easily be done and managed by setting similar standards for all the outputs which has been
generated and converting many targets into one individual measurement. The outcome of
such combination simplifies the comparison of outputs, permitting the management to focus
on the effectiveness of an individual units as well as combined units and determine necessary
action plans which will perform as an indicator to evaluate the overall performance of the
entire unit (Micheli and Manzoni, 2010).

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The necessities for the support and assistance of the SPMS
The performance-based evaluation system assists that all the employees must be accountable
for the growing clientele’s satisfaction. It is dependent on the proposition that consideration
of performance results should be a crucial element of the process involved in the evaluation.
It is also dependent on the proposition which continued workers development and
enhancement is very important role in any organization and all the employees working in an
organization should be given effective support to boost their performance and create a sense
of belongingness towards the goals and objectives of the organization. The main objective of
the system is to determine if the employee satisfy the criteria, introduce excellence in the
results, set standards to evaluate the performance of the employees, make sure that the
supervisors are competitive and provide all the required resources to boost the performance
of the employees (Poister, 2010).
Implications related to strategic alignment
No matter what the main business objectives and business strategy an organization focuses
on, customer intimacy, optimization of latest technology or innovation, work environment
practises must show and drive the behaviours in order to deliver on that goals and strategy
and the consistent market positioning. Strategic alignment is an intense hands-on business
redesign process in which strategic goals and objectives are aligned with the principle
business purpose and the core mission and values.
A tool for converting strategy into action plans
There are large number of tools which are used to translate strategy into action plans. The
strategy must be implemented successfully and effectively in order to create success of the
organization. Those organization which are unsuccessful set an example of the failures. In
another words, it can also be said that a company having a strategy does not guarantee to
achieve success. The two main factors which are critical in nature that determine the success
of the company are effectively formulated strategies and effective implementation of
formulated strategy. There are huge number of Multi-National Companies which became
success in creating the “Strategic translation” converted into the accurate measurement
system which are far good enough to execute the strategies. This is just because they can
communicate their direction in a more better ways, be more focused on the drivers which are

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critical in nature and match align their action plans and investment criteria. The growth of the
effectiveness of the Multi-National Companies strategic management process can easily be
controlled and managed by reducing the connection that takes place between the formulation
of the strategy and its implementation within the organization (Nudurupati, Bititci, Kumar
and Chan, 2011). The major issues involved and identifies for the disconnection are
mentioned below.
A clear and sound vision of the strategy is not only enough- organizational challenges
in order to convert the goals and vision into action plans is very important. Even
though there are many companies which have a very effective strategic plans, but they
do not have accurate operating goals. So, it is very necessary for every company to
have goals with action plans.
Likewise, companies do not gather the accurate information in order to evaluate
progress and growth towards their strategic goals and there are many companies
which do not learn from the mistakes.
Scarce of transformation of strategic formulation into a nonstop process which adapts
to the feedback based on the performance when the strategic goals and objectives are
achieved (Nooraie, 2012).
The balanced scorecard is an accurate solution in the form of an innovative management. The
Balanced Scorecard is a well proved approach and a technique to strategic management
which surrounds the long-term strategy into a proper management system by the ideas of
measurement (Tayler, 2010). The Balanced Scorecard converts the mission, vision and
strategy of any organization into an effective tool which will communicate strategic intent
and encourage and tracks the performance of the employees against the establishment of the
company goals and mission. The balanced scorecard system hardens the focus and main aim
of the organization towards the success by setting certain standards and objectives (Niven,
2011). This tool also measures the performance of the organization as well as employees
from four major perspectives. The learning and growth idea guides and provides attention
based on the overall success of the organization which also include the employees working in
an organization along with its infrastructure facilities. Sufficient investment in all the areas
and segments must be done to gain long term success. The enhancement of an accurate
learning organization assist success in another Balanced scorecard perspective, the inner
perspective. The internal perspective emphasis on the performance of the principle internal

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processes which runs the business. Improvement and growth in the internal processes is a
major indicator of the financial success. A company vision denotes the end goal that must be
achieved by every organization. A strategy is a shared and combined understanding that deals
with the tactics which must be followed to achieve the desired goal. The balanced scorecard
creates a medium to convert the clear vision into the standard set of objectives. The set
objectives are later converted into a system of performance dimensions which communicate
an energetic, forward-looking and strategic focus for the overall organization in a very
effective manner (Grigoroudis, Orfanoudaki and Zopounidis, 2012).
Nevertheless, in order to convert higher processes into financial success, the organizations
should initially convince their customers. The perspective of the customer reflects the
business through the eyes of a customer so that the company recalls an attentive focus on the
needs and demands of the customer and their satisfaction (Franco-Santos, Lucianetti and
Bourne, 2012). At the end, the Financial perspective, determines the end results of that the
company gives to its shareholders. Combined together, all the mentioned perspectives
provide a balanced idea of the recent and future performance of the organization. Balanced
Scorecard is basically used to clarify and apprise strategy, communicate strategy to all of his
employees, align combined and single goals with the strategy, connect strategic goals with
long term targets and yearly budget plans, analyse strategic initiatives and create periodic
performance reviews in order to learn and enhance strategy. The balanced scorecard converts
an organization mission and vision into a complete set of performance measures which aims
at creating framework and outline for a strategic measurement and management system
(Capon, Farley and Hoenig, 2012).
What could go wrong in Strategic performance management system?
The main objective of SPMS is to create and enhance the effectiveness of the performance
done by the team members. The manager along with the members are combined together and
they work together in order to plan, monitor, evaluate and acknowledge the work and
contribute to the overall achievement of the organization (Upadhaya, Munir and Blount,
2014). There are several types of tools which are commonly used in the process which ranges
from traits and characteristics based or behaviour based to outcome based. Feedback is
provided by both formal as well as informal communications and the feedback generated can
be regular as well as irregular. A huge amount of time and energy is invested in setting the
right goals and reviewing the performance of the employees and later appraising it as well.

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Nevertheless, things can be sometimes wrong and the mandatory effectiveness of the
performance of the employees is not gained (Butler, Henderson and Raiborn, 2011). There
are some main challenges which an organization faces while managing the performance of
the employees which are mentioned below.
Wrong Design: The performance management system matches with the particular
needs and demands of the company. It cannot be a replication of a system which is
created and implemented in other company, even though a company in the similar
industry or the similar business group. Powerful consultation with many stakeholders
and employees of the company is very important. The trust of the user plays an
important role in any system and the design can be tried out primarily on the pilot
basis before it is applied on the organization. Thus, performance management must be
reviewed as a continuous process for the long-term success. The design must include
rewarding employees and training the poor employees in an organization (Blocher,
Stout and Cokins,2010).
Lack of Integration: The performance management system must be combined together
with strategic planning and HRM systems along with the culture, structure, systems
and process of the organization. If, it does not take place, it will hinder the overall
growth of the organization.
Absence of leadership commitment: Leadership Commitment and assistance is a
mandatory factor for smooth implementation of the entire system. Leaders are
responsible for driving the process and making performance management as a crucial
part of the company. They are the one who monitors and evaluates the performance
of the entire organization. They also review the performance cycle and rewards the
employees based on their performance.
Incompetence: Competence in order to use the SMPS is important because it ensures
the smooth implementation of the entire system. Some of the principle skills required
are defining objectives, and performance indicators, defining performance measures
and providing feedback and appraisals to the employees (Bisbe and Malagueño,2012).
Thus, it can be concluded that SMPS also aims at ensuring the effectiveness of the
organization and the employees by flowing institutional accountabilities on large number of
levels of the company. Additionally, it also creates a link between the performance of the
management and another HR system. Most important, the major complements made by

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SMPS is the Results-based performance management system which is undertaken by the
office of the president and which connects the performance of the organization with the goals
set by the society.

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