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Importance of Strategic Performance Measurement System

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Added on  2019-11-20

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The present report addresses the importance and significance of adopting a Strategic Performance Measurement System (SPMS) in business corporations. As such, the report has provided a complete description regarding the use of multi-perspective SPMS such as balanced scorecard. The salient features of the SPMS systems are discussed in detail in the report. The report "strategic performance measurement" undertakes a literature review that determines the salient features of SPMS as well as creates profound knowledge for the implementation of the reward system and theory of motivation in companies. AGL Energy Limited and Westpac Banking Corporation are renowned Australian companies and have provided good sustainable performances over the years. 

Importance of Strategic Performance Measurement System

   Added on 2019-11-20

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Importance of Strategic Performance Measurement System_1
Executive SummaryThe present report addresses the importance and significance of adopting StrategicPerformance Measurement System (SPMS) in the business corporations. As such, the reporthas provided a complete description regarding the use of multi-perspective SPMS such asbalanced scorecard or Triple Bottom line. The salient features of the SPMS systems arediscussed in detail in the report. Also, it has discussed the relation of motivational theories tothe reward system provided to the top executives and non-executives employees of a businessentity. This has been carried out in order to demonstrate the importance of liking strategicperformance measurement system with the compensation plans for achieving theorganizational objectives and goals. The report has provided a disclosure of SPMS adoption by the two selected publiclylisted companies in Australia that are, AGL Energy Limited and Westpac BankingCorporation. The examination of their SPMS disclosures revealed that both the companiespublicly disclosed the information related to their strategic performance measures in theirannual reports, sustainability reports and on their company websites. However, on acomparative basis, Westpac Banking Corporation has implemented a better and improvedstrategic performance metric system that provides a complete quantitative measurement ofeach of its key performance indicators. The SPMS disclosure of Westpac Banking has clearlyillustrated the strategic aligning of its corporate objectives with that of its key performanceindicators. Thus, it can be said that SPMS disclosure pattern of Westpac is more on aquantitative basis as compared to that of AGL Energy Limited as analyzed from theirsustainability reports. Also, the banking corporation has strategically aligned its SPMSmeasures and targets with the executive rewards as depicted from analysis of its financialmeasures. This has enabled the bank to achieve a competitive advantage in the marketplaceover all its competitors and thus it is recognized to be the most sustainable bank of Australia.
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ContentsIntroduction................................................................................................................................4Literature Review.......................................................................................................................4Salient feature of Multi-Perspective SPMS............................................................................4Reward Systems Related to the Motivational Theory............................................................6Company Research.....................................................................................................................8Company Profile.....................................................................................................................8SPMS Disclosure....................................................................................................................8Comparing Financial Performance of two selected companies...........................................11Link to Rewards/Compensation Plan...................................................................................13Conclusion................................................................................................................................13References................................................................................................................................15
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Introduction This research study aims to identify the utility of multi-perspective StrategicPerformance Measurement System (SPMS) along with the effect of motivational theories onreward system. This study describes real examples of the companies that integrated multi-perspective SPMS and reward system in their management as an important tool ofmotivation. It has been analysed that Australian companies are gradually increasing theimplementation of SPMS related to the social, sustainability and environmental measures thatare focused on the climate change legislations (Striteska and Jelinkova, 2015). The disclosureof companies’ performance on various aspects such as social, environmental and economicthrough the adoption of a SPMS system helps them to achieve transparency in their businessoperations. This in turn is essential for maintaining trust and integrity in their businessoperations in mind of its various stakeholders. Thus, the report undertakes a literature reviewthat determines the salient features of SPMS as well as creates profound knowledge for theimplementation of reward system and theory of motivation in companies. This has beendone to illustrate the importance of linking of SPMS measures to the compensation plan ofthe executives and non-executives of a business entity in order to achieve a competitiveadvantage in the marketplace. The literature review has presented the importance of two of the major SPMS systemsadopted by business corporations around the world that are balanced scorecard and triplebottom line. In addition to this, the report has carried out evaluation of two publicly listed top100 corporations in Australia regarding the effectiveness of their SPMS disclosures. For this,one company selected belongs to an environment sensitive industry whereas the otherbelongs to a non-sensitive environment industry. This has been done to compare and contrastthe SPMS disclosure adopted by the companies belonging to different industry sectors. Thecompanies selected for the purpose are. AGL Energy Limited and Westpac BankingCorporation as these are renowned Australian companies and have provided good sustainableperformances over the years. The report analyse the annual report, sustainability reports andthe information extracted from the companies websites for evaluating the effectiveness oftheir SPMS system. The financial measures of both the companies are also evaluated forassessing the linking of their SPMS financial measures with that of the executive’scompensation plan.
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