Comprehensive Report on Performance Management at Unilever

This report provides a comprehensive analysis of performance management within Unilever, a UK-based firm. It delves into the significance of performance management in achieving organizational goals, emphasizing the measurement and control of business activities. The report utilizes the Lynch and Cross performance pyramid to assess various performance indicators, including customer satisfaction, flexibility, and productivity. It explores both financial metrics, such as liquidity, solvency, and efficiency, and non-financial indicators like quality, time management, waste reduction, and customer satisfaction. The report further examines performance management methods such as benchmarking and target costing, offering insights into their application and impact within Unilever. The analysis highlights the importance of aligning operational activities with strategic objectives for overall business success.

Performance Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Measurement of performance and control within different types of organisational settings......1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Performance management is a process that helps the organisation in achieving its
respective goals by ensuring that the business activities are going in right direction and meeting
the expectations(Gerrish, 2016). Present study is based on the organisation Unilever that is UK
based firm founded in the year 1929. Report will include different measurement for performance
and control using Lynch and cross performance pyramid.
Measurement of performance and control within different types of organisational settings
It is very important for Unilever to manage its performance by measuring it and
performance management helps the organisation to make its employees motivated so that they
get engage in business activities for overall productivity of Unilever.
Figure:- 1
According to performance pyramid it is been analysed that all organisation operates at
different level and as a result they have different concern with respect to achievement of
objectives of business(Strommer and Földesi, 2019). It is been analysed that the traditional
performance management was having its focus on financial performance of the business and as a
result the businesses were not able to link there operations with the respective strategy they come
up with. There is requirement of measurement of performance and having control on the
1
Illustration 1: performance pyramid

organisation. Lynch and cross with the help of this model suggested that Unilever can take
different other measures rather than just having focus on traditional financial measures(Perera
and Perera, 2019). According to this model, customer satisfaction, flexibility in business and
productivity also have effect on achievement of business objectives and as a result these factors
also have to be measured in order to have business profitability. This models helps Unilever to
measure its performance with nine different dimensions that is from vision of Unilever to the
individual objectives of the organisation. There are different objectives of the organisation and
these can be achieved by taking proper measures at different levels of the pyramid. The bottom
line is having its focus to enhance quality and delivery performance with reduction in time and
waste. There are different non-financial indicators that Unilever uses so that operations are
measurable.
Non-financial indicators:- Non financial measures generally measures the performance of
business with focus on time, quality and quantity of activities that business carry on without
having focus on monetary values. The non-financial indicators for measurement of performance
are as follows:-
 Quality:- Unilever works to measure the quality of its product before it reach to the
customers. This measure helps the organisation to boost its productivity with customer
satisfaction. However, there are situations when Unilever is not able to reach the quality
standards and apply different approaches for performance management like customers
focus, process approach, continuous improvement etc.
 Time:- It is generally been noticed and measured by the organisation, that how much time
employees and suppliers take in operations and delivery of products. However, It is been
seen that they are taking more time than measured average time, different training
activities are conducted by Unilever in order to improve there performance(Sorooshian
and et.al., 2016).
 Waste:- It is very important to measure the waste as it affects the business productivity of
Unilever. However, different methods are used by the firm to analyse the wastage of
resources taking in organisation and Unilever is having different waste management
techniques to ensure that resources are wasted in less amount.
 Customer satisfaction:- It is very important to measure the retention ratio of customers in
order to analyse the performance of Unilever so that appropriate measures can be taken to
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achieve the same. It also required to analyse number of customers complaints and the
average time in solving these complaints. However, If customers retention ratio is not
appropriate and there is requirement to improve customer complaint handling then
respective measures are taken by Unilever to enhance the same.
These non-financial measures are very important for Unilever in order to have overall success of
the organisation.
In contradiction to this financial measures that organisation takes into consideration for
measuring the performance are also very important and are as following:-
 Liquidity:- It is very essential to assess the ability of Unilever that whether it meets short
term financial obligations or not so that proper measures can be taken in order to manage
the business performance.
 Solvency:- Unilever also requires to measures the respective long term debt against the
respective assets and equity so that financial stability of Unilever can be determine in
order to take measures for its improvement(Strommer and Földesi, 2019).
 Efficiency:- It is also required to measure the stock turnover of the organisation in order
to determine whether business is using its assets effectively or not so that proper
measures are taken to manage them.
All the respective financial measures are used to manage the performance of the organisation in
monitory terms. These financial measures are helpful to assess business performance so that
respective changes can be brought for its improvement.
There are different ways to manage the performance of business:-
 Benchmarking:- It is a systematic approach that is used by the organisation to manage its
performance by having comparison their performance with the same filed of business in
which Unilever operates. It is very useful in development and productivity of the
organisation by having proper performance management. However, it is this way to
manage the performance is not appropriate as it increases the dependency of organisation
on other firms and they do not have their own creative ideas for management of its
perform(Sridhar, Mantrala and Naik, 2016).
 Target costing:- It is integral part of strategic profit management system and here the
selling price for new product launched by Unilever is estimated so that required market
can be captured. It is general comparison between estimated cost with target level. It is
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beneficial to Unilever in order to make improvement for bringing competitive advantage.
However, it can create burden on production department of Unilever if estimated cost is
low(Clifton And et.al., 2019).
CONCLUSION
From the above study it is been interpreted that it is very important for the organisation to
have performance management and for the same, Unilever have to use Benchmarking and Target
costing method effectively.
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REFERENCES
Books and Journals
Clifton, M.B. And et.al., 2019. Target costing: market driven product design. CRC Press.
Gerrish, E., 2016. The impact of performance management on performance in public
organizations: A meta‐analysis. Public Administration Review. 76(1). pp.48-66.
Perera, S. and Perera, C., 2019. Performance measurement system for a lean manufacturing
setting. Measuring Business Excellence.
Sorooshian, S. and et.al., 2016. Review on performance measurement systems. Mediterranean
Journal of Social Sciences. 7(1). p.123.
Sridhar, S., Mantrala, M.K. and Naik, P.A., 2016. A New Method for Benchmarking Marketing
Organizations with Inter-Connected Departments. In Marketing Challenges in a Turbulent
Business Environment (pp. 35-36). Springer, Cham.
Strommer, D. and Földesi, P., 2019. Comparison of Logistics Performance Measurement Tools.
Acta Technica Jaurinensis. 12(1). pp.1-12.
Online
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%27performance+pyramid%27&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjqq5T-
u7TlAhVM8XMBHW1oBHkQ_AUIEigB&biw=1926&bih=1012#imgrc=zKxWTTpI-
ORZTM:>
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