Faculty of Business: Performance Management Report, 2020

This report examines performance management, focusing on the differences between service and manufacturing industries. It begins with an introduction to performance management, defining its importance in identifying, measuring, and developing employee capabilities to achieve organizational objectives. The main body delves into Key Performance Indicators (KPIs) relevant to both sectors, including customer satisfaction, employee engagement, cost of service delivery, and employee satisfaction in the service industry, and capacity utilization, scrap reduction, quality of goods, and on-time delivery in the manufacturing industry. The report then discusses the challenges of measuring performance in the service industry, highlighting issues like homogeneity, intangibility, perishability, and simultaneity. Financial factors such as profit increase and cost reduction, and non-financial factors such as employee satisfaction and retention are also explored. The report concludes by emphasizing the crucial role of continuous KPI analysis and improvement for enhanced business performance. The report uses the Investment Services UK Ltd (ISUL) and Openhouse Products Ltd as case studies.

Performance
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
KPIs in service and manufacturing industry..........................................................................3
What makes it difficult to measure performance in service industry.....................................4
Financial and non-financial factors within performance management..................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Performance management is a continuous process where the performance of employees
of company is identified, measured and developed so that their capabilities and sills can help the
organisation in achieving its objectives in an efficient manner. In this report Investment Services
UK Ltd (ISUL) is taken which is an idea-centric wealth and investment advisory firm which help
professional investors in covering markets. Also Openhouse Products Ltd is taken which is a
manufacturing company that designs and manufacture bags for emergency and health sectors. In
this report the KPIs of service and manufacturing industry, difficulty in measuring performance
in service industry etc. will be discussed.
MAIN BODY
KPIs in service and manufacturing industry
Key Performance Indicators are the measurable values that help in determining how
effectively a business is able to achieve its business objectives. This will help the businesses like
ISUL and Openhouse Products Ltd in determining their ability to achieve their goals through
their performance.
Some KPIs used in service industry:
 Customer satisfaction: It is the ability of a business to satisfy its customers by providing
them high quality of services so that they can remain loyal to the company and continue to
take servicers from the same company (Mone, Londo, & Mone, 2018)
 Employee engagement: It is the level of involvement of employees in making decisions and
their commitment towards company so that they use their skills and talents in achieving
company goals.
 Cost of service delivery: It is the ability of business to reduce its cost of delivery of service
so that the profits of business can be maximised while minimising its costs.
 Employee satisfaction: The level of employee satisfaction determines their willingness to
use their complete talent in achieving company goals which indicates that the business is
doing well.
Some KPIs used in manufacturing industry:
 Capacity utilisation: It is the ability of a business to utilise all its tools, equipments and
machinery in an efficient manner so that production capacity can be completely utilised.

 Scrap: It is the ability of a business to reduce the amount of scrap or waste while
producing its goods so that the efficiency of its performance can be determined (Kallio &
Hyvönen, 2016).
 Quality of goods produced: The quality of goods produced by the company help in
determining the performance level of a manufacturing company.
 On-time delivery: It is the ability of a business to deliver the goods produced by it on
time to its customer so that their demands can be efficiently fulfilled.
What makes it difficult to measure performance in service industry
In order to measure the productivity of business the output is divided by input so that the
ability of organisation to develop output as compared to its inputs can be ascertained. In service
industry it is difficult to measure the performance as there is no physical or tangible number of
goods attained through business processes. Following are some reasons which make performance
measurement difficult:
 Homogeneity: It is the lack of similarity of service each time it is given to the customers
along with the perception of customers every time they receive the services. It is thus
difficult to determine the ability of business in satisfying the demands of customers as for
one person the service can be good while for the other the same service can be bad
(Eaidgah & Abdekhodaee 2016).
 Intangibility: As the services are intangible it is difficult to measure the quality of service
which is provided by the company to its customers. It also becomes difficult to
distinguish the service given by one person working in same company from the other as
the services delivered by them are intangible.
 Perishability: The services cannot be preserved for their later use and they perish as and
when they are delivered by the business and it is to be simultaneously utilised by the
consumer as it cannot be stored for later use. This makes it difficult to measure the
performance as all the services that are provided are to be consumed on the same spot.
 Simultaneity: The performance measurement is difficult as the service is given to
customers and it is received by them at the same time which means that the quantity of
service received by them and cannot be measured. However by the use of feedbacks the
customers the ability of a business to satisfy the needs of customers can be evaluated that
can help in measuring the performance of business (Choudhary & Reyes 2016).

Financial and non-financial factors within performance management
Financial factors are related with company finances that can help in measuring company
performance like:
 Increase in profits: If with the goods and services which are provided by business help in
increasing their profits then it can be said that the company is able to perform better in
market.
 Reduction in cost: If the cost of producing goods and services of company gets reduced then
the performance of company is high in market (Gaillard2016).
Non financial factors are the ones which cannot be measured in terms of money and relates to
following factors:
 Employee satisfaction: If the employees working in company are satisfied with their jobs
then it can be said that the company is able to perform better.
 Employee retention: It is the ability of business to retain employees which means that the
business is performing better and the employees are engaged in company which also help in
increasing their performance.
CONCLUSION
From this report it can be said that performance measurement plays an important role in
determining the ability of business to achieve its goals and to make its performance even better
so that large number of customers can be attracted. KPIs must be continuously analysed so that
they can be improved that can help the business in performing better.

REFERENCES
Books and Journals
Mone, Londo, & Mone (2018). Employee engagement through effective performance
management: A practical guide for managers. Routledge.
Kallio & Hyvönen, 2016. Ethos at stake: Performance management and academic work in
universities. Human Relations .69(3). pp.685-709.
Eaidgah & Abdekhodaee, A. (2016). Visual management, performance management and
continuous improvement. International Journal of Lean Six Sigma.
Choudhary & Reyes, B. C. (2016). U.S. Patent No. 9,294,361. Washington, DC: U.S. Patent and
Trademark Office.
Gaillard, P. (2016). Fredholm and Wronskian representations of solutions to the KPI equation
and multi-rogue waves. Journal of Mathematical Physics .57(6). 063505.