Strategic Performance Measurement System Report: A Detailed Analysis

This report provides a comprehensive overview of Strategic Performance Measurement Systems (SPMS). It begins by defining the nature of SPMS, highlighting its role in driving strategy execution, improving employee performance, and making strategic goals transparent. The report then delves into the issues faced by multi-national companies (MNCs) in implementing SPMS, such as differing goals between parent companies and subsidiaries, diverse regional needs, and the challenges of performance evaluation in an international context. The report further elaborates on the implications of SPMS on strategic alignment, emphasizing the importance of building relationships between headquarters and subsidiaries and the need for clarity in addressing issues. The report concludes by summarizing the key aspects of SPMS, including the use of balanced scorecards, the challenges faced by MNCs, and the importance of aligning SPMS with strategic goals.

Running head: STRATEGIC PERFORMANCE MEASUREMENT SYSTEM
Strategic Performance Measurement System
Name of the student
Name of the University
Author note

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Executive Summary
The main aim of this report is to discuss about the nature of strategic performance
measurement system. It discusses about the issues in relation to strategic performance
measurement system and its implications on organisation.

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Table of Contents
Introduction................................................................................................................................3
Nature of Strategic Performance Measurement System............................................................3
Issues of Strategic Performance Measurement System.............................................................4
Implications of SPMS on strategic alignment............................................................................6
Conclusion:................................................................................................................................7
References:.................................................................................................................................9

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Introduction
Strategic Performance Measurement can help the companies in achieving success and
it can help in driving strategy execution. Strategic Performance Measurement System
(SPMS) can lead to improvements of the performance of the employees and this approach
can help in making the strategic goals transparent to that of the line executives. It helps in
providing a mechanism that can help in monitoring the progress towards that of the goals by
making use of intuitive performance measures (Hill, Jones and Schilling 2014). This report
discusses about the nature in relation to strategic performance measurement system and the
issues that a multi-national company faces in relation to performance measurement. This
report elaborates on the implications of SMPS in the areas of strategic alignment along with
that of performance evaluation.
Nature of Strategic Performance Measurement System
Strategic Performance Measurement System makes use of information in order to
bring about a positive change to the organisational culture and process. The relations between
the roles and the capabilities of that of strategic management system can help an organization
in achieving causality between the roles along with that of organizational resources. SPMS
should be implemented and it can help in the articulation of the strategy that can produce
business results. It helps in the monitoring of the financial along with non-financial aspects in
relation to an organization (Wheelen et al. 2017). SPMS can help the organizations in
building organisational capabilities that can help them in sustaining competitiveness within
that of the market. The organisations are making use of SPMS that can provide them with
information that can help the organization in identifying strategies that can help them in their
growth within the industry (Slack 2015). Balanced scorecard refers to a performance
measurement tool that is made use of by the managers for keeping track of the activities of

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the employees. It is indicative of a performance management report that helps in managing
the manner of
implementing a strategy. This is used by the individuals for tracking personal performance
and it helps in focussing on the strategic agenda pertaining to an organization. It has in the
recent age become main component in relation to the structural approaches of corporate
strategic management (Horngren et al. 2014). Balanced Scorecard helps in reflecting on the
critical success factors that helps in determining the success in relation to the strategies of the
organization. Balanced Scorecard helps in showing relationship of the individual measures in
the manner of cause and effect (Rothaermel 2015). The Balanced Scorecard proves to be
immensely helpful for an organization as it can translate the strategy of an organization into
that of the operational objectives. A strategy map is a visual representation that helps in
identification of the linkages between the lag along with the lead factors.

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Figure: Balanced Scorecard
Source: (Hill, Jones and Schilling 2014)
Issues of Strategic Performance Measurement System
Performance management is indicative of a process that helps in setting a shared
understanding regarding what one can achieve at the organizational level. Performance
measurement can help in the integration of different elements that can produce effective
management in relation to the human resource. It is indicative of a systematic process that a
manger can make use of for achieving the objectives of the team. It can help in improving the
team effectiveness and developing of performance capabilities in an organization.

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Strategic Performance Measurement System should be on the basis of the needs
pertaining to the organization. SPMS cannot be duplicated and implemented in that of
another organization because the objectives of the companies being different. A multi-
national company (MNC) finds the implementation of SPMS difficult as the goals of the
parent company is different from the subsidiaries. The subsidiaries are located in different
regions and hence the missions of the organization are on the basis of their local needs. The
competitive strategy of an organization situated in a particular region may be different from
that of another place and this makes the strategies to be different for the organizations
(Lasserre 2017). The parent company having a mission statement differing from that of the
subsidiaries acts as a hindrance in the path of implementing strategic performance
measurement system. An accounting system is of great necessity for a multi-national
corporation that can render effective help for monitoring of operations. The reviewing in
relation to organizational development helps in the field of performance evaluation. The
international context of a MNC makes the process of strategic performance measurement
difficult. A multi-national company cannot decide properly as to whether foreign operations
should undergo evaluation based on cost, profit or investment (Bettis et al. 2016). The
circumstances prevailing in the environment will have an impact on the organisational
strategy and hence a multi-national corporation cannot use a uniform measure that can help in
the field of performance evaluation. An MNC cannot decide on what basis performance
evaluation will be done that can give rise to a valuable result.
Performance of the subsidiary and management should undergo differentiation that
can help in getting valid results. Evaluation system should be capable of supporting
separation of managerial and subsidiary performance that can provide remuneration to that of
the good managers in an organisation (Melnyk et al. 2014). The integration of performance
management system with the aspect of strategic planning is imperative for the success of an

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organization. The dearth of integration between parent company and subsidiary makes the
implementation of performance measurement difficult for the organization (Koufteros,
Verghese and Lucianetti 2014). There are additional problems that makes the process of
measurement of performance difficult. It has been found that the economic, social along with
the cultural environments vary in different countries that makes the measurement of strategic
performance measurement difficult. The government existing in some country can impose
some kind of control that can limit selling prices in relation to a particular product.
Availability in relation to the materials along with that of skilled labour can differ to great
extent across different countries which makes strategic performance evaluation difficult
(Kondo and Nishii 2016).
Cultural differences are found to exist in parent along with subsidiary company and
this makes difficult the measurement of strategic performance measurement system. The
integration of business plans becomes difficult in the case of a multi-national corporation and
this acts as a barrier in the path of strategic performance measurement (Micheli and Mari
2014). Financial planning is different for the different organizations that makes performance
measurement difficult.
Evaluation pertaining to balanced scorecard is an arena of difficulty as one cannot
decide whether right factors are being measured. Strategy map can prove to be useful in
providing a visual representation that can explain cause-effect relationship existing within an
organization. The devising of a competitive strategy is dependent on that of competitive
forces pertaining to a particular industry. The manner in which a company would like to be
viewed will differ from parent and subsidiary company. The needs of the customers are
different in different areas which makes implementing strategic performance measurement
difficult. The business conditions that exist internally is different for parent company and the
subsidiaries and this makes the evaluation of the performance measurement difficult (Lisi

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2015). Senior management not being committed to the organization can lead to failure of in
relation to strategic performance measurement. There are lesser chances of the strategy of the
organization being translated into that of action on account of the fact that key performance
indicator in different companies will be different. The financial measures act like that of
dependent variables and they act as lagging indicators. The establishing of quantifiable link
becomes difficult in case of an MNC because of difficulty in measuring lag time (Shahin et
al. 2014).
Implications of SPMS on strategic alignment
SPMS can be used for building relationship between the headquarters and that of the
subsidiaries. It is important that the organisations should be able to decide regarding what
kind of SPMs is to be introduced that is in line with that of strategic control. In the event of a
multi-national company wanting to exert financial control over that of the subsidiaries
financial indicators should be included that can prove to be appropriate. SMPs acts as a useful
means with the help of which dialogue can be established between the different functions in
an organisation. The headquarters should seek dialogue with that of the local managers that
can help in designing measurement system that includes that of non-financial indicator
(Salinas et al. 2015). Lack of the aspect of clarity over different issues can lead to the creation
of considerable problems that can cause the failure of strategic performance measurement
system. The significance in relation to performance indicator would keep on changing with
the passage of time which is dependent on the performance of the organization. Shift in
emphasis in relation to specific elements pertaining to SPMS is dependent on performance of
subsidiaries along with that of the operating environment (Ibrahim 2015). The parent
company can make use of multiple perspectives in order to assess performance. They want to
restrict the focus to that of financial indicator in case of financial results being poor.

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Conclusion:
SPMS can help in the process of articulating of strategy in an organization that can
help in driving the business results. An organization can monitor financial and non-financial
aspect with the help of SPMS. Balanced Scorecard can help the management in a company in
tracking activities pertaining to the employees. The objectives in relation to a parent company
is different from that of the subsidiary in the case of a multi-national company. This makes
implementing SPMS difficult in the case of a multi-national company. The location of the
subsidiaries being different from the parent company it becomes difficult to assess strategic
performance measurement system. The environmental circumstances influence strategy of
organization and a uniform measure in relation to a multi-national company will be different.
Business conditions are different for parent company and that of the subsidiaries and hence
evaluation in relation to performance measurement becomes difficult. Financial indicators
can be included in relation to an MNC that can help the parent company in exerting financial
control on the subsidiaries. Dialogue with local managers by the headquarters can prove to be
of much help in designing strategic performance measurement system. Clarity in relation to
different issues can help in the removal of considerable problems pertaining to SPMS. The
wants of the customers being different for parent company and subsidiaries makes the
implementation of SPMS difficult.

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