13.4 Performance and effectiveness - concepts, issues and approaches

Question 1

“Performance” is a measure of the actual application of the strategic intent - i.e. how does the actual performance compare to the strategic perception of what that performance looks like? There are two phrases frequently used to measure this:

1) Organisational e_________ - does the performance enable the realisation of the s_______ goals?
2) Organisational e_________ - has the performance made optimal use of the s________ resources available?

Answer 1

effectiveness
strategic
efficiency
stakeholder

Question 2

Organisational effectiveness and efficiency can be measured in two ways:

1) Q________ - a consideration of the performance from narrative data - i.e. a “subjective” approach.
2) Q________ - a consideration of the performance from numerical data - i.e. an “objective” approach.

Answer 2

Qualitative

Quanitative

Question 3

The opening of Heathrow’s Terminal 5 was disastrous, with 23,000 bags misplaced and 500 flights cancelled in the first five days due to staff and maintenance issues.

How did the opening of Heathrow’s Terminal 5 demonstrate poor strategic effectiveness and efficiency?

Answer 3

Effectiveness - the goals of the terminal were not realised, as a lack of staff training and maintenance factors meant that bags were lost and flights cancelled (BA lost £16m)

Efficiency - the opening did not make optimal use of stakeholder resources - the necessary efficiency measures were not in place to ensure that the opening ran smoothly.

Question 4

“You can’t manage what you can’t measure” - Peter Drucker.

In the assessment of any organisation, it is important to understand:

• how to m______ and assess performance and behaviour and the different l_____ at which these can be measured.
• what is going to c____ as a result of having made the measurement and assessment,

Answer 4

measure

change

Question 5

At the highest level, the measurement of strategic performance can be divided into two categories - what are these?

Answer 5

Financial measures

Performance measures

Question 6

What are some examples of financial measures that could be used to evaluate strategic performance?

Answer 6

Profitability - has the performance delivered the anticipated return in line with the target?
Liquidity - has the performance delivered the anticipated liquidity?
Wealth - has the performance delivered the anticipated shareholder wealth?

Question 7

What are some examples of productivity measures that could be used to evaluate strategic performance?

Answer 7

People - is the existing human resource used to enable individuals to reach their potential?
Product - is the product/service in line with expected quality?
Resources - Are all the resources being utilised optimally?

Question 8

Why can measures such as EBITDA be confusing when used to compare companies?

Answer 8

Different companies may measure different aspects differently - e.g. earnings can be measured in a number of different ways.

Question 9

An alternative approach to organisational control is to consider how effectively stakeholder r______ are being used. This is referred to as an i_____ measure and assumes that organisations derive success through maximising the efficient use of resources.

Answer 9

resources

input

Question 10

Daft (2013) researched the impact of stakeholder expectations as measures of effectiveness:

Owners - f_______ return
Employees - worker s_______, pay, supervision
Customers - q_____ of goods and services
Creditors - creditworthiness
Community - Contribution to c______ affairs
Suppliers - Satisfactory transactions
Government - c________ with laws and regulations

Answer 10

financial
satisfaction
quality
community
compliance