Operations Performance Measurement - Term Paper Example

Introduction Innovations in business practices, over the period of time, necessitated many important and critical challenges which are now consideredas a part of doing business. These changes not only brought a completely new way of doing the business and meeting the competitive requirements but also ensured the implementation of standards which allowed firms to become internally competitive also. The modern way of doing the business, despite its reliance on the information technology as an strong alternative to improve performance have failed to achieve the desired results as many firm still struggle to manage the different resources of the firms in most optimal way despite having access to the most modern technologies. (Hammer). The obvious reason for such failure has often been cited as the lack of developing operating performance metrices and other systems and procedures which can ensure the consistent and reliable operational performance of the firms. It is also because of this reason that it is now considered that the modern organisations need to concentrate more on the operational performance of the firms in order to remain more competitive as well as flexible in nature so that they can easily withstand the external shocks. In order to achieve the efficiency in the operational performance, firms need to concentrate on different functions of organisation like marketing, customer services, manufacturing etc. This will allow them to re-engineer the processes properly and achieve the desired level of efficiency in their operations. However, improvements in the operational performance largely depend upon the development of an effective operating performance measurement system therefore any initiative to bring in a culutre of performance improvement would largely depend upon how successfully an organisation set up its performance measurement system. This paper will attempt to discuss the development of performance measurement system by taking into account the nature of the operations performance measurement system and how it is related with making improvements in performance. My organization I work in a London based management consultancy firm which offers its services in governments, telecommunication, intelligent transport solutions and business transformation. From its very nature, the activities of the firm are diverse in nature therefore it requires the management of different internal and external players in different contexts each time we deal with them. It is also important to discuss here that we face a different and complex challenge in terms of managing different aspects of our operations into a completely new and radical way in order to ensure consistency in our operations. However, in order to face the competition effectively and to become more resilient and flexible, we need to implement operational performance standards which match that of the international quality standards such as ISO 9001:2000. This would also require us to improve different aspects such as resource management, business development, and client delivery etc. We also need to manage subcontractors therefore it becomes more complicated when it comes to managing the performance of the firms, working for your organization to ensure compliance with the already set standards of the firm. Performance Management & Measurement It is often argued that the use of automation and information technology to boost the results and operational performance of the firms has not yet yielded the results which were expected. (Hammer). It is therefore believed that the firms do not only need to automate but also take into account the softer side of the operational performance in order to achieve the desired results. One of the basic problems behind the failure of the organizations to effectively measure the operational performance is the fact that the existing systems tend to measure the performance of personnel rather than processes thus ignoring various aspects of performance management. (Hammer, The 7 deadly sins of performance measurement (Hammer). It is also critical to understand that generally, financial gains have been linked with the performance measurement whereas those operations where greater financial gains can be made are considered as viable and preferred operations ignoring the fact that a potentially profitable operation may not create the desired level of synergy between the different processes of the firm. (Smith and Goddard) In order to achieve the desired level of improvement in the performance management of the operational activities of the firms, it is critical that the firms should put in place effective performance measurement systems. Services sector of the economy is considered as one of the most important sectors as more and more organizations now prefer to outsource many of their activities in order to free up time and resources to concentrate on their core competencies. (Ellram, Tate and Billington). Since my organisation is also a service organisation offering services of different nature therefore it becomes critical for us to deliver what is expected from us. Therefore, in my organization, our basic emphasis always remained on achieving and complying with the international quality standards for operations. These quality standards include ISO standards which we have set for ourselves as benchmark for achieving the desired level of efficiency and performance in our firm. As discussed above that our firm deals in four major areas of government, telecommunication, business transformation as well as intelligent transport solutions therefore we need to maintain standards which serve the different segments of our clients and for this purpose, we have set an standard level of operational performance which must at least meet the international standards. At our firm, our operational areas are divided into following: 1) Resource Management 2) Business Development 3) Client Delivery 4) Resource and Skill Development 5) Other internal processes. Based on those five broad areas, our performance measurement expectations are based on the key drivers of the performance and results of those drivers on the overall performance of the operational activities performed. (Jhonston, Bringall and Fitzgerald). Further, to that our performance management measures are designed in such a way that we take inventory of different sub-activities performed under each of the five broader areas and then attempt to find out what operational activities, under each of these major areas, are directly related with the customers i.e. since services are always perishable in nature therefore our main focus is to remain customer oriented and always strive to provide solutions which meet the expectations of our customers. It is also critical to understand that our firm tends not to focus entirely on the so called total quality management but attempt to take a much broader view of the firm's resources in order to implement and impart a completely unique way of ensuring performance and quality in our operational activities. Thus our performance measurement metrics are primarily driven by the underlying philosophy of delivering the promised services to the clients first and then building on this, attempt to exceed the expectations. Before discussing how our existing operation performance system contributed to the overall performance improvement, it is critical to understand that operation performance measurement systems vary from organisation to organisation and mostly depend upon the sector or the industry within which firms operate. (Medori and Steeple). Since the performance measurement mainly emerged due to the globalization of the organizations and resultantly their operations and activities therefore the performance measurement system at our firm is also that of following the international standards besides ensuring to fill the gaps left behind by the international standards due to their uniformity. However, it is also critical to understand that since measurement of services is often a difficult task therefore the accurate measurement of the services poses a much greater challenge for managers to effectively devise a system which clearly set out the performance criteria and measure the performance against them. In order to avoid such discrepancies, managers therefore have decided to stick to the uniform set of quality standards to ensure a standardised platform for the measurement of performance in different core and non core activities of the firm. Performance Improvement Since our operational performance system is based on imitating the international quality standards therefore the basic philosophy of performance improvement is linked with the compliance with these standards. While implementing the operational performance system, we took into account the way our existing procedures were performed and then we compared them to how they should have been performed as per the international quality standards. Based on this gap analysis, we identified the gaps where we were lacking and attempted to infuse new procedures and practices in order to improve the performance and raise the level to the point where it match the international standards. Thus considering the present scenario at our firm, our existing operations performance measurement system has greatly contributed towards the improvements in our performance. Conclusion Operations Performance measurement was always linked with the manufacturing organizations however with the shift towards service based economy; there is a greater need for bringing in more efficiency and effectiveness in the operational performance of the service oriented firms. In order to achieve the desired levels of operational performance, it is critical that the firms must develop an effective and efficient performance measurement system so that under a broader perspective, it can be easily assessed as to whether the firm is efficient or not. Bibliography 1) Ellram, Lisa M, Wendy L Tate and Corey Billington. "Service supply management: the next frontier for organizational performance." California Management Review 49.4 (2007): 44-66. 2) Hammer, Michael. "Re-engingeering work: don't automate, oblieterate." Harvard Business Review 68.4 (1990): 104-112. 3) Hammer, Michael "The 7 deadly sins of performance measurement (and how to avoid them)." Sloan Management Review 48.3 (2007): 19-28. 4) Jhonston, R, S Bringall and L Fitzgerald. "Good enough performance measurement : a trade off between activity and action." Journal of the Operational Research Society 53 (2002): 256-262. 5) Medori, David and Derek Steeple. "'A framework for auditing and enhancing performance measurement systems'." International Journal of Operations and Production Management 20.5 (2000): 225-248. 6) Smith, P. C. and M. Goddard. "Performance Management and Operational Research: A Marriage Made in Heaven" The Journal of the Operational Research Society 53.3 (2002): 247-255. Read More