Performance Measurement System - Coursework Example

ID Number: Performance measurement system Introduction Performance is an important metric for measuring the effectiveness and efficiency of an organization. Performance is also an important component of any management system which is aimed at measuring the effectiveness and success of an organization and its activities. The performance measurement systems are based on the process of gathering, analysing and reporting varied information about the performances of an individual employee, team, department, business unit, system, component, group or the organization as a whole. The domestic and multinational companies across the world use different strategies and processes of studying the performance level within an organization. Performance measurement systems are important because they help to evaluate the performances of different components and entities of an organization and helps to understand whether the outputs from the different resources and activities of the organization are in line with the desired objectives of the business and how much of the pre-defined objectives have been achieved by the different activities of the same. This report is prepared regarding the performance management system used by a multinational automobile manufacturing company, General Motors. The report is started with an overview of the selected company followed by a small discussion regarding what a performance management system is. the Performance Measurement Systems (PMS) used in General Motors are thoroughly discussed and evaluated to understand how far these systems are effective and what can be added to make the performance measurement process of the company more impactful. The report is suitably concluded by highlighting the main findings and recommendations. Discussion (1200) General Mortars is one of the largest automobile manufacturing companies in the world. The company was founded by William C. Durant in the year 1908. The company has its headquarters in Detroit, the United States. General Motors is a major employer which has more than 209,000 people in 120 countries across the globe. The largest international markets of General Motors are in China, the United States of America, the United Kingdom, Canada, Germany and Russia. The automobile manufacturer is globally acclaimed company which has established strategic business partnerships with other ancillary business organizations in the automotive industry. As of 2013, General Motors has revenue of USD 135.6 billion. It can be identified that the effective and differentiated performance management systems used by the company over the years of its existence has been a major reason for the continued success and competitiveness achieved by General Motors. In a highly competitive automobile segment, it is extremely important to ensure that the performances, quality and standards of all kinds of resources and products of the company are strictly monitored and meet the international market requirements. Therefore, performance and its measurement are critical for the company in every phase of its functioning. The management of General Motors employ a number of performance measurement systems and processes. The balanced scorecard designed by Kaplan and Norton is a common performance evaluation system that has been traditionally used by General Motors. The balanced scorecard is used as a performance measurement system for measuring both the financial and non-financial performances of the company (Kaplan and Norton 114). General Motors employ the balanced scorecard and strategy maps to assess the performances of the single business units as well as the whole company for the short term as well as the long term scenarios. There are four main parts of eh balanced scorecard system. These are given as follows: The Financial perspective – how the company look to its shareholders. The Customer perspective – how the company look s to its customers. The Internal Process perspective – what must the company excel at. The Innovation and Learning perspective – how can the company continue to innovate and improve with the aim of creating value for the internal and external stakeholder groups? (Source: Van de Walle and Alasdair 118) The use of the BSC model has enabled General Motors to develop a comprehensive view of the operations at various levels and units of the business and hereby to improve on the investment and operating activities in order to achieve the short term and long term strategic objectives of the corporation (McCurry 401). Apart from this performance management system, General Motors also uses a High Performance Work System (HPWS) which has been employed as a way of measuring the performance levels of employees within the organization and also as a strategic way of finding out the most suitable work systems that can be employed to improve the overall productivity and performance of the business. The high performance work system includes open systems, independent work team and payment on the basis of performance (Barrows and Neely 62). These are also evaluated in order to ensure high commitment and high involvement work processes. The company also aims at infusing flexibility and support within the work systems so as to deliberately boost the organizational performance levels. The main focus of this high performance work system is to rearrange the work activities so that the individual employees and employee groups can be enabled to participate in the decision making processes that are useful in the day to day operations and activities of the business (Poister 23). The high performance work system in the company is mostly affected by three potential drivers which are the retrenchment of employees, products and process layout designs and use of technology. The workers are considered to be the key to success in the automobile manufacturing company. As such, retrenchment is seen as a process that has harmful impact on the effectiveness, efficiency and performance of the organization. General Motors has recognized that the loss of talented and skilled workers may lead to the reduction of the competitive edge of the company (McCurry 104). Also, in a dynamic and continuously improving automobile industry, it is very important for a company to develop a strong base of workers who would add to the creativity, innovation and performance of the business. Therefore, General Motors employs the High Performance Work System (HPWS) including its measurement processes to ensure that the performances of the individual employees are gauged, investigated, improved and supported (Moullin 201). Apart from the performance management of the workers, General Motors also concentrates on managing and monitoring the performances of the other resources and entities of the business so as to create maximum value for the stakeholder groups. The company also puts much emphasis on improving the performances in its operational activities. The operational activities of the company are reported on a daily basis and reviewed on a quarterly basis on the board level. The summary of the operational performance reports are sent to the higher management every fortnight which ensures that any drawbacks or loopholes in the performance management and performance measurement system are immediately identified and rectified (Neely 332). The performances of the employees and departments are checked through the use of the balanced score card which can then be sued to develop the strategy map for the business. In this process, the strategic objectives of General Motors are kept as the base on which the long term strategic purposes and missions of the business are developed and streamlined with the performances and achievements of the company. The balanced scorecard is used as a strategic management tool to achieve a number of varied goals and results. These may include reviewing the capability and capacity of the existing work force in the company, planning to meet the short term, medium term as well as long term goals of the company, devising plans to help reduce the conflicts of interests between the different stakeholder groups as well as decrease the gaps between the stakeholder needs and the customer wants from the business (Padhaya and Yemen 201-202). Designing the Key Performance Indicators (KPIs) and communicating the same to the individual employees is an integral part of the performance management system used in General Motors. This not only helps the employees to have a better understanding of what is desired from them but also helps in guiding and leading the employees to higher performance and efficiency. Rewarding and recognizing the contributions and achievements of the employees for different kinds of innovations and value addition is a strategic process employed by the automobile giant to manage the performances of the employees in a more impactful manner. The 360 degree feedback system is another significant Performance Measurement System (PMS) used by General Motors. In this method, feedback performance appraisals are done in a 360 degree manner in which the mangers give feedback on the performances of the employees and simultaneously the employees give feedback in the performances of the managers based on different criterions and guidelines (Iveta 12). The feedbacks given are kept confidential due to which the employee relations are not hampered in any manner. The use of these Performance Measurement Systems (PMS) has enabled General Motors to maintain a transparent and unbiased organizational culture while at the same time boosting the performance level of all levels of employees working in the company. Conclusion Thus, it can be identified that the Performance Measurement System (PMS) is an important tool for increasing productivity and for developing a highly motivated, engaged and proactive workforce. General Motors has been an early acknowledger of the need for evaluating the performances of individual employees and departments and as such has been able to maintain competiveness in its functioning over the years of its existence. The varied Performance Measurement system (PMS) used by the company like the Balanced scorecard, 360 degree feedback system, self-evaluation system etc. have been much effective in ensuring the continued success and competitiveness of the company on the international platform. Works cited Barrows, Ed and Andy Neely. Managing Performance in Turbulent Times: Analytics and Insight. New York: Wiley. 2012. Print. Behn, Robert. Why measure Performance? Different Purposes Require Different Measures. 2003. Stamford: Cengage Learning. Print. Gabčanová Iveta. Human Resources Key Performance Indicators. Journal of human resource management. Vol. 2(1). 2012. Print. Kaplan, Robert and David Norton. Strategic Performance Measurement and Management in Business Organizations. Management & Leadership, Vol. 11(3). 2001. Print. McCurry, Peter. Measures of success. London: Sage. 2011. Print. Moullin, Michel. Performance measurement definitions: Linking performance measurement and organizational excellence. International Journal of Quality Assurance, Vol. 20(3). 2008. Print. Neely, Andy. Business Performance Measurement: Unifying Theory and Integrating Practice. Cambridge: Cambridge University Press. 2011. Print. Padhaya, Beroul and Blount Yemen. Association between Performance Measurement Systems and Organizational Effectiveness. International Journal of Operations & Production Management, Vol. 34 (7). 2014. Print. Poister, Theodore. Measuring Performance in Public and Nonprofit Organizations. San Francisco: Jossey-Bass. 2012. Print. Van de Walle, Steven and Roberts Alasdair. Publishing Performance Information: An Illusion of Control? Houndmills: Palgrave. 2008. Print. Read More