In the modern business environment, performance measurement has become more important than just financial metrics to assess an organization's overall performance. The Performance Prism model is a comprehensive performance measurement framework developed to meet these needs, balancing the needs and contributions of different stakeholders.
Performance Prism Model Overview
The Performance Prism Model is called an innovative second-generation model for performance measurement and performance management developed by the Center for Business Performance at Cranfield University in the UK and the Process Excellence Core Capability Group at Andersen Consulting. It can be used without particular limitation in non-profit and for-profit organizations, applies open modules, and has different characteristics from other measurement models in that it includes all stakeholders in an organization.
Organizational Philosophical Background: If an organization wants long-term success, it must be clear who its key stakeholders are and what they want.
Approach
1. Consider not only the needs of stakeholders, but also the needs of the organization for stakeholders
→ Managers need to know what various stakeholders want and need from the organization, and they also need to know what the organization needs from those stakeholders.
2. Investigate interrelationships among stakeholders
→ Bureaucrats must link and combine strategies, processes, and capabilities to satisfy a variety of preferences and needs systems to provide value to stakeholders.
5 Perspectives of Performance Prism Model
Stakeholder Satisfaction
Who is our stakeholder and what do they want and need?
As a top priority, it aims to identify and satisfy the needs and needs of key stakeholders such as customers, shareholders, employees, and suppliers. An organization always exists to provide value, and the existence of that value is to provide it to stakeholders.
Strategies
What are the strategies needed to meet preferences and needs systems?
The only reason an organization has a strategy is to provide value to its stakeholders. The organization's strategy involves specific plans to meet the needs of stakeholders.
Processes
What are the processes needed to meet preferences and needs systems?
By evaluating and improving the organization's internal processes for implementing strategies, the chosen strategies must solidify the foundation by processes designed to successfully achieve them. The process is cross-functional, showing a blueprint of where, when, and how a task will be executed.
Capabilities
What capabilities (people, strategies, skills, and infrastructure) are needed to run the process more effectively and efficiently?
Competency is a combination of everyone, tactics, technology, and infrastructure that makes the management process of an organization viable, and can be said to be the foundation of the organization. If people, strategies, technologies, and infrastructure do not function properly, it is impossible to execute or enhance the process.
Stakeholder Contribution
What do we want or need from our stakeholders?
It involves analyzing the support and resources an organization needs from stakeholders to succeed and providing value to stakeholders, as well as forming relationships for stakeholders to contribute to the organization. In other words, if there is something stakeholders want and need from the organization, the organization also wants and needs from the stakeholders.
Advantages of Performance Prism Model
Comprehensive Performance Assessment: While traditional performance measurement systems focus on financial performance, Performance Prism assesses an organization's overall performance by considering both financial and non-financial performance.
Stakeholder-centric approach: Systematically reflects the expectations and needs of different stakeholders and aligns them with the organization's strategic objectives.
Strategic Linkage: Closely align your organization's strategy with operational processes for more consistent performance improvements.
"The Performance Prism model is the best framework for achieving an organization's strategic objectives while meeting the needs of a wide range of stakeholders," emphasizes Professor Andy Neely, director of the Centre for Business Performance at the Cranfield School of Management. In addition, recent studies have shown that organizations that adopt Performance Prism have improved stakeholder satisfaction and financial performance by an average of more than 20% compared to those that do not.
Difference between Performance Prism Model and BSC
Reference site
- Kang Hwang-seon. Understanding and applying the meritocracy model. A collection of papers presented at academic conferences.
- Performance Magazine
- Boardmix Guide on Performance Prism
- MBA Knowledge Base on Performance Prism
- Emerald Insight on Performance Prism
