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
