Open Universiteit

Please use this identifier to cite or link to this item: http://hdl.handle.net/1820/6604
Title: Strategy and Performance Measurement How do managers react if there is tension between strategy and performance measurement Ron Konjer 836964561 Open University Netherlands Faculty : Management Sciences Education : Master of Science in Management Mentor/Examiner : Drs. Veneklaas Slots Co-Examiner : Dr. Kamminga February,
Authors: Konjer
Keywords: Strategy, Performance Measurement, Balanced Score Card, tensions, leading and lagging indicators, distracting or ignoring or pseudo alignment tactics
Issue Date: 3-Mar-2015
Publisher: Open Universiteit Nederland
Abstract: Key Words Strategy, Performance Measurement, Balanced Score Card, tensions, leading and lagging indicators, distracting or ignoring or pseudo alignment tactics Abstract Almost every organization has some kind of a Strategy and uses some kind of Performance Measurement. Although having a Strategy and a Performance Measurement System (PMS) is no reason to survive and reach the optimal performance. In a cover article of the Fortune (June 1999) of failures of organizations the conclusion was that focus on strategy and vision apparently led to the misplaced believe that the only thing management needed was having a good strategy. In approximately 70% of all cases the real problem is not the strategy itself but implementing the strategy. To know if a Strategy is implemented it has to be measured. By measuring this there might be tension as the outcomes might indicate that the Strategy is not implemented as desired and hence the results of the organization will also not be the desired outcomes. In this research the main question consists of the way Managers act in case there is tension between the Strategy and the Performance Measurement. As the implementation of Strategy is seen as highly critical it is also necessary to know if it is implemented and to know what will be one if this is not the case. The financial industry seems to be an interesting sector to make further research on this theme as their output consists of services and hence intangible assets which are closely tight with their Strategy. In order to do so a research is done at a medium sized organization within this financial industry. The main question in this thesis is: How do managers react if there is tension between strategy and performance measurement (PM)? Tensions do exist but not because the Performance Measurement system shows that the Strategy is not met or implemented. The current Performance Measurement System and more in particular the BSC does not guarantee whether the organization is able to assess if the organization meets its Strategic goals. Targets are defined on a yearly bases following budget and based on a three year perspective. As market circumstances change the targets change also during this Strategic period. As the implementation of Strategy is not visibly measured by the BSC it is difficult to assess whether Managers use the mitigating tactics of doing nothing, pseudo alignment or distracting focus from the discussion. As Strategy is not translated into actions and there is no specific measurement through a PMS then there is tension. Strategy should be implemented and the performance indicators and the PMS should be aligned to Strategy. The missing part is how to do so and that is where the tension is about. Managers at this organization prefer to adapt the Performance Measurement system and based on the outcomes decide what has to be changed on Strategic level. During the interviews none of the mitigating strategies have been proven and consequently we can conclude that the described mitigating strategies (doing nothing, pseudo alignment or distracting focus) are not applicable for the Managers and management style of this organization. Master Thesis Drs. RG Konjer Page 3 of 3 So by using the BSC in the (ongoing) Strategic process the Strategy can be better analyzed with the feedback of the organization and make the Strategy more tangible. So perhaps the conclusion should be that if an organization wishes to implement its Strategy it should use the BSC to get a clear view on the Strategy and by doing so the Strategy might get implemented
URI: http://hdl.handle.net/1820/6604
Appears in Collections:MSc Management Science

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