Content area
Full Text
Keywords
Performance management, Strategic alignment
Abstract
Argues that effective integrated performance management (IPM) needs both strategic and maturity alignment. The management literature focuses on strategic alignment; develops the concept of maturity alignment. Maturity alignment indicates that an organization must install the appropriate managerial and operational processes in accordance with the desired maturity level. Identifies four different maturity levels that indicate how well the organizational and managerial processes within an organization are defined and developed. Argues that insufficient maturity alignment is one of the major reasons why many performance management initiatives fall.
Introduction
Why do so many companies have difficulties in delivering sustained (financial) performance? One explanation is that companies find it extremely difficult to define a unique strategic position in an ever-changing competitive arena. Having a clear vision and a well-elaborated strategy, however, is not enough. In their most recent book The Strategy-focused Organization: Hou Balanced Scorecard Companies Thrive in the New Business Environment, Kaplan and Norton (2001) see the ability to execute the strategy as an even bigger management challenge than determining the right vision and strategy. These authors point to the importance of adequate performance management systems as a critical success factor for the strategy implementation.
Interest in performance measurement and management has rocketed during the last couple of years. Many different frameworks have been developed, which all have contributed to our understanding of performance. But each offers a different perspective on performance (Neely, 2002). Clearly, what is needed is a more integrated approach towards the management of performance. Integrated performance management (IPM) is recognized as a hot business topic today and the demand for suck systems and processes is increasing. But, as is the case with many widespread management concepts, there is confusion about what it exactly stands for. We define IPM as a process that helps an organization to formulate, implement and change its strategy in order to satisfy its stakeholders' needs. IPM should enable an organization to develop and implement its strategy to live up to its performance expectations. In this paper, we argue that IPM is effective if the organization achieves both strategic alignment and maturity alignment. The first concept is generally accepted in the strategy and management literature. The second concept is new, but helps explain...