An examination of the linkages between organisational performance measures and strategic objectives

To be successful, in the competitive, global business environment, firms must have a sound understanding of all their operations and the factors which impact upon them, combined with a performance management system which allows them to assess their progress towards achieving the organisation's objective. The thesis examines 3 propositions : that managers are unaware of the need to link performance measures to strategic goals and that, as a consequence, performance measures do not change to reflect a change in strategic direction; that the link between the performance measurement system and organizational goals is weak because the organization's structure inhibits a coordinated approach towards achieving strategic objectives through the use of performance measures; and, that the dynamic environment in which firms operate serves to disassociate strategic objectives from the performance management system, and the lack of managerial attention to the link between the two will result, over time, in a set of performance measures which provide insufficient, late or wrong information. The research indicated that awareness of the need to link performance measures with strategy rose with managerial responsibility; that the wider the scope of the performance measurement system, the better it would be at accommodating and monitoring changes in strategic direction; that, where the performance management system covered a broad range of activities it could be better used by managers to coordinate and integrate those activities; that managers' perceptions of the reliability, validity and timeliness of the information provided by their performance management system were positively related to the level of ownership of the system; and, in a dynamic business environment, the more comprehensive the information provided by the performance management system, the less likely the organisation would respond inappropriately to external factors. Additional research needs to be done on ways to make performance management systems more reactive to management's needs