Operational Analysis and Effectiveness Essay

Competition in a corporate world is becoming intense. That is why strategic plans for a business in order to advance from competitors should be given proper attention in a business. Operational Performance is one of the important areas in management that needs to be taken focus in a company. It is a complex task in handling the operations of the business. In a manufacturing company, the performance of its facilities can be measured through various parameters, considering the external constraints of the market and defining it to follow its strategy and vision. Performance is all about capability; it is about the future. In any business, operational performance is an important issue. In needs to be measured The focus of achieving results on useful products and services for customers inside and outside the organization is the major contribution of performance management. It emphasizes the objective not only implementing strategic plans but doing them in the most effective way as possible. (McNamara, 2007) The first thing that comes to our mind when we hear this term is the performance in terms of the manpower or basically, the performance of employees. However, performance management refers to the areas where man is involved. First, it focused on the organization. The different activities in a department are involved such as computer support, administration, sales, etc. , the processes that concerns the billing, budgeting, product development, financial management and other), the programs for employees such as implementation of new policies and procedures to provide safe workplace and training programs, the products or services to internal or external customers, the projects (automating the billing process, moving to a new building, etc. ) and the teams or groups organized to accomplish a result for internal or external customers. Critical outcomes and Its Cost In this field of management, there are several activities that can be problematic. These areas have huge impact on the whole system. Costs are involved direct or indirectly. The key areas for measurement that should be considered are the profitability, market performance, resource utilization and people performance. (Wright & Race, 2004) Other matters such as score cards, statistical process control and benchmarking. When performance reviews fail, performance management often conflicts with relationship management. Negative feedback doesn’t motivate; ignoring the subjective element in reviews undermines employee attitudes. (Simmons, 2003) Performance reviews often conflict with relationship management. Negative feedback doesn’t motivate, and ignoring subjective elements in reviews can undermine employee attitudes. In fact, Simmons says this primary tool designed to improve performance can, and often does, create the opposite of the desired and intended result. Instead, she suggests an alternative review system that takes into account the important emotional aspects. (Simmons, 2003) The core assumption of most performance reviews is that if you clarify the gap between current performance and desired performance that will drive improved performance. However, that’s not the case. Instead, reviews tend to amplify the quality of the personal relationship between boss and employee. (Simmons, 2003) Measurements are significant to provide analysis to a certain area that to be studied. These will give valid conclusions on the subject. It is important to find improvements and effectiveness of the activities. Design and Implementation of a Performance Measurement System The main reason for constructing a measurement system for the case organisation was to obtain a tool for developing the organisation. The purpose of the measurement system was to improve the circumstances and the organisation’s employees. In addition, the measurement system was designed for guiding the implementation of the strategy. While designing and implementing the performance measurement system, the special characteristics were taken into account. (Mettanen) In an operational unit, individual approach emphasizes on individual performance appraisal, goal setting, and feedback. Performance appraisal has been a subject of much interest to HRM researchers. Literally hundreds of articles have been written on the subject over the past few decades. Most of this effort has been devoted to characteristics of instruments and raters, with underlying goals to eliminate errors of bias, better understand performance-related information processing, and ultimately to improve rating accuracy. Research on performance management has included other individually-focused phenomena that may occur before, during, and after appraisal. These include planning processes and interventions designed to maintain or improve performance. For example, individual feedback and goal setting have both received much acclaim as ways to manage task performance. Characteristics including the specificity of feedback and the extent to which it includes both behaviours and outcomes, and the degree of goal difficulty have been especially associated with higher performance (Chhokar and Wallin, 1984; Kim, 1984; Locke et al. , 1981). The interconnectedness of goal setting and feedback has also been discussed. Tolchinsky and King (1980) and Bandura and Cervone (1986) proposed that the effect of feedback depends on the beliefs that such feedback generate and, specifically, on the goals that are set in response to feedback. A TQM-compatible Approach Under this approach, the activities are on direct supervision. Their reasoning was largely based on the problems discussed above and the degree of system contribution to variance in work performance. A system-oriented approach would be primarily oriented towards improving processes which affect the performance of all individuals within the system. For example, in a production area, workflow or other technological processes might be evaluated and then improved in such a way as to enhance the performance of an overall work unit. Forms of performance management which attempt to link individual- and unit level performance are consistent with a system-oriented approach and TQM philosophies. Such a linkage may be accomplished in two ways. First, in line with the work of TQM proponents performance management may focus on ways to evaluate and improve the work system. In essence, this involves an identification of the internal or external customers associated with a work unit and measures to determine the extent to which customers’ needs are being met. Group-level involvement is attained so that co-workers and management work together to determine potential chronic problems which may be causing performance variance within the system and low levels of performance in relation to customer needs. A second mechanism for linking individual- and unit-level performance is to focus performance management largely at the unit level in terms of appraisal and rewards. This would be in contrast to the more common existing practice of making fine distinctions among individuals when appraising and rewarding . Individual efforts in organizations must increasingly be integrated in a total group effort and output. This idea leads to conclude that the natural unit of analysis for appraisal in organizations should be the group rather than the individual. Although group level assessment raises potential problems associated with social loafing demonstrated how having group-level goals causes individuals to accept more difficult goals for themselves. Matsui et al. oncluded that by having group goals, members develop a sense of shared responsibility for the attainment of their individual goals. It was showed how membership in quality circles could increase the commitment and productivity of individual members. had argued earlier that the group could be used as a â€Å"medium of change† to ensure the control of individual behavior and performance. (Waldman) Corporate Performance Management methods intend to provide improved. Roles of Operations Manager The operations manager is in charge of the supervision of the operations within the system. First, there must be qualifications for the said job. Operations manager should develop strong analytical skills and a logical approach to problem solving. It is advisable for them to take additional courses in statistics and computer systems. The operations manager is in charge of a more technical side of business so he should know how to handle multiple situations and problems. And also he must be able to communicate with different types of people in various functional areas for him to implement his plans effectively on his subordinates. If he aims to reach the highest levels of operations management he must acquire a master’s degree (MBA). According to a survey to general managers at large, global business firms conducted by (Reilly & Reilly, 2002) , the performance system on their company can be described as the company strategy includes measurable goals that the company is trying to achieve ,the performance measures collected and communicated in the organization are useful to managers in running the business ,managers understand how effective measurement provides key support in the pursuit of corporate goals, an understanding of the consequences of performance results is communicated and understood and the current measurement system encourages behavior that is good for the organization. The methodology used to gather information on managers’ feeling about their performance measurement systems is a questionnaire administered to attendees of various executive education courses at the University of Michigan Business School. Respondents are mostly general managers at large, global business firms. Almost half come from countries other than the United States. The number, form and content of the questions have varied somewhat over the years, but the following conclusions represent a reasonable consolidation of the results. (Reilly & Reilly, 2002) Responding managers most strongly agreed with the following descriptions of their performance measurement systems as the company strategy includes measurable goals that the company is trying to achieve, the performance measures collected and communicated in the organization are useful to managers in running the business, managers understand how effective measurement provides key support in the pursuit of corporate goals, an understanding of the consequences of performance results is communicated and understood, the current measurement system encourages behavior that is good for the organization Survey respondents tend to agree strongly with the most general kinds of statements about performance measurement. Measures are seen as supportive of the business strategy. Managers are positive about the firms’ efforts to communicate measurement results, analysis and significance. They view measurement systems as an important contributing factor to the success of the firm. Responding managers most strongly disagreed with the following descriptions of their performance measurement systems as the complexity of the business is fully reflected in the detail and structure of the measurement system, the company understands and measures the specific aspects of value it creates for customers, investors, employees, suppliers, and other key stakeholders, the measurement system helps managers understand the interrelationships among business activities across all parts of the business, managers at all levels of the business measure and understand the extent to which their process activities contribute to creating value for stakeholders, performance standards are to a large extent determined from a comparison to external sources such as other divisions, competitors, or unrelated, world-class, benchmark companies. As managers get into thinking about their systems in greater detail, they become more negative about their performance measurement systems. They do not think their systems fully capture the complexities and subtleties of the operation of the firm. Interrelationships among measures are not made sufficiently explicit. The â€Å"line of sight† between measures of operating activities and the value-creation results for corporate stakeholders is unclear. Standards for measures are not externally-driven benchmarks. While managers are generally satisfied with the measurement culture, level of measurement understanding, and communication of measures and their consequences, they are less enthusiastic about the structure, content, and connectivity of their measurement systems. Why might this be the case? Three reasons stand out. First, managers support the concept of performance measurement because their experience has shown it to be a positive force in helping to achieve corporate success. The more one knows about measurement, the more open that person is in communicating results, and the more positive a person is about the role of measurement, the greater the chances of achieving the desired business outcomes. Ignorance, secrecy, and negativism regarding measurement are a sure recipe for failure. Second, managers who use measures on a regular basis understand the difficulties inherent in the performance measurement process. Sometimes, the thing being measured and the measure itself are one and the same. Cycle Time, Number of Units Produced, Number of Errors are examples. More often, measures are an imperfect specification of the underlying idea. Return on Assets is meant to comment on the efficiency of the use of capital, but assets are measured using the principles of accrual accounting and are thereby measured by historical cost, or perhaps, not at all. Third, managers know the shortcomings of their own systems. They are aware of the distortions that can be introduced through cost and asset allocations. They know there is a tendency to measure the things that are easy to measure, and to avoid measures that are more difficult. They have watched as others engage in activities that clearly hurt the firm but help a key measure, for example, avoiding value-creating investment because it would drive down Economic Value Added in the current period. Please ensure that measures at the individual level aggregate upwards to the organization level. If the business wants to increase sales or reduce unsafe behavior (Reilly & Reilly, 2002) Improving Performance Measurement Systems It is an indicator of how the business is operating. The key to improved performance measurement is the development of integrated performance measurement systems. Integrated systems are constructed around a unifying theme such as business strategy or value creation, and are concerned with measuring the critical aspects of the structure that links the activities of people and processes in the firm to the intended outcomes for the company’s stakeholders. Integrated systems embody the quality concerns of production, the customer satisfaction focus of sales and marketing, and the monetary discipline of accounting, among other corporate sub-systems. They use measures denominated by money, units, time, feelings and other expressions of actions and results. But they present all these dimensions as parts of a single, overall representation of all aspects of company activity. When there is need for a sub-system, measures are taken from the whole and applied to the part. Measures used in pay-for-performance schemes are selected from the complete structure in recognition of their ability to drive the desired behaviors and outcomes, and will probably be different for different parts of the company. Measures selected to represent the performance of a unit of the organization reflect the unit’s performance, the linkages between the unit and other organizational units, and the linkage between the unit and the firm as a whole. (Kaplan & Norton, 1992) The sophisticated structure of integrated performance measurement systems is highly beneficial to management, but it does not eliminate some of the basic difficulties of performance measurement. There is still the unavoidable disconnect between our desire to know the future and our ability to measure only in the past or present. Some of the things we measure today may have the power to give insight into the future, but future outcomes per se cannot be measured. It must also be recognized that businesses are highly complex organizations that offer far more opportunities for measurement than can effectively be employed by management. The challenge of reducing the required number of measures to a critical few will always be present. Finally, the relationships among measures denominated so differently defy mathematical representation. As a consequence, we must be satisfied with understanding rough approximations of the strength and direction of interactions among measures. (Kaplan & Norton, 1992) In spite of these difficulties, the benefits of measurement integration far outweigh the costs. A better measurement system helps align the actions of people in the organization to ensure they work together to accomplish the intended goals. A unified system facilitates the creation of a â€Å"single version of the truth†, which helps avoid conflicts and misunderstandings resulting from inconsistent data or inappropriate comparisons. Finally, an integrated system motivates individuals by conveying a sense of fairness and logic in the scorekeeping. Employees can seek to do their best knowing that the measurement system will accurately and impartially measure the contributions they make and the extent of their success.