Strategic Management & Performance
Strategic management is the professional discipline related to the development of strategic goals and plans to achieve these goals. Performance is an important part of strategic management because it allows managers to see if plans are being successfully implemented. There are four key types of performance measures that should be included in any strategic management plan.
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Financial Performance
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Financial performance is the most commonly measured metric in strategic management simply because it is the easiest to measure. Financial performance measures include return on investment, profits, revenues and costs among others. In strategic management these performance measures are used to gauge the overall health of the company and to locate key problem areas such as areas where profits have declined or costs have increased.
Employee Performance
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In strategic management, the performance of employees is often measured in order to assess whether or not employees are helping the company to reach its strategic goals. Employee performance measures can include employee retention, job satisfaction and a variety of effectiveness measures such as measurements of time to complete specific tasks.
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Production Performance
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Measuring production performance is important to strategic management because it allows managers to understand how efficiently the firm's production processes are and to assess areas for improvement. Typical production performance measures include production time, production error rates and frequency of stockouts.
Management Performance
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Management performance is, arguably, the most important performance measure in strategic management. This is because the top management team must be capable of understanding and realizing the companies strategic goals. Management performance measures often include percent of targets missed, department morale, absenteeism rates and variation from budget.
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