Performance Prism: In 2002, the book "Performance Prism - A Successful Method for Measurement and Management of Businesses" was compiled by Andy Neely, professors at Cranfield College in the UK and Chris Adams and Anderson Consulting. When jointly developed a three-dimensional performance framework model. This is a stakeholder-centered performance evaluation system. The five aspects of the prism represent the five key elements of the inherent causal relationship between organizational performance: stakeholder satisfaction, stakeholder contribution, organizational strategy, business Process and organizational capabilities.

Compared with the balanced scorecard, the model has shifted from the concept of focusing only one or two stakeholders, gradually caring about all important stakeholders in the organization, and focusing on interests while gaining contributions from stakeholders. Satisfaction of relevant subjects. Its innovation is that it not only emphasizes the orientation of the value of stakeholders, but also measures the contributions made by stakeholders to the organization.

The performance prismatic approach places important stakeholders at the core and effectively handles the relationship between the company and every stakeholder.

The establishment of the performance prism model is based on the following logic:

To achieve long-term success, it is necessary to know clearly who the company's important stakeholders are and what they want.

Accordingly, strategies are developed to pass on value to relevant parties through the implementation of strategies.

When executing a strategy, there must be a process of effectively issuing and executing commands.

In the process, you must have the ability to ensure the smoothness of the process.

The contribution of stakeholders to the company must be obtained in order for the company to maintain this capability. This model is still in the process of further theoretical improvement and testing the effectiveness of the company's performance management practice. > Figure 1: Performance prism model diagram showing the relationship between stakeholder satisfaction, stakeholder contribution, organizational strategy, business processes, and organizational capabilities.

Three basic premises of performance prism model play a supporting role in the performance prism, a performance management framework:

For organizations, if they want to survive and prosper for a long time, it is not advisable or even feasible to focus on just one or two stakeholders (shareholders and customers).

If an organization wants to deliver real value to shareholders, its strategy, process and capabilities must be integrated.

Organizations and their stakeholders should recognize that their relationship is reciprocal and that they should contribute their own strength to the organization if they expect some benefit. Performance Prism demonstrates a comprehensive performance measurement structure that is built on structures that already exist and are constantly seeking to make up for their shortcomings, providing us with insight into the real challenges of company performance management and the challenges of facing reality. An effective and comprehensive framework.

Stakeholder satisfaction: Who are our primary stakeholders? What are their wishes and requirements?

Stakeholder contribution: What do we want from stakeholders?

Strategy: What strategy should we adopt to meet the needs of stakeholders and also meet our own requirements?

Process: What kind of processes do we need to execute our strategy?

Capabilities: What abilities do we need to operate these processes?

In fact, these five aspects also form a causal relationship chain. It begins with asking the question—“Who are our stakeholders and what are their needs?” Then it raises questions about what strategies it takes to deliver value to stakeholders. What processes are required to implement these strategies? What abilities are required to consolidate these processes—a combination of personnel, technology, experience and basic organizations? A subtle but very important refraction in the performance prism is the difference between what stakeholders have to do with a company and what the company has to do with its stakeholders. All companies get something from their stakeholders, just as all stakeholders want something from their stakeholders. The performance prism prompts the management team to think clearly and clearly put forward this issue – what are our stakeholders’ needs for us? And what are our needs for stakeholders? In other words, what are the exchanges between the company and stakeholders?

In today's operating environment, organizations committed to long-term success must have a very clear understanding of who is their primary stakeholders and what their aspirations and requirements are. But it is not enough to have a clear understanding:

To meet their own requirements, organizations must also get something from their stakeholders, often including money and credit from investors, loyalty and profit from customers, ideas and technology from employees, and raw materials from suppliers and services, etc.

They also need to clarify the strategies they are going to adopt to ensure the value allocated to stakeholders. In order to implement these strategies, we must also consider what processes the company needs, which must be effective and efficient. Within it, the process can only be implemented if the organization has the appropriate capabilities; proper human resources, good practice, leading technology and a synthesis of material infrastructure.

In terms of indicator setting, performance prisms are set up according to different stakeholders. Generally, stakeholders can be divided into: investors, customers and middlemen, suppliers, employees, rulers and communities. Of course, each organization can be based on its own It is necessary to divide its stakeholders, set indicators one by one based on the satisfaction and contribution of each stakeholder to select strategies, processes, and capabilities.

According to the performance triangular prism model, perspective performance has multiple levels:

Performance measurement runs through the five levels of the performance model, and, combined with the actual situation of the company, each aspect can be further refined and decomposed into many specific issues. And every problem must be expressed by measurement indicators. Since the five aspects of the model have intrinsic connections, the measurement indicators derived from the model naturally have interdependent relationships. Measured indicators are not limited to financial indicators, nor do they emphasize the use of non-financial indicators as supplements to financial indicators, but are guided by the five levels of performance prism. As long as these five levels can be better played a role and better achieved corporate goals, measurement indicators can be introduced into the measurement system, such as financial indicators, non-financial indicators, historical indicators, forward-looking indicators, core indicators, and auxiliary indicators. , internal indicators, external indicators, quantitative indicators, descriptive indicators, background indicators, etc. By placing these seemingly complex indicators in the performance prism model, the relationship between these indicators can be clarified, interdependent and mutually reinforced, so as to make better decisions. [At the level of stakeholder satisfaction, the measurement indicators that can be considered are: ① Shareholders: Return on Investment, Stock Price, Economic Value Added, Price-Equity Rate, Return on Net Assets, etc.; ② Creditors: Debt-of-asset ratio, Current Ratio, Quick Ratio , interest protection multiple, etc.; ③ Employees: employee satisfaction, etc.; ④ Customers: customer satisfaction, customer complaint rate, etc.; ⑤ Partners: number of complaints, etc.; ⑥ Supervisors: the number and nature of violations, etc.].

In the other four aspects, a series of measurement indicators or methods can be similarly derived. However, the many optional indicators obtained based on the performance model must also consider the availability of performance measurement information, the correlation and importance of measurement indicators, the trade-offs on accuracy and simplicity, and the controllability of measurement indicators, etc. , and finally came up with a simple and efficient indicator system that better serves the enterprise.

Compared with traditional performance evaluation systems and balanced scorecards based on financial indicators, performance prism has the following characteristics:

Structural aspect: Performance prism is a three-dimensional framework. It provides a comprehensive and comprehensive framework. This prism has different refractive surfaces, which can clearly reflect those hidden complex things, indicating the truly complex things in performance measurement and management. The constituent elements of such complex things can also be seen from the traditional one-dimensional framework structures, but they only propose one aspect of performance, and it should be recognized that they include all the content they provide and compress it into a single performance The model is necessary. However, simple compression cannot be performed, and in order to understand it as a whole, we also need to observe various aspects of these interconnectedness through performance prisms.

Starting point: There is a general understanding now that any theory of the greatest performance measurement method design should come from strategy, that is, "get methods from strategy." For example, the starting point of the balanced scorecard is strategy, but strategy is not the ultimate goal. Instead it is just the route you choose - how to get to the route you expect. The performance prism is set along this line of thinking. It believes that strategy should serve the satisfaction of stakeholders and their contributions, that is, adopt strategies to ensure that the needs of their stakeholders are met while ensuring that their own requirements are met.

Theoretical basis: The basis of the performance prism is the stakeholder value theory, not shareholder value. Unlike the first generation performance measurement and management framework, performance prisms are all-round. While the shareholder value proposition is important and sometimes useful, it ignores many of the fundamental challenges that managers in the 21st century have to face. The company owner or its agent no longer decides separately what should be important and what the company should measure. Instead, companies must take note of all their stakeholders and consider what they care about, and a wider range of stakeholders is crucial to the organization.

In terms of indicator setting: It is measured from the long-term and short-term perspectives using multi-dimensional standards, combining financial indicators and non-financial indicators to measure five aspects of each stakeholder. Compared with the traditional performance evaluation system, it reveals the motivation for performance in a more comprehensive manner. The traditional performance evaluation system is mainly based on financial indicators (such as profits and return on investment). It is easy to ignore long-term interests and cannot reveal the motivation of performance or the key factors for performance improvement. It is also more specific than the evaluation indicators of the balanced scorecard. Although it is not the same as the evaluation indicators of the balanced scorecard. The balanced scorecard organically combines financial indicators and non-financial indicators through four aspects: finance, customers, internal management, learning and growth, and realizes the internal and external factors of the company, between the financial results and the execution motivation of these results. Balance. However, since it only provides 4 aspects of design and does not propose specific indicators for each aspect, the company needs to consider the characteristics of the industry in which the company is located, the internal and external environment of the company's competition and the customer base. Determine specific indicators in various aspects based on comprehensive factors such as characteristics. However, whether the specific indicators should be formulated by the company's manager or by professional evaluation agencies has become a problem.

Although performance management based on performance prism models is theoretically nearly perfect, there are still some incompletely overcome problems in actual operations:

Non-financial indicators are difficult to measure and have insufficient accuracy.

Difficulty in weighing and matching financial indicators and non-financial indicators.

Since existing manager compensation is mostly based on financial performance, this may undermine the due link between non-financial performance and manager compensation.

If too many indicators derived from performance models are distracted, managers may even make them at a loss.

Excessive emphasis on adjustments based on the comparison between reality and standards can easily fall into a self-enclosed cycle, which is not conducive to the generation of new improvement mechanisms.

Each enterprise has its own actual situation. Therefore, when applying performance prisms in detail, they should have their own different practices, but their steps are common, generally including 4 steps:

Clarify stakeholders related to the company: design a preliminary indicator evaluation system. First of all, the managers of the enterprise should identify the requirements and needs of the enterprise stakeholders and their contribution to the company, so as to concretize the expression of the needs and contributions of the enterprise stakeholders, and lay a solid foundation for establishing a complete goal evaluation system. Secondly, use the survey method to investigate the heads of various departments of the company, and collect all the work that should be done to improve the performance of the company. These work are classified according to stakeholders and take corresponding actions according to different stakeholders. , determine strategic plans, processing processes and capabilities for each stakeholder, and distinguish subcategories of stakeholders and establish corresponding evaluation indicators.

Communication and contact with relevant parties of the enterprise: After the preliminary indicator evaluation system is designed, various different channels should be used such as regular or irregular publications, letters, bulletin boards, slogans, etc. to enable stakeholders to understand the company's strategy, Process and competency and performance measurement. At the same time, listen to employees' suggestions on the indicator evaluation system; hold talks with major shareholders to understand their expectations for the company's financial performance; also hold talks with some important customers to understand their expectations for the company's products; often talks with other stakeholders , understand what they expect from the company.

Determine various evaluation indicators: Based on communication and contact, comprehensive opinions from all aspects, and modify the preliminary indicator system until the balance between the evaluation indicators in the five aspects is achieved, so that they can fully reflect the stakeholders of the enterprise. Requirements and contributions to finalize the evaluation indicators in the performance prism index evaluation system.

Implementation and control of indicator system: Enterprises select appropriate information systems according to specific circumstances, establish databases, establish connections between evaluation indicators and databases and information systems, and at the same time, they must decompose and implement the evaluation indicators of corporate goals and strategies to the grassroots level and implement them. Determine the specific numbers of annual, quarterly and monthly performance measurement indicators, and combine them with the company's plans and budgets. The annual compensation and reward system of employees must be linked to the performance prism, so that employees can make every effort to achieve the company's various tasks. Evaluation indicator. In addition, in order to improve the performance prism index evaluation system, enterprises should periodically examine the implementation of the index system and often use employee opinions to correct the performance prism measurement indicators to better serve the company's strategic management.

What investors want to get from the organization:

What the organization wants to get from investors:

Strategies to achieve these aspirations and requirements:

Processes related to implementing these strategies:

Ability to develop and cultivate: new product and service lines, market goals and positioning, business unit performance management, brand management, product/service pricing management, core capability investment, supervisor leadership, investor relations, financial management, risk management , post-merger integration, business alliance management, and social responsibility.

Related measurement indicators: