Integrating Performance Framework With A Management System
Performance framework can help any organization to turn strategy into measurable and executable actions. Several framework models have been developed over the years to meet these goals. Performance frameworks and measurement should be seen as a part of a management system. By aligning strategic management with measurements, companies can better ensure consistency between planning, execution and outcomes.
Performance measurement models are used in business organizations in number of supportive ways. They can be used to support the organizational strategy, influence behavior, advance communication. This is achieved by measuring and following performance through Key Performance Indicators (KPIs). Different models focus on different aspects of performance measurement but their main principle is the same. These models serve as a tools for learning, setting priorities and refining strategic approaches.
Frameworks for measuring performance
The Balanced Scorecard (BSC) by Kaplan and Norton (Kaplan, R., et al, 1996) is one of the most widely used models in business organizations. It combines financial and non-financial perspectives, customer, internal processes, learning and finance, into a holistic system. These perspectives contain the company’s strategy which enables to combine otherwise incomparable measures. This forces to see the measures as a whole, reducing suboptimization, and to evaluate how improvements in one factor requires trade-off in another. The model has been criticized that it has been built for American business culture and that it can overlook personnel involvement.
The Performance pyramid system, developed by Lynch and Cross (Lynch, R. L., et al, 1991) , connects vision and strategy with daily actions through top-down and bottom-up approach. Focus of the model is on the customer preference related objectives. The model tries to tackle problems related to performance measurement by combining measures with strategic goals which helps different departments to understand how they can help themselves in achieving their goals. This is achieved by combining financial measures with non-financial ones in a way which can utilized in operational management and by evaluating all actions in relation to customer demands
The Performance prism expands the scope by including a wider set of stakeholders beyond customers and shareholders (Neely & Adams, 2001, pp. 4-5.). These stakeholders can be for example investors, subcontractors, distributors or local communities. It focuses on which strategies to use for organizations to meet stakeholder needs but also how stakeholders contribute back to the company’s success.
Parmenter’s winning KPI methodology (Parmenter, D., 2010 and 2020) focuses on linking KPIs to critical success factors. Every KPI measured should be linked to these critical success factors. Critical success factors are factors or issues which are done well every day by the organization and every employee should be aware of these. If the people in the organization aren’t familiar with these strategic success factors, the KPIs built based on them are most likely useless. Parmenter’s model stresses empowerment, partnership, and practicality. Focus is on meaningful measures which are tracked and reported.
Performance as part of a management system
Performance measurement is not a standalone process but part of the company’s management system. The management system is a written description of how a company or its sub-organization is managed and led. It also defines how key figures are used across forums, ensuring that performance measurement becomes a part of leadership and decision-making (Varis, K., 2025).
Management system processes are:
- Strategy process
- Annual planning or budgeting process
- Process of monitoring and ensuring results
- Risk management process
Conclusions
Performance measurement frameworks provide organizations with tools to translate strategy into results. While different models differ in their approach, they share the goal of aligning actions with strategic objectives.
When integrated into a comprehensive management system, these frameworks not only track outcomes but also strengthen communication, learning and competitiveness. Depending on the organization, any of the models introduced can be and should be integrated as a part of the company’s management system.
References
Kaplan, R., Norton, D. (1996). The balanced scorecard. Translating Strategy into Action. Harvard Business School Press.
Lynch, R. L., Cross K. F. (1991) Measure up! Yardsticks for Continuous Improvement. Blackwell.
Neely, A. & Adams, C. (2001). Perspectives on Performance: The Performance Prism. Journal of Cost Management, 15(1), 7–15.
Selin, J. (2025). MBA Thesis: Developing Key Performance Indicators.
Parmenter, D. (2010). Key performance indicators: developing, implementing and using winning KPIs (2nd ed.). John Wiley & Sons, Inc.
Parmenter, D. (2020). Key performance indicators: developing, implementing and using winning KPIs (4th ed.). John Wiley & Sons, Inc.
Varis, K. (2025). Financial Management, study material, Turku University of Applied Sciences.
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