Performance Prism - A Performance Measurement Approach

As the companies grow in the size, the number of stakeholders increase. Companies have to cater to the interests of its stakeholders such as local communities, vendors, employees, legislators so on and so forth. Performance prism is an ideal tool to analyse.

Performance Prism is one of the development in management accounting put forth by Cranfield University. The theory is performance of an organisation depends on how effectively it meets the needs and requirements of all its stakeholders.

The five facets of the Performance Prism:

1. Stakeholder Satisfaction
2. Stakeholder Contribution
3. Strategies
4. Processes
5. Capabilities

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Approach: Starting with Stakeholders, not with Strategy. Five key questions for measurement design:
  1. Stakeholder Satisfaction – who are the key stakeholders and what do they want and need?
  2. Strategies – what strategies do we have to put in place to satisfy the wants and needs of these key stakeholders?
  3. Processes – what critical processes do we require if we are to execute these strategies?
  4. Capabilities – what capabilities do we need to operate and enhance these processes?
  5. Stakeholder Contribution – what contributions do we require from our stakeholders if we are to maintain and develop these capabilities?
Once the answers to the above questions have been dealt, Performance Prism can use the results to identify performance measures which will enable the company to monitor the success of processes in place.

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