Explain Fitzgerald and moon's building block model of performance management.

Fitzgerald and Moon proposed a Building block model which suggests the solution of performance measurement problems in service industries. But it can be applied to other manufacturing and retail businesses to evaluate business performance. It identifies three areas for performance measurement, these are

Fitzgerald and Moon’s building block model is performance measurement framework based on dimension, standards and measures.

Dimensions are the goals i.e. CSF so suitable measure must be developed to measure each of dimensions. Dimensions are twofold: Downstream Results  Components under results are: competitiveness, financial performanceUpstream Determinants Components under determinants are: quality of service, flexibility, resource utilization and innovation.

Standards are set of KPI’s represented by AEO where A means Achievability, E means Equity/Fairness and O means Ownership.

Achievability – links to maximum capacity utilization, challenging enough – not overestimation

 Equity – all participants should be fairly measured by providing equal challenging task

Ownership – accept participation in setting own measurement target

Measures

Clear – Reward should be clearly defined i.e. the rate of reward and achievement of performance both should be measurable

Controllable – should avoid linking reward to areas of performance which cannot be controlled e.g. linking to idle performance which is only achievable only in very short run OR should not be linked to operation where manager does not have power to control

Motivational – reward should motivate employees to achieve objectives – should be mix of both monetary and not-monetary reward

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Fitzgerald and moon's building block model aims to provide a framework to improve performance measurement in service businesses.

The model suggest that performance should be based on three concepts: dimensions, standards, and rewards.

Dimensions - The model identifys six dimensions ,competitive performance, financial performance, quality of service, flexibility and resource utilization and innovation and suggests that performance measures companies choose should focus on these six areas.

Standards- This aspect of the model relates to the targets  which are chosen to be measured.Here the model highlights three key properties which performance should possess: ownership, achievability and fairness.

Rewards- finally , the model highlights the properties which reward schemes need to possess in order to encourage staff to work towards the performance standards set. Again, there are three key properties: clarity, controllability and motivation. The reward system needs to help motivate staff, and in order to achieve this , staff need to be clear about the goals they are working towards and feel that the rewards are  related to areas of responsibility that they can control.