Performance Prism - Explained
What is the Performance Prism?
Written by Jason Gordon
Updated at August 17th, 2023
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What is the Performance Prism?
The Performance Prism (PP) is a performance management approach. It is a further development of the Balanced Scorecard performance management system. Basically, unlike the balanced scorecard, it employs a stakeholder approach to developing an organizational strategy. That is, it begins by focusing on the interest of all stakeholders - investors, employees, suppliers, vendors, and the community.
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Facets of the Performance Prism
The Performance Prism begins with Five Facets:
- Stakeholder Satisfaction: Who are our stakeholders and what are their wants and needs?
- Strategies: What strategies can further these wants and needs?
- Processes: What processes are necessary to carry out these strategies?
- Capabilities: What capabilities are necessary to carry out these processes effectively and efficiently?
- Stakeholder Contribution: How can stakeholders contribute to these capabilities and processes?
These facets lead to strategy formulation and the development of metrics for assessing organizational performance.
Interrelationship between Stakeholders and the Organization
An organizational strategy naturally flows from these facets and furthers the reciprocal relationship between these stakeholders and the organization. As such, the performance prism provides for the complex and reciprocal relationship between stakeholders and the organization.
- Strategy is driven by stakeholder demand and satisfaction.
- Strategies provide direction for the development of processes.
- These processes dictate the necessary solutions and capabilities for carrying them out.
- These solutions result in stakeholder satisfaction.
Thus, the organizations strategy and value cycle is complete.
Results of the Performance Prism
Integrating stakeholder interests into the process of developing a strategic plan has numerous implications. It enables the organization to more readily account for risks and take advantage of environmental opportunities. Further, it improves internal processes by facilitating the communication of strategic objectives throughout the organization.