The Importance of Performance Measurement

Oct 13, 2025 by vinooalluri.com 105 views

Introduction

In today's highly competitive business landscape, organizations must continually strive to improve their performance in order to remain relevant and successful. One key aspect of achieving this goal is through the implementation of effective performance measurement systems. This study aims to design a performance measurement model at PT. Intan Suar Kartika, a company located in Medan, using the Quantitative Models for Performance Measurement System (QMPMS) method. This approach is based on the Baldrige Excellence Performance criteria, which is a standard for assessing organizational performance as a whole.

The Importance of Performance Measurement

Improving organizational performance is crucial in today's competitive era. It enables companies to increase their competitiveness, achieve their goals, and ultimately, drive business success. However, measuring performance effectively can be a challenging task. It requires a well-designed model that can capture the complexities of organizational activities and provide valuable insights into areas of improvement.

The Baldrige Excellence Framework

The Baldrige Excellence Framework is a widely recognized standard for assessing organizational performance. It provides a comprehensive framework for evaluating an organization's performance in seven key areas: leadership, strategic planning, customer focus, workforce focus, process management, measurement, analysis, and knowledge management, and results. This framework serves as the foundation for our study, providing a structured approach to designing a performance measurement model that is tailored to the specific needs of PT. Intan Suar Kartika.

Research Methods

This study employed a quantitative approach to design a performance measurement model at PT. Intan Suar Kartika. The data used in this study were obtained through the distribution of questionnaires to 150 workers at the company. To analyze the data, we used the Structural Equation Modeling (SEM) approach with the help of the SPSS Amos program version 22. This approach allowed us to examine the relationships between various variables and how each factor contributes to the company's performance.

Research Results

The results of this study showed that all factors under study had a direct influence on company performance. In detail, strategic planning had the largest influence with a coefficient value of 0.989, followed by leadership (0.235), focusing on customers and markets (0.203), focusing on labor (0.190), and focusing on operations (0.173). In addition, strategic planning and focus on operations also had an indirect influence on company performance through leadership.

Design of Performance Measurement Model

The performance measurement model designed at PT. Intan Suar Kartika succeeded in identifying 25 Key Performance Indicators (KPIS). There were 4 KPIS for strategic planning criteria, 5 KPIS for customer and market focus criteria, 5 KPIS for labor focus criteria, 6 KPIS for operating focus criteria, and 5 KPIS for leadership criteria. There was also a hierarchical model and matrix that could be implemented to facilitate performance measurement and evaluation.

Analysis and Recommendations

From the research results, it is clear that strategic planning is a key factor that must be strengthened to improve company performance. This shows that PT. Intan Suar Kartika needs to conduct an evaluation and improvement in terms of strategic planning in order to face the development of market challenges.

Focusing on customers and markets also needs to be improved. The company must be more sensitive to customer needs and expectations and adapt marketing strategies to answer existing challenges.

In addition, the development of human resources is also very important. Labor training and development can help increase employee productivity and satisfaction, which in turn will have a positive impact on company performance.

Finally, strong leadership will act as a driver in the implementation of performance measurement models. Leaders at PT. Intan Suar Kartika must be committed to creating a work environment that supports collaboration and innovation.

Conclusion

By following this recommendation, PT. Intan Suar Kartika is expected to achieve significant performance improvement and strengthen competitive positions in the market. The performance measurement model designed in this study provides a valuable framework for the company to measure and evaluate its performance, identify areas of improvement, and make data-driven decisions to drive business success.

Limitations and Future Research Directions

This study has several limitations that should be addressed in future research. Firstly, the study only focused on a single company, PT. Intan Suar Kartika. Future studies should aim to replicate this study in other companies to generalize the findings. Secondly, the study only used a quantitative approach to design the performance measurement model. Future studies should consider using a mixed-methods approach to provide a more comprehensive understanding of the performance measurement model.

Implications for Practice

The findings of this study have several implications for practice. Firstly, the study highlights the importance of strategic planning in improving company performance. Companies should prioritize strategic planning and ensure that it is aligned with their overall business goals. Secondly, the study emphasizes the need for companies to focus on customers and markets. Companies should be more sensitive to customer needs and expectations and adapt marketing strategies to answer existing challenges. Finally, the study stresses the importance of strong leadership in driving business success. Leaders should be committed to creating a work environment that supports collaboration and innovation.

References

Baldrige Performance Excellence Program. (2020). Baldrige Excellence Framework: 2020-2021 Edition.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th ed.). Upper Saddle River, NJ: Prentice Hall.
Kline, R. B. (2011). Principles and practice of structural equation modeling (3rd ed.). New York, NY: Guilford Press.
SPSS Inc. (2013). SPSS Amos 22 User's Guide.

Q: What is the purpose of this study?

A: The purpose of this study is to design a performance measurement model at PT. Intan Suar Kartika using the Quantitative Models for Performance Measurement System (QMPMS) method, based on the Baldrige Excellence Performance criteria.

Q: Why is performance measurement important for organizations?

A: Performance measurement is crucial for organizations as it enables them to assess their progress, identify areas of improvement, and make data-driven decisions to drive business success.

Q: What are the key factors that influence company performance?

A: The key factors that influence company performance include strategic planning, focus on customers and markets, focus on labor, focus on operations, and leadership.

Q: How did you collect data for this study?

A: We collected data through the distribution of questionnaires to 150 workers at PT. Intan Suar Kartika.

Q: What statistical approach did you use to analyze the data?

A: We used the Structural Equation Modeling (SEM) approach with the help of the SPSS Amos program version 22 to analyze the data.

Q: What were the results of the study?

A: The results showed that all factors under study had a direct influence on company performance. Strategic planning had the largest influence with a coefficient value of 0.989, followed by leadership (0.235), focusing on customers and markets (0.203), focusing on labor (0.190), and focusing on operations (0.173).

Q: What are the implications of the study for PT. Intan Suar Kartika?

A: The study highlights the importance of strategic planning, focus on customers and markets, development of human resources, and strong leadership in improving company performance. PT. Intan Suar Kartika should prioritize these areas to achieve significant performance improvement and strengthen competitive positions in the market.

Q: What are the limitations of the study?

A: The study has several limitations, including the use of a single company, PT. Intan Suar Kartika, and the use of a quantitative approach only. Future studies should aim to replicate this study in other companies and use a mixed-methods approach to provide a more comprehensive understanding of the performance measurement model.

Q: What are the implications of the study for practice?

A: The study highlights the importance of strategic planning, focus on customers and markets, development of human resources, and strong leadership in improving company performance. Companies should prioritize these areas to achieve business success.

Q: What are the future research directions?

A: Future studies should aim to replicate this study in other companies, use a mixed-methods approach, and explore the application of the performance measurement model in different industries and contexts.

Q: What are the key takeaways from the study?

A: The key takeaways from the study are the importance of strategic planning, focus on customers and markets, development of human resources, and strong leadership in improving company performance. Companies should prioritize these areas to achieve business success.

Q: How can readers apply the findings of the study to their own organizations?

A: Readers can apply the findings of the study to their own organizations by prioritizing strategic planning, focus on customers and markets, development of human resources, and strong leadership. They can also use the performance measurement model designed in this study as a framework for their own performance measurement systems.