What is Fitzgerald and Moon Building Block Model?

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

· Standards.
What kinds of properties good standards or targets should possess.
o    Equity.
Performance measures should be equally challenging for all parts of business. Relaxation given to one part of the business leads to perception of unfair treatment which hinders productivity.
o    Ownership.
Performance measure should be acceptable to everyone. Employees should be got involved in the identification of measures rather than being imposed on them. Ownership means here is responsibility for the results.
o    Achievable.
Performance measure should be realistic. Ex, Using actual results for the competitors to set as target. Employee will not be motivated to achieve targets if consider them impossible.
· Rewards.
What kind of properties reward schemes should possess.
o    Motivation.
Rewards scheme should be set in manner which motivates employees to achieve the business goals. If sales growth is desired than bonus can be linked to performance measures, like increase in number of units sold than previous year.
o    Clear.
Rewards scheme should be clearly communicated to employees in advance. What kind to performance will be rewarded and how their performance will be measured.
o    Controllability.
Employees should only be reward or penalized of the result over which they some control or influence. Aspects of business like financing and investment should not be considered by eliminating related expenses like interest and depreciation, when evaluating their performance.
· Dimensions.
They are the areas of business performance which need to be monitored and controlled if business goals have to be achieved. For overall assessment of the business performance, performance needs to be measure from various perspectives. They are further divided into two sub-categories.
o    Determinants.
These are performance areas which influence the results. These are.
·Quality.
It is the ability to deliver goods and service with consistency. Quality should be judged from eyes of the customers. Quality is the level of benefits customers expects from the product. Quality should be enough for a product price paid.
·Flexibility.
It is the responsiveness to change in the factor influencing the business performance. Ex, ability to cope with sudden increase in sales demand.
·Innovation.
Ability of the business to devise new products and new ways of doing things. Like packaging of products with environment friendly (recyclable) material.
·Resource Utilization.
It is the ability to use resources to achieve business objectives. Business assets should be used for the proper purpose and in most efficient way. Ex, using delivery vans to its maximum capacity only by carrying authorized goods.
o    Results.
It reflects the success or failure of determinants identified above.
·Financial Performance. Financial performance gives an indication of overall business at a glance in monetary terms. These can be used to identify areas of strengths and weaknesses. It may also highlight other areas previous identified which may be critical to business success.
·Competitive Performance.
How they stand in comparison to its competitors? How are the different from their competitors? Ex, offering of products of higher quality than competitors and products having distinct features than rival products.



Thank you. Your comments are invaluable for me.
If you liked this post, kindly tell to your friends or peers.