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Introduction
The utilization of performance measurement systems is often recommended to facilitate the strategic implementation of projects and enhance organizational performance. Since its advent, various organizations have endeavored using performance measurement systems (PMS) to facilitate operations, offer corrective measures, and spearhead the achievement of competitive advantage.
The Emirates Airline is amongst such organizations that consider performance measurement as a procedure for enumerating success and efficiency is diverse ways. The PMS provides a set of advantages that quantify the efficacy as well as the efficiency of the Emirates Airline activities.
Literature claims that there are five performance measurement systems namely the enhancement and productivity measurement system, performance pyramid system, the performance prism, tableau de board, and balance scorecard. However, this report defines and explains the performance measurement system of Emirates Airline.
That is, the circumstances in which the organization finds itself or the issues Emirates Airline is facing regarding its business and PMS. The report discusses the current successes and problems regarding the delivery of high quality services and products. Lastly, the report offers recommendations that would enable Emirates Airline to improve its current performance management system.
Methodology
According to Hall (2010), in order to investigate and write a report on the PMS of Emirates Airline, qualitative research method was used while most data or information were gathered from secondary sources. The necessary research data was gathered across the study population through sampling strategy.
A research technique dubbed as survey method was used while content analysis was applied to analyze data. The secondary research data and information accrued from literature search on staff interviews including managers, supervisors, and junior employees of Emirates Airlines.
Most of the PMS information used in this report is readily available from the company’s reports, journals, newsletters, investor information, and bulletins. Besides, the information on the PMS of Emirates Airline was obtained through internet search and documentary analysis. For instance, a preview of the documentary analysis, internet search, and report on the previous interviews conducted to the Emirates Airline management and staffs were done to obtain the required information.
Performance Measurement System: Literature review
Scholars and non-scholars describe performance measurement systems as procedures for measuring both the usefulness and efficacy of the assumed activities. Such systems help in comparing the expected outcomes with training goals intended to give improved results (Hall, 2010).
Over time, PMS have evolved to meet the demands of organizations and different stakeholders. In fact, PMS has been implemented by most organizations to stimulate education and motivation, improve priorities and decision-making, enhance deliberate discussion, assist in the clarification and formulation of strategies, as well as improve, manage, and assess performances based on different factors intended to generate profits (Hall, 2010).
The implementation of the PMS in various organizations has been on a steady increase over the past few years. In fact, most organizations believe that PMS cannot only assist them in delivering value and quality services to their stakeholders, but also to other interested parties owing to the pressure mounted on them by such undertakings.
As a result, several organizations like the Emirates Airlines heavily invest in the maintenance and improvement of PMS. From the research point of view, the strategy, operations, and accounting scholars have scrutinized the impacts of PMS on organization performances and operations. A study by Tiessen and Scott (1999) emphasizes on the PMS effect on group performance whereas Hall (2010) conducted a study on how PMS affects performance and behavior of organization employee.
With respect to the use, implementation, and design of PMS, researches have conducted broad investigations on the success of the PMS. However, no agreement has been reached yet on the real effects of PSM implemented by organizations. In fact, the occurrence and comprehension of the effects of performance measurement systems on corporations has not been incorporated in any study hitherto.
According to Rousseau (2006), to sustain the organizational based initiatives and improve the PMS, it is essential to integrate the research knowledge in this field. In fact, a preview of the existing practical evidence on the performance measurement system conducted integrates our understanding of the outcomes of PMS. The literature provides several acknowledged theories to explain the effects of performance measurement systems.
The attribution theory illustrates how the multi-criterion presentation measures influence the course of decision-making by most managers (Hoffman & Schiff, 1996). Besides, the neo-institutionalism adopted by Malmi (2001) explains the consequences of decisions made while employing the PMS in an organization. Assorted systems of performance measurement have been identified with a description of each focusing on the key purposes and components of such systems (Speckbacher, Bischof, & Pfeiffer, 2003).
A number of researchers emphasizes on the effects of type A PMS that are utilized when evaluating organizational performance or informing the management decision-making. This type of performance measurement system comprises of the pecuniary and non-financial performance measures that are explicitly or implicitly associated with the organization strategy.
Nevertheless, the scholars assessed and asserted that the results of type B PMS are employed to appraise organizational performance and inform managerial decision-making. Besides, this type of PMS explicitly demonstrates the rapport amid the effects and causes of measures as well as embraces the non-financial and monetary performance measures connected to the strategy (Ittner, Larcker & Meyer, 2003).
The type C PMS as indicated by most researchers concentrates on the results of performance measurement systems that are applied when evaluating the administrative and organizational performance or informing decision-making. Often, this occurs devoid of relating the performance evaluation outcomes to the fiscal rewards.
The type C PMS include the explicitly or implicitly non-monetary together with the financial performance measures associated with the strategy. Lastly, Speckbacher, Bischof, and Pfeiffer (2003) typology has looked into the type D effects of PMS that influence the monetary reward employed when evaluating the managerial and administrative performance or informing decision-making. Such a performance measurement system includes the non-fiscal and the pecuniary performance measures that are related to the strategy.
The Emirates Airlines Background
The Emirates Airline is the world’s quickest developing airline corporation. The aviation impacts of this global airline corporation keep on reshaping the worldwide changes in business, tourism and transport. The Emirates is an eco-tourism founder that operates the largest fleet in the airline industry. The Emirates airline company appears to be one of the pioneers of DDCR (Dubai Desert Conservation Reserve) that is two hundred and twenty five square kilometers (225 km2).
The organization is a global enterprise that in combination with the Dnata does business in more than seventy-six nations (The Emirates Group, 2012). The commitment of the corporation to create a sustainable future relies on the stability of its performance. As part of the shared vision and corporate initiative, the Emirates Airline aspires to work together as a group to effect organizational changes.
Conversely, the corporation has all round groundbreaking initiatives and techniques that prove its balance towards responsibility. At both ground and air, the Emirates Airline takes impressive steps to lessen aircraft emissions through initiating modern fleets like Boeing 777 and Airbus A380. Therefore, as the company goes forward, the Emirates Airlines continues to provide the novel fleets in air. The Emirates perception of eco-efficiency underlies its programs of sustainability.
These include offering supplementary ground services using a small number of vehicles, flying extra cargo and passengers with little fuel, and doing superfluous business with dismal paperwork. The development of environmental performance hardly has any bound at the Emirates Group. Hence, the Emirates Airline balances its business with the environment to overcome the challenges that might accrue. Indeed, this is possible through the support of global staff, the current zeal, and a review of the past performance.
Content
The utilization of performance management systems is often suggested to assist in the implementation of policy and enhancement of corporate performance (Davis & Albright, 2004). Emirates Airline is often faced by the challenge of environmental emissions on both air and ground.
Over the years, the company has strived to take steps towards the mitigation of these impacts on the environment. However, to achieve the objective, Emirates Airline engages performance measurement partners to ensure there are balanced performances as a corporate initiative. The management sets the goals to ensure a shared vision of how the company in collaboration with partners can effect change while ensuring the stakeholders get maximum gains from their investment.
Emirates’ management utilizes financial and non-financial performance measures directly related to the company’s business strategy. The company uses balanced scorecards (BSC) and multi-criteria key performance indicators to deliver value not only to the stakeholders, but also to all other stakeholders. The company believes that this approach will assist in performing the task. However, as will be demonstrated later, the company does not fully use BSC to address all its business aspects.
Emirates contemporary engages marketing practitioners that demonstrate their input to corporate performance. Such engagement includes the collaboration with Wavetec and GE Aviation. In its effort to ensure better financial performance that will benefit all the stakeholders, the company reported that via its A380-800 versions, it would present petroleum economy of 3.1 liters per 100 passengers’ kilometers.
The Engine Alliance GP7200 engines characterize the versions. The company reported that the engines would save half a million liters of petroleum per airplane per year. Literature shows that this is facilitated by the use of “Flextracks” program. The program ensured the planning and optimization of path value and load dynamics. The effectiveness of the technology is reported through the performance efficiency devices attached on the aircrafts. Report indicates that this can be demonstrated on screen to the stakeholders.
The company further invested in “Tailored Arrivals” program after realizing that “Flextracks’ could not effectively report the performance to the stakeholders due to its complex nature. The Tailored Arrivals facilitate the up- linking of the airplane en route with air travel control. The program first determines the velocity of the plane and journey summary from the air onto the airstrip. The strategy facilitates the acceptance by crew in order to fly an uninterrupted fall summary that saves gasoline and emissions.
In 2007, specialists in the United Arab Emirates from the principal private and administration organizations indicated that lack of appropriate application of performance management instruments was hindering the development of public and private organizations. The revelation led Emirates’ management to react to the news.
Consequently, the company sought to implement a strong set of performance management systems that would be comparable to the international benchmarks. Nevertheless, to facilitate the move, the company engaged the services of Wavetec in managing the flow of customers in thirty different locations worldwide. Wavetec facilitates the provision of queue management solutions. The system involves a full end-to-end solution that facilitates the management of all the management needs of customers.
The system utilizes the reporting and management software. The software has the capabilities of monitoring the progress in all the company’s offices globally. The operation is done from the company’s headquarters in Dubai. The centralized coverage software helped the company to standardize and monitor the services in all the locations that are connected to Wavetec.
Most important is the capacity of the system to facilitate the availability of data that is eventually used by the human resource function of the company to assess the performance of individual employees in these locations.
Further, the system allows the managers with endless opportunities to demonstrate to the stakeholders and shareholders the performance of the company in overall as per the needs of the company. An example of such needs included the company’s branded kiosk. Such kiosks appeared tailored to equate the company shade as well as its idea.
The use of Wavetec has significantly changed how reporting of performance management is done at Emirates. All the offices powered by Wavetec have a customized smart liquid crystal-display touch-screen kiosk. The kiosk has over twenty classes for customers to choose.
Indeed, this implies that by the time the customer is called to the service counter, the company representative is already fully prepared to serve the customer in advance. The response time by the representative can also be monitored from the headquarters. The smart kiosk has the capacity to recognize and classify customers. The aspect facilitates priority calling.
Wavetec facilitates the display of ticketing information. Alongside the information, there are diverse promotional communications and advertising on the screens. These are based on the needs of the company. The provision of the reporting system facilitates the observation of the progress in all the connected offices globally.
However, to augment the centralized reporting system, Emirates has the live manager dashboard. Actually, this indicates live data about active staff and counters. Information about customers who have been served or waiting is displayed including the service time and waiting time. The information is displayed using graphical and tabular trend data. Wavetec offers web-based secure reporting with manager access control for diverse organizational ranks. The reports can be accessed from anywhere around the world.
The performance measurement tool is critical for Emirates as it facilitates the management of customers visiting the facilities. The PMS facilitates the effective allocation of the workforce in any of the offices worldwide. Literature indicates that this is particularly important as it facilitates the decreasing of waiting times of the clients. In fact, the PMS helps in leveling and assessing the value of services offered in each of the preset administrative center.
The appraisal and characterization of the major employees’ performance factors are facilitated by the Wavetec system. The information generated by the structure is essential for administrators as it prompts proficient allocation of the existing assets to ensure the reduction of clients’ real as well as the alleged waiting period. The strategy helps to augment client familiarity. The control panel directly underscores all the inconsistencies in the setting that could present delays and other grounds that could generate troubles to consumers.
The review and modernizing performance measurement systems regards the innovation of the accounting systems. According to Manibo (2007), this is achieved through Activity-Based Costing as well as the expansion of non-expenditure performance assessment. The non-cost performances are not explicitly economical but are continuously demanded by consumers.
The operational factors that usually urge the expansion of one side of PMS of the non-cost in the airline industry are twofold. One portion is associated with environmental turbulence in terms of unpredictability and frequency of changes. The other portion is associated with managerial complexities that are presented by change in strategies founded on cost-leadership to those based on customization. The portion increases the competition between companies and requires very complex management.
The second portion influences the PMS of Emirates Airline. The claim is founded on the fact that the company seeks the adaptation to the value strategies. The company has been changing the plans from the depiction derived from the administration and outlay assessments to that anchored in the quantification of generated worth, hence non-expenditure productivity.
The outcome happens via the consideration of the performances not from the point of view of trade-off where some performances are given a priority to the disadvantage of others. However, these passages jointly pursue the performance outcomes at different levels resulting to performance compatibility.
Considering value in addition to the traditional financial performances, Emirates management settles on a market-client orientation. Since the traditional financial performances are measured through Return on Investment, they consider a long-term period in which to assess the satisfaction of the clients. With respect to measurement and management, the Emirates PMS innovations affect both its macro and micro corporate aspects.
Meyer claims that this means the spreading of work enlargement and teamwork that effectively transfer the concentration on individuals to group performance. The approach is not entirely effective as it ignores some aspects of the efficient PMS. In this approach, the performance evaluation is not entirely important with regard to the premeditated standards but to the sustained improvement to be attained.
Conversely, the Emirates PMS model falls within the strictly hierarchical mock-up. The model is characterized by cost and non-cost performances. The model appears amassed at dissimilar stages pending the conversion into the profitable and fiscal parameters. The model connects the performance of the company with Return on Investment.
This presents challenge to the management, as it does not radically formalize the levels of measures. The level of measures should include the simplicity of description of the measure object. The description involves the detection of the phenomena to be measured and the recognition of the measurability. Further, it involves the selection of the best metrics and the recognition of the comprehensibility. The compatibility with the existing measures is essential to the recognition of the receiver or user.
Norton (1992) claims that to make Emirates current performance measurement system effective, it is important to have ease in the personalization of the roles for the outcome presented by the measure. However, this calls for the Balanced Scorecard (BSC). The performance measurement system is the best-known system. Developed by Kaplan and Norton (1992), it is a multi-breadth framework for the description, implementation and management of corporate strategy across all corporate levels.
Through a logical structure, it links ideas, intentions and measures to the corporate strategy. BSC presents a corporate view of a company’s overall performance. BSC complements conventional financial performance measures with key performance markers. The foundation stone for BSC includes the financial standpoint, customer standpoint, internal processes, alongside learning and growth.
The Emirates performance measurement system concentrates on customer perspective and internal processes. These leave the BSC incomplete as financial, learning, and growth perspectives are not explicitly addressed.
The monetary position hardly responds to the inquiry seeking to know the manner in which the company ought to appear to the stakeholders in order to thrive monetarily. The perception is concerned with productivity. Although Emirates’ financial standpoint addresses the capital-employed proceeds, and venture returns, it hardly falls short of addressing the economics of value addition.
The learning and growth standpoint of Emirates fails to address the approach used in realizing corporate mission and the strategy for upholding the corporation’s capacity to transform as well as progress. These limitedly address how the company will ensure the sustainability of the environment considering that the company plays a role in air pollution through emission of carbon dioxide from its fleet.
When addressing environmental issues, the company has changed the on-board china previously. The strategy was aimed at reducing the weight of airplanes that assists in the saving of gasoline and diminishes the greenhouse gas emissions. The company removed over 115 tons of outdated chinaware. These were replaced with new and lighter china. Part of the old china was used to build a synthetic bed for the re-establishment of Gulf pearl oyster population off the coast of Dubai.
The company BSC also fails to address the internal processes exhaustively. In view of this process, it is expected that a company will respond to the subject regarding the venture to undertake in order to be profitable so that it will meet the stakeholder like clients and commercial demands. The perception involves the interior practices, which the management should pursue to generate the maximum influence on the purchaser contentment while realizing the corporate monetary standpoint.
Regarding this perspective, Emirates Airline engages in processes that seek to meet the satisfaction of its customers in specific locations globally. The company achieved this by engaging the services of Wavetec systems to ensure customer satisfaction. The performance measurement system offered by Wavetec addresses the employees’ responsibility in handling customer needs, but hardly offers feedback and employee appraisal.
In role understanding, job satisfaction, and performance measurement system, it is evident that the systems influence the degree at which the individuals understand their roles in corporate settings (Franco-Santos, Lucianetti, & Bourne, 2012). When considering the current situation at Emirates, the research by Burney and Widener (2007) is vastly relevant. The effective adoption of BSC assists in the provision of job-relevant information. In turn, this minimizes the employees’ perception on role disagreements (incapacity to accomplish work expectations brought by mismatched demands) and role vagueness (ambiguous information regarding work duties, power and tasks).
Lack of complete adoption of BSC by Emirates does not help mitigate role conflicts as individuals view immediate managers as obstacles to their appraisal and eventual promotion. The individuals at the company are evaluated using less than ten performance measures. The element that is considered the most important by the management is the employees’ ability to satisfy customers.
The relationship between Emirates’ performance measurement systems and the supply of work-relevant information is relatively less important to managers with moderate experience (about 8 years) than it is for managers with low (about 2 years) or high experience (about 20 years). Moreover, it is also important for the management to realize that BSC reduces responsibility ambiguity when it is used to determine salary.
There has been criticism regarding BSC. However, it is imperative for Emirates to consider the system given that it has the widest market penetration. The system covers performance at several levels starting from personal level to the small business unit, and corporate levels. The approach has been adopted by many organizations worldwide. The design and substance of the approach meet several management requirements. In fact, Silk (1998) approximates that more than 60 percent of Fortune 1000 companies in the United States have had familiarity with BSC.
BSC is inherently a non-static list of measures. In fact, it is a logical framework for addressing, implementation and alignment of multifaceted change plans. BSC is also essential for the management of strategy-oriented organizations. Scholars claim that this integrates the plan and corporate entity mission into actions and ideas that form the diverse sections illustrated below.
The implementation of the plan is then supervised through an internal
The above is the four perspectives performance measurement structure with predetermined goals, drivers and indicators grouped into every of the four standpoints. A suitable BSC ought to entail a blend of direct factors or productivity enhances and the product events called delay factors. Nonetheless, it is imperative for a company to have all the four standpoints, and involve both lag and lead indicators. For Emirates, lag indicator enhances turnover. The lead indicator would entail the ticket order execution time.
Although there is a correlation between the four standpoints, Emirates Airline fails to recognize this important aspect. Progress in corporate education and development paves way for the expansion of interior commercial practices. However, this is followed by the development in customer perspectives. After that, the improvement of fiscal actions subsequently follows. Notably, although this is used for the measurements in non-financial areas important for the prediction of future financial performance, it is not highly considered at Emirates.
The performance measuring systems at Emirates is not of satisfactory kind. In the marketing perspective, companies achieve their goals by satisfying the clients effectively and efficiently. The strategy is a procedure of quantifying action with measurement being the process of enumerating while action leading to performance. In the case of Emirates and within the context of performance measurement systems, effectiveness would mean the extent at which clients’ needs are met.
Efficiency would be a measure of how the resources are cost-effectively utilized to provide a specific level of customer satisfaction. The importance of this is not only that, two essential dimensions of performance are identified but also that it underscores the verity that there can be interior and exterior reasons for following a particular strategy. For example, in Emirates’ case, one of the quality-associated dimensions of performance is service reliability and customer satisfaction. In the effectiveness perspective, attaining an advanced level of service reliability may lead to customer satisfaction. In view of efficiency, it may lead to the reduction of costs incurred by the company through diminished field failure and timely response to customer concerns as maybe observed through the Wavetec.
Experts in the UAE have previously lamented that most companies in Dubai including Emirates lack the appropriate knowledge in performance measurement. They added that managers are aware of the BSC during the evaluation of performance but often uses it without proper understanding. This puts a dent on the publicity of Emirates, as performance measurement system used by the company is considered incomplete, as it does not serve all the stakeholders of the company. The experts insisted that while the company focused mainly on the financial side of the BSC, other evaluating performances are equally imperative. Scholars and experts who consider the performance measurement system insufficient to address all the important aspects of the company have scrutinized the company. Thus, it is important for the company to review the performance measurement system it currently uses as it has been criticized by many quarters as incomplete.
According to Hall, to illustrate the importance of complete BSC application by Emirates, the Assistant Director of Development Maryam Al Hammadi described how the very effective computerized performance management system was vital and significant in achieving the goals of the Dubai Municipality for social projects as well as attaining its financial goals. The expert described how the computer system would allow Emirates to recognize low performing areas and units timely to facilitate remedial measures (Manibo, 2007). This would include the involvement of the employees for appraisal as opposed to the current system where employees are only evaluated based on their delivery of services to the customers.
The current performance measurement system used by Emirates, the Wavetec Enterprise Queue Management Solution (EQMS), focuses on two sections of the solution. These include the section that addresses the concerns of the company customers. The section is meant to ensure that the customers feel relaxed and well catered for in order for them to associate the derived quality with the company’s brand. The other area is interested in the company staff. The solution seeks to ensure that the staffs in all the global offices spend utmost time giving customer service. The time should also be used to deliver care that is compliant with quality standards. There should be minimal obstruction by assignments that can be handled by the Wavetec technology. This illustrates that the Wavetec technology has been partially successful as it significantly considers the welfare of the customers while considerably ignoring the interests of the employees who deliver the services. Failure by the company to put the interest of the employees has been detrimental to the financial performance of the company.
Recommendations
Given that BSC cannot be an isolated performance measuring system since it shares contribution with other systems and generates outputs for others, it is important to integrate it with other corporate performance measuring systems. These systems may include the accounting system and strategic planning. This strategy will help Emirates to compare its own competitive position with competitors to whom it loses customers and employees. It will also be able to check on the achievement of its corporate goals.
The learning and growth standpoint of Emirates fails to address how the vision of the company would be achieved and how to sustain the company’s ability to change and improve. Hence, it is imperative for Emirates to adopt a management-by-process approach that highlights crosswise organizational performances as opposed to the solitary-function performances. The approach will be fundamental, as it will seek to engage and inspire all the employees assessed.
References
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Hoffman, L. R. & Schiff, A. D. (1996). An exploration of the use of financial and nonfinancial measures of performance by executives in a service organization. Behavioral Research in Accounting, 8(2), 134.
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Meyer, C. (1994). How the right measures help teams excel. Harvard Business Review, 95-103.
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