Building Blocks is the theory developed by Fitzgerald and Moon which is related to performance management.

Building Block is the performance management theory which is applied for the service industry and consider 3 importance blocks.

They are Dimension, Standard, and Service.

Dimension included in Building Blocks

  1. Competitiveness
  2. Finance Performance
  3. Quality of service
  4. Flexibility
  5. Resource Utilization
  6. Innovation

Standard in Building Blocks

  1. Ownership
  2. Achieve-ability
  3. Fairness

Rewards Building Blocks

  1. Clarity
  2. Motivation
  3. Control-abilities

Building blocks believe that the above performance management indicators are very important for the service industry.

Additional knowledge related to Building Block:

Performance measurement in service businesses has sometimes been perceived as difficult because of the five factors listed above, but the modern view is that if something is difficult to measure this is because it has not been clearly enough defined.

Fitzgerald et al and Fitzgerald & Moon provide building blocks for dimensions, standards, and rewards for performance measurement systems in service businesses.

Dimensions are the areas of performance that yield the specific performance metrics for a company.

The dimensions are split into results (competitive performance and financial performance) and determinants that affect those results (quality of service, flexibility, resource utilization, and innovation).

Determinants for Building blocks:

(A) Quality of service looks at matters like reliability, courtesy, and competence.

(B) Flexibility is an apt heading for assessing the organisation’s ability to deliver at the right speed, to respond to precise customer specifications, and to cope with fluctuations in demand.

(C) Resource utilization, not unsurprisingly, considers how efficiently resources are being utilised.

This can be problematic because of the complexity of the inputs to a service and the outputs from it and because some of the inputs are supplied by the customer (he or she brings their own hair, for example).

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Many measures are possible, however, for example, the number of customers per hairdresser’. Performance measures can be devised easily if it is known what activities are involved in the service.

(D) Innovation is assessed in terms of both the innovation process and the success of individual innovations. Focusing on the examination and improvement of the determinants should lead to an improvement in the results.

There is no need to elaborate on competitive performance, financial performance and quality of service issues, all of which have been covered already. The other three dimensions deserve more attention.

Flexibility for Building blocks:

In Building blocks concept, Flexibility has three aspects: Speed of delivery Punctuality is vital in some service industries like passenger transport: indeed punctuality is currently one of the most widely publicised performance measures in the UK because organisations like railway companies are making a point of it.

Measures include waiting time in queues, as well as late trains. In other types of service, it may be more a question of timeliness. Does the auditor turn up to do the annual audit during the appointed week?

Is the audit done within the time anticipated by the partner or does it drag on for weeks? These aspects are all easily measurable in terms of ‘days late’.

Depending upon the circumstances, ‘days late’ may also reflect on the inability to cope with fluctuations in demand.

Response to customer specifications The ability of a service organisation to respond to customers’ specifications is one of the criteria by which Fitzgerald, Building blocks, et al distinguish between the three different types of service.

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Clearly a professional service such as legal advice and assistance must be tailored exactly to the customer’s needs. Performance is partly a matter of customer perception and so customer attitude surveys may be appropriate.

However, it is also a matter of the diversity of skills possessed by the service organisation and so it can be measured in terms of the mix of staff skills and the amount of time spent on training.

In mass service business customisation is not possible by the very nature of the service. Please remember Building blocks are for business industry performance valuation.