Integrating global organizations through performance measurement systems

The last 20 years have witnessed a massive transformation in corporations, especially in global ones that have been forced to redefine their strategies, structures, and processes.Market globalization has caused company executives to turn their attention to merger-andacquisition strategies and has encouraged them to secure a competitive advantage through innovations in products, production, and information technologies. This process continues today. World-class corporations face the challenge of ongoing alignment of local business processes with global corporate strategies as they continuously learn and change the way they do things to win in their market. In this environment, companies have to organize and monitor their resources to achieve goals that underpin the corporate vision. Corporate leaders have to translate their broad mission and strategies into specific objectives and measures as well as communicate them across the organization. To do so, more and more companies, General Electric (GE) and Nestlé Waters (NW), to name two, are relying on comprehensive, corporate-wide performance measurement systems as a common organizational language. The result is integration, which we define as the effective collaboration among different specialized organizational entities that is necessary to achieve unity of effort. Consider how great the challenge is for executives seeking integration at a global organization, which is a group of wholly or partially owned affiliates located on different continents. Integrating a global organization means managing and coordinating global organizational relationships —both the vertical and hierarchical ties between the parent company and its subsidiaries and the horizontal and lateral ties between different subsidiaries belonging to the same global organization. It’s worth the effort. The resulting synergy through aligning efforts and resources can lead to superior financial performance, and the company ultimately can become more than the sum of its parts. GE and Nestlé Waters make the case for integration processes that emphasize performance management systems.