Depth of strategic measurement systems and performance of medium sized service firms in kenya

In Kenya, medium sized service firms are major contributors of employment and economic development. However, low transition rate among medium sized service firms in Kenya has remained a major concern as more than 90% of these firms fail to transition to large firms as expected. This has been attributed to inadequate strategic capabilitiesresulting from use of inappropriately designed strategic measurement systems. Specifically, use of measurement systems, which lack adequate depth to elicit critical information for strategic decision-making. An in-depth performance measurement system is necessary for probing deeply to uncover new clues, open new dimensions and secure vivid, accurate and detailed accounts. This descriptive study examined the effect of depth of the strategic measurement systems on performance of medium sized service firms in Kenya. The target population for this study was 2,039 medium sized service firms registered by Nairobi City County, Kenya and the sample size was 323 firms selected by stratified random sampling design. A standardized questionnaire was used to collect primary data from the chief executive officers of the sampled firms. The study showed that depth of strategic measurement system has a weak but statistically significant positive effect on performance of medium sized service firms in Kenya. The findings further indicated that majority of the firms focus on measuring operational efficiencies of activities considered important across departments. The study also showed that majority of the firms do not use disaggregated measures and mostly set strategic priorities for managers and employees without empowering them to control factors influencing their performance. Moreover, reporting of performance measures was not as frequent in most firms as most reports were generated only once a monthly. The study recommends that managers of medium sized service firms should promote carefully balanced disaggregation of measures. Further, they should set strategic priorities for managers and employees based on factors they can control. Moreover, frequency of measurements should be increased to capture the emerging issues. However, managers of these firms should not focus so much on highly detailed measurement systems because too much emphasis on detail would only serve to prolong the implementation of the strategic measurement system with minimal marginal increase in performance. Instead, the management of medium sized service firms should focus on comprehensive and integrated measures, which covers all critical parameters of the organization.