Parent-subsidiary Strategic Performance Management

Performance management is an important means in parent-subsidiary corporation management and control. How to effectively control and encourage subsidiaries with performance management to realize the group strategy and create corporate synergies has become the focus of this flied. Although parent-subsidiary performance management differentiate single enterprises performance management because of the property rights' structure, the existing research mostly has not displayed the uniqueness of parent-subsidiary corporation management and control, and can not meet the need of parent-subsidiary corporation's development. So in order to guide the parent corporation to manage subsidiaries effectively and promote sound development of parent-subsidiary corporation system, it is necessary to perfect parent-subsidiary performance management system.AH the management activities toward subsidiaries are about to actualize the whole group's strategy, not excepting performance management. The strategic objective can only motivate subsidiaries to make efforts if it translates into specific performance objectives which are measurable and comparable. During each phase of parent-subsidiary strategy management, performance management links up strategy closely and plays unique role. Therefore parent-subsidiary performance management takes the strategy as the guidance. When a corporate company chooses performance management tools and designs performance management procedures, the distinct quality on evaluation objects, evaluation measures, information collection and external influence factors should be fully considered.Performance management tool is the carrier of performance management system. Theoretically and practically, Balance Scored Card (BSC) is one of most popular and typical tools in the research field on strategic performance management tool. Western scholars has proposed three new tools-Performance Prism, Strategic Scorecard and Activity-based Profitability Analysis-which mean to surpass BSC while pointing out that BSC is not perfect, it also has defects. Although these new tools have advantages respectively, compared with BSC, their improvements are not significant enough. Since BSC theory is more mature than others, it is chose as the foundation of parent-subsidiary performance management in this paper.Performance measures system is the core of the performance management tool. Parent-subsidiary measures system is divided into four perspectives-financial perspective, customer perspective, internal business process perspective and learning and growth perspective. Among them, financial perspective includes revenue growth measurement, cost reduction and productivity growth measurement and asset utilization measurement; customer perspective includes core measurement and customer value proposition measurement; internal business process perspective includes innovation process measurement, operation process measurement and post-sale service process measurement; learning and growth perspective includes core measurement and performance drivers. All the measures make up of an entity with cause-and-effect relationships.To create synergies is one of the most important motivators for establishing parent-subsidiary organizations, also one of the main differences between single enterprises and parent-subsidiaries. This paper proposes synergy performance management, the measurement of which contains parent-subsidiary business department synergy and parent-subsidiary support department synergy.Another significant difference between single enterprises and parent-subsidiariesis that according to different subsidiaries, the extent of centralized management anddecentralized management changes, namely there are different models ofparent-subsidiary management and control. The parent corporation emphasizesdifferent performance control points of the subsidiaries under different models anddesigns different management procedure. So it needs a performance managementmodel and procedure which is suitable for certain model of parent-subsidiarymanagement and control. According to the division of management and controlmodels, this paper proposes three kinds of models of parent-subsidiary performancemanagement-administrative control model based on the disabled governance ofsubsidiaries, governed control model based on the governance of subsidiaries, and managed control model based on the governance of subsidiaries.