Strategic Performance Management and Business Valuation · Performance Measurement, Evaluation and Improvement Tools

Performance Pyramid, Building Block and Other Frameworks

Updated 11 October 2026 · Fact-checked

These are frameworks that show what a firm should measure and how the measures link together. The performance pyramid links strategy to operations through four levels. Fitzgerald and Moon separate results from determinants. The prism starts with stakeholders. To answer, name the framework, state its structure, then apply it to the case.

Understand Performance Pyramid, Building Block and Other Frameworks

A performance measurement framework is a structure that tells you which measures to use and how they connect to strategy. Without one, firms track many unrelated numbers, usually financial ones. Frameworks fix this by forcing a link between objectives, actions and results.

The performance pyramid (SMART: Strategic Measurement Analysis and Reporting Technique) was developed by Cross and Lynch. It has four levels. At the top is the corporate vision. Next are the business units, with market and financial objectives. Then the business operating systems, with customer satisfaction, flexibility and productivity. At the base are the departments and work centres, with quality, delivery, cycle time and waste. Objectives flow down from the top. Measures flow up from the base. The left side of the pyramid looks outward at the market. The right side looks inward at the business.

The Fitzgerald and Moon building block model was designed for service businesses. It has three blocks. Dimensions are the areas measured: results (financial performance and competitiveness) and determinants (quality, flexibility, resource utilisation and innovation). Standards are the targets, and they should be owned by staff, achievable and fair. Rewards are the incentives that motivate people to reach the standards. The results-determinants matrix is the same idea in simple form: results are lagging outcomes, determinants are the drivers that produce them.

The performance prism was developed by Neely and Adams. It begins with stakeholders, not strategy. It has five facets: stakeholder satisfaction, stakeholder contribution, strategies, processes and capabilities. You ask what each stakeholder wants and what the firm needs back from them. Then you design strategies, processes and capabilities to deliver it, and measure each one.

In the exam, the same question often asks you to compare frameworks or apply one to a given business. Know the structure of each and what sets it apart.

Key rules to remember

Performance pyramid levels (top to bottom): Corporate vision → Business units → Business operating systems → Departments and work centres; Objectives cascade down. Measures are reported up. External effectiveness is on the left, internal efficiency on the right.
Pyramid measures by level: Business unit: market and financial. Operating systems: customer satisfaction, flexibility, productivity. Work centres: quality, delivery, cycle time, waste; Use this to match a measure to its level in a case.
Fitzgerald and Moon building blocks: Dimensions + Standards + Rewards; Dimensions split into results (financial performance, competitiveness) and determinants (quality, flexibility, resource utilisation, innovation).
Standards: three attributes: Ownership, Achievability, Fairness; Standards that staff do not own or cannot reach will not motivate.
Performance prism facets: Stakeholder satisfaction, Stakeholder contribution, Strategies, Processes, Capabilities; Starts from stakeholder wants and needs, not from strategy.
Results-determinants link: Determinants (drivers) → Results (outcomes); Results are lagging. Determinants are leading and are what management can act on.

How to solve Performance Pyramid, Building Block and Other Frameworks questions

Use this method for any question that asks you to explain, compare or apply a performance framework.

1Identify which framework the question names, or which one fits the scenario (service business, stakeholder pressure, strategy cascade).
2State its origin and purpose in one or two lines.
3Draw or list its structure: levels, blocks or facets, in the correct order.
4Map the facts in the case to each part of the structure, using the actual business and figures given.
5Point out gaps, such as missing determinants, no stakeholder measure or weak rewards.
6Compare with another framework if asked, using a clear basis such as starting point, focus and suitability.
7Close with a recommendation or a one-line conclusion that answers the exact question.

Quickest way: Anchor words for each framework

When to use it: When you have under ten minutes for a 14-mark framework question, or in an MCQ that asks you to match a feature to a model.

Pyramid = four levels, cascade down and report up, external left and internal right.
Fitzgerald and Moon = service firms, results and determinants, standards, rewards.
Prism = stakeholders first, five facets.
Results-determinants = outcomes versus drivers.
Write the anchor words first, then add case-specific points under each.
In an MCQ, eliminate options that give the wrong starting point, such as strategy for the prism.

Common mistakes in Performance Pyramid, Building Block and Other Frameworks

Saying the performance pyramid starts at the bottom with operations.
Students remember that measures flow upward and forget that objectives flow downward.
Fix: Write both directions: objectives cascade from vision down, measures are reported up from work centres.
Treating all of Fitzgerald and Moon's dimensions as results.
Students list six items together without grouping them.
Fix: Group them. Results: financial performance and competitiveness. Determinants: quality, flexibility, resource utilisation and innovation.
Leaving out standards and rewards from the building block model.
Students focus on the dimensions because they look like a list of measures.
Fix: Always name all three blocks. Mention ownership, achievability and fairness for standards.
Describing the performance prism as a strategy-first model.
It is confused with the balanced scorecard, which starts from vision and strategy.
Fix: Say the prism starts with stakeholder satisfaction and contribution, then strategies, processes and capabilities.
Giving a textbook description without applying it to the case.
Students recall notes instead of reading the scenario.
Fix: Quote facts from the case under each element and end with a clear recommendation.

Worked examples

Example 1

Sundaram Hospitals Ltd, a private hospital chain, tracks only monthly revenue and profit per hospital. Patient complaints are rising and nurse turnover is high. Using the Fitzgerald and Moon model, advise the management on a better measurement system.

Show the solution

Identify the problem: the hospital measures only results (revenue and profit). It has no determinants, so it cannot see why complaints and turnover are rising.
Results dimensions to keep: financial performance (revenue, profit per bed) and competitiveness (market share, new patient growth).
Determinants to add: quality (complaint rate, infection rate), flexibility (waiting time, ability to handle emergencies), resource utilisation (bed occupancy, theatre use per nurse) and innovation (new treatments or services introduced).
Standards: set targets with the nursing and medical staff so they own them, make them achievable given current staffing, and apply them fairly across hospitals of different sizes.
Rewards: link recognition and incentives to the standards, such as bonuses for lower complaint rates and better retention, not only for profit.
Recommendation: add determinant measures with agreed standards and linked rewards. Review results and determinants together each month.

Answer: Keep financial and competitiveness results, add quality, flexibility, resource utilisation and innovation as determinants, set owned, achievable and fair standards, and link rewards to them so that quality and retention improve alongside profit.

Example 2

Explain how the performance pyramid would be used at Kaveri Auto Components Ltd, whose vision is to be the preferred supplier to leading Indian car makers.

Show the solution

Top level, corporate vision: to be the preferred supplier to leading car makers.
Second level, business units: set market and financial objectives, such as a target share of supply to major customers and a target operating margin.
Third level, business operating systems: translate these into customer satisfaction (on-time delivery, customer rating), flexibility (ability to change models quickly) and productivity (output per labour hour).
Fourth level, departments and work centres: measure quality (defect rate), delivery (schedule adherence), cycle time and waste (scrap).
Direction of flow: objectives pass down from vision to work centres. Work-centre measures are reported up so that managers see whether the vision is being met.
Left and right sides: customer satisfaction, quality and delivery serve external effectiveness. Productivity, cycle time and waste serve internal efficiency.
Conclusion: each shop-floor measure links to a business objective, so daily actions support the vision.

Answer: The pyramid cascades the vision into market and financial objectives, then customer satisfaction, flexibility and productivity, then quality, delivery, cycle time and waste at work centres, with measures reported back up.

Exam tips

Write the structure first, in order. Examiners give marks for correct levels, blocks or facets before any application.
For case questions, name the business and use its facts under each element. Generic answers lose marks.
When asked to compare frameworks, use a clear basis: starting point, focus, suitability and limitations.
Remember the prism begins with stakeholders and Fitzgerald and Moon suits service businesses. These are common MCQ traps.
There is no negative marking in Section A, so attempt every MCQ.

Practice questions from Performance Measurement, Evaluation and Improvement Tools

Performance Pyramid, Building Block and Other Frameworks in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalPerformance Pyramid and Building Block Model

Performance Pyramid, Building Block and Other Frameworks: frequently asked questions

What is the performance pyramid or SMART system?

It is a framework by Cross and Lynch that links corporate vision to day-to-day operations through four levels. Objectives flow down and measures flow up. It separates external effectiveness from internal efficiency.

What are results and determinants in Fitzgerald and Moon's model?

Results are financial performance and competitiveness, which are outcomes. Determinants are quality, flexibility, resource utilisation and innovation, which drive those outcomes. Managers act on determinants to improve results.

How is the performance prism different from the balanced scorecard?

The prism starts with what stakeholders want and what the firm needs from them. The balanced scorecard starts with vision and strategy and uses four perspectives. The prism has five facets.

Do I need to draw the pyramid in the exam?

A neat labelled diagram helps and is quick to draw. Always add a short explanation of each level, because marks are given for the explanation and its application to the case.