Many organisations get stuck with old habits. Habits that include manual, tedious, dependent processes. Activities that do not add value and only increases staff despair. Processes which require executives, managers and individuals to be involved in endless and repetitive planning activities. Some organisations even feel that performance information is not affecting the decision making process or effectively improving the performance of the organisation. This may be indicative of the disconnect between performance measurement and performance management
Ask yourself some of the following questions:
What is the feeling in your organisation about the budgeting cycle? Are the individuals involved in the planning cycle dreading the long hours and monotonous processes? Can you actively compare planned outcomes to actual performance and determine where the gaps are? Better yet can you provide answers for these gaps? Lastly does your finance team reactively respond to forecasting the future?
Wouldn’t you like to have an organisation that embraces the budgeting process, planning cycles and forecasting future outcomes? An organisation that is adaptable to the changing environment that companies face? A team that can deliver immediate alternative plans as external and internal factors change?
Performance Management has been around for many years. In recent years’ information has become widely available across organisations. Operational teams have been involved in measuring and capturing actual outputs, executives have been involved in quantifying strategies and financial teams have been focused on compiling this information into meaningful reports. Performance Management has become an evidence-based decision making tool that places emphasis on accountability and continuous learning.
Here is what Performance Management should comprise to make your organisation a dynamic, ever changing, result orientated power house that can provide you with imperative answers. Answers that will allow you to make decisions that will drive your organisation to the next level.
Key measures. Determining key measures is critical to any successful Performance Management solution. These measures should be used to drive decisions and identify risks. A comprehensive investigation should identify the factors that influence your organisation’s performance.
Derive future operational and financial outcomes by incorporating strategic outcomes. Operational and financial outcomes can be determined with comprehensive planning, analysis and forecasting. Strategic outcomes use a combination of financial and non-financial assumptions, thus the determination and tracking of these assumptions becomes key to making these outcomes feasible. Using an integrated solution (combining information from various internal and external sources) becomes vital in measuring performance in your organisation.
Grow sales. Whether your organisation is product based or service delivery orientated, growing revenue is one of the key drivers to success. Incorporating this key driver into the planning cycle is thus vital in generating realistic outcomes. Tracking and comparing this to current actuals can lead to understanding your customer base better by determining trends and seasonality and addressing these customer needs – an example of Performance Management done correctly. Sales within any organisation need to be tracked, projected and measured on a continuous basis to determine whether your defined goals and growth will be reached.
Reduce cost. Competing in an environment, where micro and macro-economic factors have major influences on the wellbeing of an organisation, cost reduction has always been crucial. What if the planned cost reduction has a tremendous effect on future growth or it creates unforeseen future risk? Performance Management can be used to determine these future outcomes, provide understandable alternatives for these risks and create a measurement by aligning future outcomes of your organisations’ current strategies with these plans.
Determine the effect on costs when key drivers in the organisation change. Whether costs are driven by sales or vice versa, the goal of a value adding Performance Management solution should be to promptly determine the outcome if any of these drivers change. Now think of the possibilities when your strategies are incorporated into a long term view of future outcomes.
Create transparency throughout the process. Executives, managers and individuals involved in the planning cycle insist on a transparent view of the process. Whether you contribute or approve, specific questions will emerge at certain stages in the cycle. Thus finding a Performance Management solution that can provide full transparency which is auditable will keep everyone satisfied.
Motivate the stakeholders to be proactively involved. Creating a culture of executives, managers and individuals taking action before risks emerge will add immense value. Organisations should encourage stakeholder ownership. Individuals should take responsibility and be accountable. The focus should be to use failures as learning outcomes for the future.
Create more time to analyse data rather than gathering the data. Receive better data to determine better results by reducing dependencies and redundant complexities. Time should be focused on analysing the outcomes and determining possible solutions, rather than gathering data. Remove unnecessary sharing of spreadsheets and consolidation processes. Let the stakeholders focus on analysing the results to assist decision makers to make evidence-based decisions.
Continuous learning and improvement. Staff should be motivated to utilise past experiences to reduce future risk. Continuous learning and improvement should be at the centre of a Performance Management solution.
At Cortell we specialise in the implementation of Performance Management solutions. Solutions that allow your organisation to move forward, focus on your way of doing business and determine the impact of current decisions on future plans. We have specialist consultants that deliver industry leading Performance Management solutions. We have implemented Budgeting and Forecasting, Pricing, Costing, Projection and Value Driver based solutions across clients ranging from multi nationals to SME’s.
If you would like to utilise the full capability of Performance Management OR simplify your data gathering process to increase time spent on analyses – the faithful 80 – 20 rule – , speak to us.