Sunday, March 15, 2020

Performance Management Methodology and Practice

Performance management is not an isolated management discipline, but a holistic approach with a well set of methodologies and practices.

Enterprise Performance Management is the integration of multiple methodologies and practices with each embedded with business analytics to make better decisions and implement the strategy. Managing performance means understanding results, setting metrics, and making continuous improvement.

Performance Management methodologies include strategy maps, customer intelligence, driver-based budgeting/rolling financial forecasts, quality management, and scorecards, etc. Enterprise Performance Management integrates them as a large umbrella.

Strategy maps: Performance management and strategy management need to go hand in hand. The organizational management needs to make sure that strategy is on the right track, otherwise, they ‎have to take ‎corrective actions. “Strategy map" could be the GPS for the business direction setting, help to translate strategy into operational terms, align the organization to create synergies, make a strategy for everyone's everyday job and a continual management process, and monitor results and act.

It is critical to identify and strengthen the weakest link and determine how each part of the organization, including all of the key functions must "put it all together" to be successful in implementing strategy, managing performance, bringing tangible business results and making improvements continuously.

Customer intelligence: All forward-looking organizations intend to become customer-centric. Customer-centric enterprise vision, strategy, performance and governance model should enforce a seamless alignment of the various silos towards customer-centric products and delivery mechanisms and improve customer intelligence via bridging strategy & execution, connecting customer touchpoints, & minding the gap of functional silos.

Have a clear understanding of how customer-centric approaches enhance the business model and extend profitability. It requires consistently digging deeper and having different levels of metrics in place that keep a pulse on the inner workings of the business. Customer experience comes from all touchpoints, business management needs to ensure that all structures, processes and strategy alignment around excellent customer experience to result in a profitable and evolving business from a performance management perspective.

Driver-based budgeting/rolling financial forecasts: Corporate performance Management is a management control across functional domains and management disciplines. Some traditional performance management causes many of the dysfunctional behaviors and motivates people to hide bad news on delays and cost overruns then they try to hustle and catch up with financial forecasts and plans in order to avoid being penalized.

Budgeting and financial forecasts need to be a dynamic process due to the fast pace of changes and the overwhelming growth of information. Many companies are doing quarterly or even monthly forecasts instead of one big annual forecast and dynamic resource allocation based on emerging threats and opportunities, with the goal to improve business efficiency and overall organizational performance.

Quality management: Quality Management is to ensure that the business systems are reliable and run when needed and when the users expect them to run, meet the needs of the business, without wasting time or having critical defects. The core of quality management is about delivering high-performance results, optimizing business operation management capacity with a keen eye to grasp growth opportunities, manage risks, and build the differentiated business competency. High quality refers to simplicity, increasing transparency of the business environment by eliminating something which is not used for improving business efficiency and performance.

Managing digital performance and improving business quality is a logical business management scenario and an iterative continuum of inspecting the quality of products/services, measuring performance, and understanding results holistically. The successful integration and quality management will depend on the underlying business relationships between all of the crucial points and how they influence each other. Through quality integration, the enterprise is easily combined with assets for orchestrating high-performing businesses.

Scorecards: The balanced scorecard approach helps organizations translate their strategy into key performance indicators that can be cascaded down to the department, teams, and even individuals. This is a great way to set business objectives and monitor them. An effective scorecard enables the practical use of performance management concepts and success factors. Without well-designed scorecards, often what is tracked and worked toward is separate from the strategic goals of that organization.

A scoreboard is also a way of consolidating and comparing metrics relating to a holistic assessment of organizational or functional performance. In addition to having some kind of basic measure at each level, it's critical for the company to share that information among its primary stakeholders. An effective scoreboard is easy to measure and compare, helps to improve and evolve for sharing best practices within the team or crosses the management, ensuring the seamless strategic alignment and high-performance results.

Performance management is not an isolated management discipline, but a holistic approach with a well set of methodologies and practices via connecting multidisciplinary management dots to tell the full story with business context, and to ensure that the business as a whole is superior to the sum of pieces.


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