Understanding Business Performance Management
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Understanding Business Performance Management

The business world is constantly evaluating its methods to find business processes that are more efficient in terms of cost and the achievement of goals. The practice of creating metrics to measure performance is just one of the ways that business owners and managers attempt to get a better return on investment for their business processes. Business performance management is a way of monitoring the methods a company uses to reach its goals and then using data to find better methods. The idea of monitoring management procedures to develop effective methods for reaching goals has been around since business first began. Even the great warriors of ancient China understood the need to monitor processes and adjust based on the results. Business performance management was developed as a way to streamline this monitoring process and develop a more efficient way of achieving corporate goals.

What Is Business Performance Management?

Business performance management is the act of setting corporate goals, monitoring the methods used to achieve those goals, and then creating ways for managers to more effectively achieve those goals. By collecting and analyzing data, a company can determine what effects managerial changes had on performance and then alter those changes to help create a more effective process. The idea of business performance management is a broad concept, but it is best used to analyze specific goals and help a company to save on operating costs, while generating more revenue at the same time. The important thing to remember about business performance management is that it is used to improve the performance of personnel and management. The use of metrics is just a means to an end, with that end being higher profitability.

The Three Main Activities

Each business performance management monitoring program utilizes three primary activities: selection of goals, consolidation, and intervention. Each activity works with the other to help create a more efficient process. This is an extremely dynamic system where each activity affects the other and they are all working together to help develop better business processes.

Selection of Goals

The selection of goals is actually an ongoing process that can be altered by the results that are achieved through intervention. The best place to start with any business performance management program is to set corporate goals and then determine the policies and methods that will be used to achieve those goals. Once the program is underway, the effects that changes have on the process will start to alter the goals. If a managerial decision helped to increase productivity, then it may be necessary to enhance the goal. The point of the goal is to give management a measuring stick to use when it comes to determining success.

Information Monitoring

The second activity involved in business performance management is information monitoring, also known as information consolidation. This is the part of the process where the data is gathered and the pertinent data is analyzed and used to develop a better way to do business. The list of metrics used to create the data varies by company and by project, but the data becomes a critical part of the performance management process.

Managerial Adjustments

Once the data has been reviewed, the management staff decides which measures to take to increase efficiency and profitability. These changes are charted and the effects they have go back into the information monitoring activity. It is critical that the adjustments made reflect the goals of the company. This can be tricky because the goals are not always financial. For example, if the goal is to improve employee job satisfaction by 20 percent, then the actions taken by management would not necessarily require a financial consideration.

The Considerations of Implementation

When a company designs a business performance management program, there are several considerations that have to be made. Not only is company productivity a consideration, but there is also concern for:

  • Investors
  • Vendors
  • Partners
  • Competition

Will the goals of the business performance management program weaken the company and allow the competition to start taking more market share? How much risk is the company willing to assume to reach these goals? Before implementing a business performance management plan, a company has to think of how such a plan will affect every aspect of its business.