Using business performance management in business

Jodie Humphries

To ensure productivity targets are met, every business has to have measures in place that safeguard its procedures. Business Management Europe takes a look at business performance management, what it is and how it can benefit you and your business.

In today's increasingly global and competitive business environment, it's not enough to know where you want your business to go; you need to plan faster and do more with potentially less resources. At the same time, you must be incredibly efficient and more precise with every decision, while complying with regulatory requirements.

Business performance management is a set of management and analytic processes which enable the performance of an organisation to be managed with a view to achieving one or more pre-selected goals. The system providers organisations with an overview of their performance data and the ability to make decisions based on this. Often shortened to BPM, it can often be confused with business process management, which has the same abbreviation.

Business performance management has three main activities:

• The selection of goals.

• The consolidation of measurement information relevant to an organisation's progress against these goals.

• The interventions made by managers in light of this information with a view to improving future performance against these goals.

BPM involves consolidation of data from various sources, querying, and analysis of the data, and putting the results into practice. It helps businesses make efficient use of their financial resources and looks at enhance processes through continual feedback, forecasting, total quality management and performance measurement to ensure targets are being met.

Accurate and appropriate business intelligence is critical in the attainment of both the short and long-term goals of an enterprise. The possession of relevant data about customers, competitors, internal operations and the marketplace gives enterprises the ability to make the best decisions to ensure their present and future success, the article Business Performance Management Software states.

Getting back to basics, according to Technology Evaluation Centers, BPM refers to the concept of using technology to:

• Identify sales trends to develop sales strategies and to manage future sale

• Manage employee performance

• Identify quality issues on the shop floor

• Optimise business processes through the use of technology

• Forecast, budget, and plan within a process-centric environment

• Allow C-level executives the ability to monitor the organisation's performance regularly and centrally throughout the day.

TM Lewin's use of analytics

One company which has embraced performance management is the retailer TM Lewin which has utilised BPM analytics technology to help with its business. TM Lewin is working with SAS, the leader in Business Analytics software and services, to deliver an enterprise-wide management reporting and merchandise planning platform to support aggressive growth plans.

Working with analytics, TM Lewin has the capability to set financial goals based on historic, present and future demand, and analyse performance data to identify trends, gaps and opportunities. By combining disparate data from across the organisation, the company can look inside its business to see where best to focus management attention in order to maximise profitability and raise customer satisfaction and ultimately customer loyalty.

Mike Trotman, the CFO of TM Lewin says: "We were looking for the best solution to enable effective and efficient activity across the business. SAS proved they could deliver a holistic solution by providing the insight required to develop an aggressive store opening plan. SAS software will give us the insight required to make improvements within the business."

Survival in business

As times remain tough, it remains imperative for companies to get the best out of their staff. BPM systems can enable them to do this. Surveys in both the US and Britain have revealed, however, that few businesses are satisfied with their systems. Despite this, performance management appraisal is a well-established practice that drives decisions about pay, promotion, terminations, transfers and training needs.

People Management has published following points on how to manage performance:

1 Review the system

You can't expect the performance management systems put in place years ago to work, it's time to review the system and see what isn't working.

2 Engage the managers

The support of management is crucial to a successful system. This can be secured by involving managers in the system's design process and ensuring that they are reviewed on their performance management responsibilities.

3 Address interpersonal and interviewing skills

Subjectivity, interpersonal skills and human judgments are inherent to the process of good performance management.

4 Define the objectives

Performance management encounters difficulties when addressing a number of objectives. For example, when used for reward-related decisions, any developmental impetus it is intended to have is threatened. Playing judge and counsellor at the same time is highly problematic. It is best to opt for a combination of agreed, consistent and compatible objectives. Where this is not feasible, some organisations opt to conduct separate interviews at separate times of the year for the separate purposes. Many organisations are now concentrating on non-financial measures and assessing key competencies.

5 Remember to follow up

The manager who promises to provide additional resources or some form of personal development option is unlikely to enhance the system's reputation (or their own) by persistently failing to deliver. In the long run, the system is judged by the extent to which recommendations arising from review meetings actually materialise.

6 Minimise paperwork

Managers already feel inundated with paperwork and so resent the additional and often extensive form filling associated with performance management systems. This is exacerbated by the fact that the forms are not 'living documents', but remain stored in the archives of the HR department. So it is important to remember that the purpose of performance management is to motivate the employee for the purpose of improving organisational performance - not to generate more paperwork.

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