For anyone who wants to pursue a corporate strategy in a more targeted manner, measure the performance of the company or individual departments more precisely and manage a company more successfully as a whole, Corporate Performance Management (CPM) is unavoidable.
What is Corporate Performance Management?
Corporate Performance Management (CPM) aims to maximise performance in line with the company’s goals. The integrated management method – also known as Business Performance Management or Enterprise Performance Management – focuses on the processes taking place in the company as well as the cause-effect relationships and their contribution to the achievement of objectives.
Management and controlling tasks consist of planning and measuring performance and communicating it in such a way that the measurement results can be followed by concrete actions to control performance. The basis for this is knowledge of the cause-effect chains within the company and the influences of external factors.
Measuring performance with the help of the Key Performance Indicators
The basis of this management approach is performance measurement, the measurement of corporate performance with the help of key performance indicators (KPI). These are key performance indicators that evaluate the contribution of operational processes to performance in terms of the overarching corporate goals and show the degree to which the goals have been achieved. It must be possible to break down the measurement results along the cause-effect chains in such a way that the fundamental causes can be identified. Many of the classic operational indicators such as turnover, costs or return on investment are suitable KPIs. Nevertheless, the way performance is evaluated within the framework of CPM differs from conventional performance measurement systems. It is not only intended to fulfil an informational purpose, but to result in reactions when certain thresholds are exceeded or not reached. Also, it is no longer only about financial targets, but also about other targets, for example in relation to customer satisfaction, innovative strength, or sustainability. The definition of KPIs is a particular challenge in these cases.
The CPM process
The starting point for corporate performance management (CPM) is the definition of strategic goals. A balanced scorecard, for example, which looks at the company from the perspectives of finances, customers, processes and potentials, can help here. For each perspective, some strategic goals are formulated, for example, from the customer perspective, the increase of customer satisfaction. The next step is to develop programmes of measures to achieve the goals. Based on this, the KPIs with their target or threshold values can be defined, whereby the consideration of cause-effect chains is particularly important. Measuring and evaluating performance can be done permanently or at appropriate intervals. Exceeding or falling below the thresholds results in operational measures according to plans that have already been defined in advance. In addition to the balanced scorecard, there are other tools that can support corporate performance management, such as Performance Prism, Value Based Budgeting and Six Sigma. Performance Prism is based on the five performance perspectives of stakeholder satisfaction, stakeholder contribution, strategies, processes and resources. Value Based Budgeting sees the increase of the company’s value as the overriding goal. Six Sigma is based on statistical methods and aims to fulfil customer needs as economically as possible.
CPM and Business Intelligence
Business intelligence forms an important basis for corporate performance management. Automated data analyses and documentation enable the regular review of value-driving variables and convey decision-relevant information. When certain KPI thresholds are reached, this is a signal for action. The prerequisite for this is a uniform data basis throughout the company, which is kept up to date through daily processes. Tools for corporate performance management support the development and implementation of this integrated, process-oriented management approach. With the help of advanced analytical methods, information and forecasts can be derived even from large amounts of unstructured data. Meaningful visualisations convey information quickly and precisely.
Would you like to manage your company in the spirit of Corporate Performance Management? Then get in touch with us. We will support you with suitable CPM and BI solutions. We would be happy to arrange an appointment or send you further information.