Published on June 26, 2014
For Business Intelligence Managers
25/06/2014 J.Gretzitz 2 THE ORIGINS OF PERFORMANCE MANAGEMENT Performance Management originated as a broad term coined by Dr. AUBREY DANIELS in the late 1970s to describe a technology (i.e. science imbedded in applications methods) for managing both BEHAVIORS and RESULTS, two critical elements of what is known as performance
25/06/2014 J.Gretzitz 3 A formal definition of PERFORMANCE MANAGEMENT, according to Daniels’s: A scientifically based, data-oriented management system that consists of three primary elements - Measurement, Feedback and POSITIVE REINFORCEMENT DEFINITION
25/06/2014 J.Gretzitz 4 Performance Management (PM) - Includes activities which ensure that goals are consistently being met in an effective and efficient manner Performance Management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas Also known as a process by which organizations align their resources, systems and employees to the enterprise’s strategic objectives and priorities
Performance Management (PM) can be defined as a set of management processes supported by information technology (IT), that help to improve the Management, Strategy execution and Decision making in organizations Performance management processes help companies define STRATEGIC OBJECTIVES, measure performance, analyse and report performance as well as align people and culture 25/06/2014 J.Gretzitz 5
Performance Management is what organizations do to become more successful and stay ahead of their competitors. In fact, managing performance is the most critical task of any executive or manager If performance management processes allow organizations best to define and communicate their strategies, measure, report and monitor progress in order to manage and improve business performance 25/06/2014 J.Gretzitz 6
Towards better decisions making Performance Management can also be defined as a set of management processes, that help to improve the strategic decisions people make every day THE QUALITY OF THOSE DECISIONS THAT WILL SEPARATE SUCCESSFUL COMPANIES FROM THE REST 25/06/2014 J.Gretzitz 7
Performance Management is therefore a modern term for a set of management approaches that enable organizations to DEFINE and EXECUTE their strategy, and to MEASURE and MONITOR performance in order to inform strategic decision making and learning Towards better decision making 25/06/2014 J.Gretzitz 8
Towards better decision making Basic performance management model integrates processes for DEFINING strategic objectives, MEASURING performance, ANALYSING performance and REPORTING and REVIEWING performance ALIGNING PEOPLE AND CULTURE All of these are focused on PERFORMANCE IMPROVEMENT which is the CENTRAL PREMISE of performance management See Figure below: 25/06/2014 J.Gretzitz 9
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Beyond People Management and Performance Monitoring The following processes and terms are often associated with performance management: STRATEGIC PLANNING, performance measurement and monitoring, BUSINESS INTELLIGENCE, analytics, people management, reporting, financial planning & budgeting, forecasting, data warehousing, risk management, project & programme management, business process optimisation, knowledge management, dashboards, scorecards, metrics and key performance indicators 25/06/2014 J.Gretzitz 11
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Modern performance management approaches bring together these key aspects of management to form an INTEGRATED APPROACH 25/06/2014 J.Gretzitz 13
Performance management was sometimes narrowly associated with either People Management (e.g. performance appraisals and dealing with underperforming individuals) or Performance Monitoring (e.g. collecting and reporting of performance indicators) To avoid this confusion, new terms such as EPM, CPM or SPM have been created Beyond People Management and Performance Monitoring 25/06/2014 J.Gretzitz 14
Integrated Performance Management Organisations that are serious about managing performance will move beyond the basic model shown in the figure above and INTEGRATE IT WITH OTHER KEY BUSINESS PROCESSES See Figure below: 25/06/2014 J.Gretzitz 15
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In order to gain maximum benefits from performance management initiatives organisations need to ensure they ALIGN AND INTEGRATE PROCESSES including: financial planning and budgeting, project and programme management, people management and rewards, performance reporting, risk management as well as BUSINESS INTELLIGENCE AND ANALYTICS A INTEGRATED PROJECT MANAGEMENT, as shown bellow: Integrated Performance Management 25/06/2014 J.Gretzitz 17
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Enterprise Performance Management Basics Using the basic strategic performance management model, organisations start with defining their strategy, then move on to measuring performance, then use these indicators to analyse performance in order to extract insights and make BETTER INFORMED DECISIONS WHICH LEAD TO ACTIONS AND PERFORMANCE IMPROVEMENTS Let’s briefly look at each of the following steps: 25/06/2014 J.Gretzitz 19
Strategic Planning This step involves creating a business model and strategy (either corporately or for a business unit) State of the art tools that are commonly used here include Balanced Scorecard Strategy Maps and value-driver mapping Informed by strategic analyses organisations identify what strategic objectives they plan to accomplish and how they plan to accomplish them 25/06/2014 J.Gretzitz 20
Performance Measurement and Monitoring Here organisations design key performance indicators (KPIs) to measure and monitor how well they are delivering on their strategic objectives Most important is to ensure that metrics are relevant and meaningful Many fall into the trap of measuring what is easy to measure instead of what will provide the best insights 25/06/2014 J.Gretzitz 21
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Business Intelligence (BI), Analytics and Modelling In this step organisations use their performance data and metrics to analyse performance This step is all about creating a solid evidence- base to inform decision making Examples of analytics, BI and modelling approaches include marketing and sales analytics, customer analysis or click stream analysis 25/06/2014 J.Gretzitz 24
Reporting & Reviewing Performance In this step organisations translate the insights gained from their performance information into management reports and dashboard and put the review processes in place to act on the data It is all about evidence-based decision making facilitated by the performance review processes Leading edge organisations put in place performance improvement meetings to create a dialogue about performance leading to JOINT DECISION MAKING 25/06/2014 J.Gretzitz 25
Aligning People and Culture In this final step organisations ensure the people, culture and leadership approaches are Focused on performance improvement It is about creating the soft elements of a high performance organisation to ensure the performance management processes actually lead to improved performance This means organisations have to close the knowing- doing gap and act on the insights gained and decisions made in order to generate real performance improvements 25/06/2014 J.Gretzitz 26
Integrated Enterprise Performance Management More advanced performance management approaches integrate with other key management processes Here we briefly look at some of those processes in turn and explore the need for alignment 25/06/2014 J.Gretzitz 27
Financial Planning, Consolidation & Budgeting By integrating your budgeting and financial planning with your corporate objectives and priorities you ensure that the financial resources are spent on the things that actually matter the most Some of the leading organisations are now able to update their budgets and forecasts on the fly, based on a continuous inflow of both financial and non-financial data 25/06/2014 J.Gretzitz 28
Project and Programme Management Projects and programms needs to be aligned with the corporate objectives and priorities in order to ensure that efforts are focused on what matters the most The activities (projects and programms) need to be prioritized based on strategic needs and therefore have to be aligned with the strategic performance framework of an organisation 25/06/2014 J.Gretzitz 29
People Performance, Rewards and Recognition For most organisations their people are their most valuable and most expensive assets In the end it is people who deliver the projects and implement the strategic plans By aligning budgets and projects with the strategic performance framework you have made major steps towards alignment 25/06/2014 J.Gretzitz 30
However, by further aligning reward and recognition systems as well as personal performance management processes to the performance framework you can create a tight integration between what matters the most and what people perceive as important ALIGNING REWARD AND RECOGNITION SYSTEMS 25/06/2014 J.Gretzitz 31
Risk Management The management of risk is too often narrowly focused on just financial risks or the disaster risks to buildings and infrastructure While these are important, they are not enough The performance framework has identified the key drivers of future performance 25/06/2014 J.Gretzitz 32
25/06/2014 J.Gretzitz 33 One of the KEY DRIVERS for business success is management’s ability to effectively manage the performance of individuals and teams Managing performance is driven by the gap between where our people are now and where we want them to be!
(e.g. staff with the right competencies, corporate reputation or key partnerships) and it is therefore important to assess and monitor any risks in relation to all your performance drivers in order to achieve alignment between your risk management and what matters the most for future performance THE KEY DRIVERS OF FUTURE PERFORMANCE 25/06/2014 J.Gretzitz 34
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25/06/2014 J.Gretzitz 36 Set the standards and agree goals, targets and expectations Manage the quality of the work Measure and monitor that work on a regular basis Develop your people through coaching, mentoring and training Select the right tools, techniques and resources to achieve the above THE 5 MOST CRITICAL DRIVERS
Performance Reporting, Dashboards and Scorecards Relevant performance information is not only crucial for better decision making and performance improvement, it is also a requirement for most organisations to demonstrate to external stakeholders and regulators that they have delivered desired levels of performance and that they have complied with rules and regulations 25/06/2014 J.Gretzitz 37
Sales Performance Management INTEGRATED SPM SOLUTIONS allow organisations to use any of their data to produce and deliver reports, dashboards and scorecards for their stakeholders – internally or externally 25/06/2014 J.Gretzitz 38
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Business Intelligence and full analytical integration By aligning and integrating the above processes with the performance framework organisations create an invaluable set of data which they can use, in an integrated way, to inform decision making For example, the information on value driver analysis, customer relationship management, financial forecasting, and risk logs can be used to challenge, test and revise corporate strategies 25/06/2014 J.Gretzitz 40
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Performance Management Technology The full level of integration between performance management and other key management processes can only be achieved with the SUPPORT OF TECHNOLOGY Corporate Performance Management (CPM) or Enterprise Performance Management (EPM) software suites create a systematic and integrated approach that links corporate strategy to core processes and activities State-of-the-art software systems support strategic performance management activities by (see Figure above): a) bringing the data together into one single database b) providing integrated analytics and business intelligence capabilities c) integrating applications to create a tightly aligned and integrated approach to corporate management 25/06/2014 J.Gretzitz 42
Bibliography Key Performance Indicators (KPI): The 75 measures every manager needs to know (Financial Times Series) - by Bernard Marr (Jun 24, 2012) The Intelligent Company: Five Steps to Success with Evidence- Based Management - by Bernard Marr (Apr 5, 2010) Strategic Performance Management - by Bernard Marr and Dina Gray (Apr 20, 2006) Source query: The Advanced Performance Institute (API) at http://www.ap-institute.com/Performance%20Management.html 25/06/2014 J.Gretzitz 43
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