Business performance management explained

Business Performance Management
Header1:Discipline Overview
Label2:Other names
Data2:Corporate Performance Management (CPM), Enterprise Performance Management (EPM)
Label3:Core objective
Data3:Optimization of business results and alignment with strategy
Header4:Methodologies
Label5:Frameworks
Data5:Balanced Scorecard, Six Sigma, OKR, Total Quality Management
Label6:Key Metrics
Data6:KPIs, ROI, ROE
Header7:Technical Components
Label8:Tools
Data8:Business intelligence, Data warehousing, Data mining
Label9:Cycle
Data9:Plan, Act, Monitor, Analyze

Business performance management (BPM) (also known as corporate performance management (CPM)[1] enterprise performance management (EPM),[2] [3]) is a management approach which encompasses a set of processes and analytical tools to ensure that a business organization's activities and output are aligned with its goals. BPM is associated with business process management,[4] a larger framework managing organizational processes.

It aims to measure and optimize the overall performance of an organization, specific departments, individual employees, or processes to manage particular tasks.[5] Performance standards are set by senior leadership and task owners which may include expectations for job duties, timely feedback and coaching, evaluating employee performance and behavior against desired outcomes, and implementing reward systems.[6] BPM can involve outlining the role of each individual in an organization in terms of functions and responsibilities.[7]

History

By 2017, Gartner had reclassified CPM as "financial planning and analysis" (FP&A) and "financial close" to reflect an increased focus on planning and the emergence of new solutions for financial close management.[8] [9]

Following the 2017 reclassification, the market transitioned from monolithic on-premises suites toward cloud-based "Best-of-Breed" solutions, leading Gartner to officially retire the "Corporate Performance Management" (CPM) Magic Quadrant in 2018 in favor of two distinct categories: Cloud Financial Planning and Analysis (FP&A) and Cloud Financial Close. [10]

In 2020, this evolution continued with the introduction of Extended Planning and Analysis (xP&A), a framework designed to integrate financial planning with operational data from departments such as sales, human resources, and supply chain into a single, unified planning environment.[11]

Definition and scope

New technology realizes corporate strategic outcomes and describes risk-management programs.[12]

Application

Performance management principles are commonly applied in the workplace but can also be used in other settings where individuals interact with their environment to achieve specific outcomes, such as healthcare.[13] The effective implementation of performance management is crucial for maximizing team potential and enhancing daily employee performance.. It must not encourage internal competition, but teamwork, cooperation, and trust.[14]

Performance management aligns company goals with those of teams and employees to increase efficiency, productivity, and profitability.[15] Its guidelines stipulate the activities and outcomes by which employees and teams are evaluated during performance appraisal.[16] Many types of organizations use performance management systems (PMS) to evaluate themselves according to their targets, objectives, and goals; a research institute may use PMS to evaluate its success in reaching development targets.[17] Complex performance drivers such as the societal contribution of research may be evaluated with other performance drivers, such as research commercialization and collaborations, in sectors like commercial agriculture.[18] [19] A research institute may implement data-driven, real-time PMS to address complex performance management challenges in a country developing its agricultural sector..[20] [21]

Werner Erhard, Michael C. Jensen, and their colleagues developed a new approach to improving performance in organizations. Their work emphasizes how constraints imposed by one's worldview can impede cognitive abilities, and explores the source of performance which is inaccessible by cause-and-effect analysis. They say that a person's performance correlates with their work situation, and language (including what is said and unsaid in conversations) plays a major role. Performance is more likely to be improved when management understands how employees perceive the world and implementing changes which are compatible with that worldview.[22]

Public-sector effects

In the public sector, the effects of performance-management systems have ranged from positive to negative; this suggests that differences among systems and the context in which they are implemented affect their success or failure.[23] [24]

How it can fail

Employees who question the fairness of a performance-management system or are overly competitive will affect its effectiveness; those who do not feel adequately rewarded become disgruntled with the process. Without proper system planning, employees may view it as mandating compliance.[25]

Organizational development

In organizational development (OD), performance can be thought of as actual versus desired results; where actual results fall short of those desired is the performance-improvement zone. Performance improvement aims to close the gap between the two.[26]

Other organizational-development definitions differ slightly. According to the U.S. Office of Personnel Management (OPM), performance management is a system or process in which work is planned and expectations are set; performance of the work is monitored; staff ability to perform is developed; performance is rated and the ratings summarized, and top performance is rewarded.[27]

Design and implementation

An organization-wide 360-degree feedback process integrated into the organization's culture can be a powerful tool for communicating and instituting change, rapidly touching all members of the organization when new markets, strategies, values and structures are introduced into the system.[28] Each year, companies spend considerable money on their performance-management systems. For performance management to succeed, businesses must continue to adapt their system to correct current deficiencies. Some aspects, such as goal setting or performance bonuses, may resonate more with employees than others.[29]

Outcomes

According to Richard et al. (2009), organizational-performance metrics encompass three outcomes:[30]

Organizational effectiveness[31] is a similar term.

Technology

Business performance management requires large organizations to collect and report large volumes of data. Software vendors, particularly those offering business intelligence tools, offer products to assist in this process. BPM is often incorrectly understood as relying on software to work, and many definitions suggest software as essential to the approach.[32] Interest in BPM by the software community may be sales-driven.[33] [34]

See also

References

  1. "Introducing the CPM Suites Magic Quadrant", Lee Geishecker and Frank Buytendijk, 2 October 2002, www.gartner.com, M-17-4718
  2. Frolick. Mark N.. Thilini R.. Ariyachandra. Winter 2006. Business performance management: one truth. Information Systems Management. 23. www.ism-journal.com. 41–48. 10.1201/1078.10580530/45769.23.1.20061201/91771.5. 11317244. https://web.archive.org/web/20110719192210/http://snyfarvu.farmingdale.edu/~schoensr/bpm.pdf. 2011-07-19. 2010-02-21. Business Performance Management (BPM) [...] is also known and identified by other names, such as corporate performance management and enterprise performance management..
  3. Sana. Mojdeh. 2005-12-20. Technology-enabled Business Performance Management: Concept, Framework, and Technology. 3rd International Management Conference. 1–9. https://web.archive.org/web/20110722015044/http://www.mbaforum.ir/download/335_Full_sanamojdeh.pdf. 2011-07-22. 2010-02-21. Confusion also arises because industry experts can not agree what to call BPM, let alone how to define it, META Group and IDC use the term 'Business Performance Management', Gartner Group prefers 'Corporate Performance Management', and others favor 'Enterprise Performance Management'..
  4. vom Brocke, J. & Rosemann, M. (2010), Handbook on Business Process Management: Strategic Alignment, Governance, People, and Culture (International Handbooks on Information Systems). Berlin: Springer
  5. Book: International Human Resource Management. Harris. Hilary. Brewster. Chris. Sparrow. Paul. 2003. CIPD Publishing. 978-0-85292-983-4. en.
  6. Web site: Performance Management. U.S. Office of Personnel Management. 2019-02-28.
  7. Web site: 2020-11-12. Performance Management. Hameed . Waseem .
  8. Web site: Back to Basics: The Refocusing of Corporate Performance Management. Van Decker. John E.. Rayner. Nigel. www.gartner.com. Gartner. October 31, 2017. G00341616. 2019-04-16. Iervolino. Christopher.
  9. Web site: What is FP&A? . http://web.archive.org/web/20251119054627/https://www.oracle.com/apac/performance-management/planning/what-is-fp-and-a/ . 2025-11-19 . 2026-02-18 . www.oracle.com . en.
  10. Web site: 2017-12-21 . Time to retire the corporate performance management concept . 2026-02-18 . Accounting Today . en.
  11. Web site: 2025-11-26 . What is Extended Planning and Analysis (xP&A)? IBM . 2026-02-18 . www.ibm.com . en.
  12. Book: Organizational Structures Supporting Rich Survival . https://link.springer.com/chapter/10.1007/978-3-642-14316-8_11 . Springer . 10.1007/978-3-642-14316-8_11 . 17 March 2023 . Organizations . 2010 . Achterbergh . Jan . Vriens . Dirk . 351–378 . 978-3-642-14315-1 .
  13. Mettler T, Rohner P . Performance management in health care: The past, the present, and the future . International Conference Business Informatics . Vienna . 699–708 . 2009 . https://ghostarchive.org/archive/20221009/https://www.alexandria.unisg.ch/214579/1/WI2009.pdf . 2022-10-09 . live.
  14. Smith. Marisa. Bititci. Umit Sezer. 2017-09-04. Interplay between performance measurement and management, employee engagement and performance. International Journal of Operations & Production Management. 37. 9. 1207–1228. 10.1108/ijopm-06-2015-0313. 0144-3577.
  15. Book: Zaffron, Logan, Steve, David. Performance Management: The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life. Feb 2009. 1st.
  16. Web site: Performance. U.S. Office of Personnel Management. 2019-02-28.
  17. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith K. . 2021-06-01 . Role of Peripheral Analysis Methods in Adoption of Successful KPIs for a Research Institute Working Towards Commercial Agriculture . International Journal of Global Business and Competitiveness . en . 16 . 1 . 61–71 . 10.1007/s42943-021-00021-z . 0976-1888 . 8039501.
  18. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith K. . Seneviratne . Gamini . 2022-12-31 . Probing into the concept of 'research for society' to utilize as a strategy to synergize flexibility of a research institute working on eco-friendly commercial agriculture . All Life . 15 . 1 . 220–233 . 10.1080/26895293.2022.2038280 . 246761304 . 2689-5293. free .
  19. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith Krishantha . 2021-01-01 . Role of key performance indicators on agile transformation of performance management in research institutes towards innovative commercial agriculture . Journal of Science and Technology Policy Management . 13 . 2 . 213–243 . 10.1108/JSTPM-10-2020-0151 . 237685948 . 2053-4620.
  20. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith K. . Kodituwakku . Saluka R. . 2022-05-23 . "Connected researches" in "smart lab bubble": A lifeline of techno-society space for commercial agriculture development in "new normal" . New Techno Humanities . 2 . 79–91 . en . 10.1016/j.techum.2022.05.001 . 249035865 . 2664-3294. free .
  21. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith K. . Kodituwakku . Saluka R. . Madhushani . K. B. . 2022-08-22 . Intelligently driven performance management: an enabler of real-time research forecasting for innovative commercial agriculture . SN Social Sciences . en . 2 . 9 . 168 . 10.1007/s43545-022-00484-8 . 2662-9283 . 9395937 . 36033638.
  22. Book: Madden. Bartley J.. Reconstructing Your Worldview. September 2014. Learning What Works Inc.. 978-0-9885969-3-1. 99.
  23. Nielsen, Poul A. 2014. "Performance Management, Managerial Authority, and Public Service Performance." Journal of Public Administration Research and Theory. 24(2):431–458.
  24. Gerrish, Ed. 2015. "The Impact of Performance Management on Performance in Public Organizations: A Meta-Analysis." Public Administration Review 76(1):48–66.
  25. Peacock, M., Stewart, E. B., & Belcourt, M. (2020). Managing Employee Performance. In Understanding human resources management: A Canadian perspective (pp. 211-239). Toronto: Nelson Education.
  26. Abeysiriwardana . Prabath Chaminda . Jayasinghe-Mudalige . Udith K. . 2022-08-10 . Single window performance management: a strategy for evaluation integrated research culture in the commercial agriculture sector . SN Business & Economics . en . 2 . 9 . 128 . 10.1007/s43546-022-00297-0 . 251504791 . 2662-9399.
  27. US Office of Personnel Management, A Handbook for Measuring Employee Performance, published March 2018, accessed 26 October 2022
  28. Bracken, D., & Rose, D., "When does 360-degree feedback create behavior change? And how would we know it when it does?", Journal of Business and Psychology, 26(2), 183-192
  29. Kakkar. Shiva. Dash. Sanket. Vohra. Neharika. Saha. Surajit. 2020-04-23. Engaging employees through effective performance management: an empirical examination. Benchmarking. 27. 5. 1843–1860. 10.1108/bij-10-2019-0440. 219006172 . 1463-5771.
  30. Richard . Pierre J. . Devinney . Timothy M. . Yip . George S. . Johnson . Gerry . Measuring Organizational Performance: Towards Methodological Best Practice . Journal of Management . SAGE Publications . 35 . 3 . 2009-02-06 . 0149-2063 . 10.1177/0149206308330560 . 718–804. 143585204 .
  31. Upadhaya . Bedanand . Munir . Rahat . Blount . Yvette . Association between performance measurement systems and organisational effectiveness . International Journal of Operations & Production Management . Emerald . 34 . 7 . 2014 . 0144-3577 . 10.1108/ijopm-02-2013-0091 . 853–875.
  32. http://www.bpmmag.net/magazine/article.html?articleID=13966 BPM Mag, What is BPM?
  33. http://www.information-management.com/issues/20050501/1026064-1.html The Next Generation of Business Intelligence: Operational BI
  34. White. Colin. May 2005. The Next Generation of Business Intelligence: Operational BI. Information Management Magazine. 2010-02-21. The biggest growth area in operational BI analysis is in the area of business performance management (BPM).. 2011-07-22. https://web.archive.org/web/20110722135359/http://www.information-management.com/issues/20050501/1026064-1.html?zkPrintable=true.

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