Business performance management is how the management of a company or organization works to achieve goals which are preselected. These techniques include a series of analytic and management processes that work together to achieve those goals. If you have heard the terms, enterprise performance management or corporate performance management, you should not be confused as those mean the same thing. In general when speaking about management of business performance there are three activities involved in the process all of which can be done simultaneously: (1) selecting the goals, (2) organizing the measurement of progress for these goals and (3) intervening in a way that will help to meet the goals in the future.
Before technology began advancing during the late 20th century, leading to the information age, the process of business performance management was long and tedious. Although it was just as simple to create a goal, measuring the goal (step 2 mentioned above) could take months as the data collecting techniques were slow. Because of this, the intervention mentioned in step three (mentioned above) could not usually be based on facts and instead had to rely on the management’s intuition. This began to change at the end of the 20th century with Howard Dresner’s term business intelligence (BI; referring to the methods of helping decision making using facts) as well as the increase in technology.
Today many different methodologies have developed that are now used for business performance management. Although the balanced scorecard (BSC) strategy is the most popular, other methodologies such as the Theory of Constraints, integrated strategic measurement, economic value-added, Total Quality Management, activity-based costing (ABC) and the Six Sigma strategy are used as well. As mentioned, BSC is the most popular of these methodologies. This method includes the company’s mission and vision as well as the pertinent data with a focus on the information that is most relevant, allowing for easier and more efficient analysis.
One of the most important elements of business performance management is the actual process of measuring the performance as this is what determines how the team (or company) will change their methods and improve the performance when necessary. In order to collect this data, companies will look at many factors, some of which include: how many new customers they have, how many customers have been lost, money owed by customers, a demographic analysis of the customers, sales figures and figures related to the call center.
In order to successfully implement a business performance management program, the company must ask themselves several things related to all aspects of the business. These include questions related to goal-alignment (What are the goals? How do they relate to the company’s mission?), baseline (Can the company monitor the information? How do they currently collect and store data?), cost and risk (How much will the management cost? What risk is there that it may fail?), customers (Who pays for this and who benefits?), measurement methodology (Which method will be used?) and results (How will we monitor the program?) among others.