Performance management and EPM: how to improve your decision-making
Understanding your company's precise situation at any given time is the fundamental key to performance management.
Similarly, the company's past is of great importance. As a source of facts, it provides the experience to assess progress made, successes and challenges encountered, gaps and the return on investment of actions already taken. The past sheds light on the present situation. Analyzed in terms of the company's economic sector, it provides the basis for future projections.
To maintain its competitiveness and development in a VUCA environment, a company must constantly seek to improve. This involves sometimes significant adjustments, made possible by a high degree of agility, in turn enabled by total confidence in its data.
Achieving operational excellence requires the involvement of everyone, from top management to managers to employees. It is this unified collaboration that will foster a productive environment, improving productivity while optimizing costs, resources and working hours.
What is corporate performance?
Performance management is a systematic process aimed at monitoring, evaluating and adjusting an organization's activities to achieve its strategic objectives. It involves projecting into the future to better anticipate and understand how to optimize its various activities. It relies on the use of key performance indicators to measure progress and identify areas for improvement.
What are the objectives of performance management?
The aims of performance management are to clearly define the company's strategic objectives, and to ensure that all actions taken contribute to achieving them. It also aims to ensure that operational objectives are aligned with the company's overall strategy.
More precisely, corporate performance is when all the processes put in place enable an organization to achieve maximum effectiveness and efficiency while deploying the minimum of resources, whether human or material.
Corporate performance can be characterized in two ways:
- A financial performancethrough cost reduction and margin expansion
- Operational performance, through the organization of processes in the company's various departments. The objective: to be able to make effective decisions, corresponding to the challenges defined beforehand.
In order to benefit from the many advantages of performance management, it is essential to work on data quality. data quality is essential. Indeed, data reliability is the key to successful management.
What are the benefits of performance management?
Setting up a performance management system will enable you to improve :
- Quick decision-making
- The confidence you place in the decisions made thanks to the control points that will have been deployed
- Flexibility of your actions, through the reinforcement of existing actions or the implementation of corrective actions
- Ultimately, cost reduction thanks to a global vision of your expenses and how to optimize them.
Who are the players involved in performance management?
First and foremost, all company functions can be involved. Whether it's sales tracking, HR management, budget performance, management control or logistics monitoring, the objective remains the same: to project into the future to better manage the evolution of the business.
For example, a purchasing manager looking to optimize his processes has different expectations from an HR manager looking to manage his workforce, or a CFO looking to optimize his company's cash flow. And yet, an EPM tool can help.
More specifically, top management must be involved in
performance management. They are the ones who will define the
investments around the project, the sponsor and the human resources who
will lead the project. Ideally, it is recommended to include one
employee per department involved.
Performance management puts tools at the service of a company's specific needs, and not the other way around. These needs can be articulated around the following functions:
BudgetpreparationIT costs, P&L, overheads, fixed assets, pricing, monthly closing...
HR functions
Analysis of headcount and payroll, consolidation of annual reviews, analysis of average salaries, onboarding management...
Sales and marketing functions
Monitoring individual and team performance, identifying growth opportunities, resource allocation...
Optimization of promotional campaigns, operational processes, customer satisfaction analysis, marketing reporting (conversion rate, cost of acquisition, return on advertising investment...)...
Distribution, production, assortment, sales forecasting, inventory management...
Risk management, regulatory compliance...
Environmental footprint assessment, monitoring of ESG indicators (Environmental, Social and Governance) indicators, promoting diversity and inclusion...
Competitive and technological intelligence, increased predictability made possible by the growing mass of available and exploitable data...
What is corporate performance planning?
Managing your performance means planning your activities and anticipating different business scenarios. And so, planning is an integral part of performance.
The challenge lies in setting up a system for data data retrieval system from the company's various departments. Automatic data feedback will enable us to define the actual budget in real time, rather than spending a lot of time consolidating data. In this way, a comparison can be made in real time between forecast and actual budgets. Forecasts can therefore be made more regularly.
Tools are available to support you in this process. It is possible to work with Excel files, but having a technological platform will enable you to be more efficient and faster in the implementation. The tool features controls and facilitating functions (data harmonization, source reconciliation). Below you'll find an overview of the most powerful tools on the EPM market.
Performance planning can be implemented by any company. A company that is less efficient than another runs the risk of going into decline, because it will not have found the actions it needs to remain competitive, nor optimized its operations and costs.
Our partners in performance management
How do you set up a performance management process?
Identify problems rather than expected objectives
The bias introduced by the desire to identify objectives is to erect solutions, whereas problems open up a wider field of reflection.
From this phase onwards, the support of an expert in strategic consulting is a guarantee of success.
Assign a priority to each of them
During this stage, it is essential not to focus on the potential cost of resolving each of the issues listed, but rather to build a process of prioritizing the issues via, for example, a SWOT to identify those that have the greatest negative or positive impact on the company's performance.
Identify potential obstacles
During this stage, the support of an expert is also recommended. Its neutrality and external vision enable a more factual analysis of the obstacles to the implementation of an EPM tool, which by its very nature leads to non-performance or a lack of performance. This is why any EPM tool can be perceived as a threat.
Define a few relevant use cases
Carry out a benchmark based on a number of use cases representative of the issues at stake
This final stage will enable the tools to be compared via POCs. The selected POC will form the basis of the MVP, which can be implemented rapidly, enabling short, regular deliveries.
What are the pitfalls to avoid when implementing performance management?
1. Roll out your project alone, without the help of experts
It's also not a good idea to hire a pure player, as they'll only know one tool and won't be able to give an objective opinion on it, nor have full knowledge of all existing functions.
2. No framing
Framing the project (preferably with an expert) allows you to identify areas of concern and risks. It also gives visibility to the project without launching all projects at once.
It's also an opportunity to launch a POC: choose one or two functionalities and develop them to completion in order to verify feasibility. If you're not sure which tool to choose, you can develop them on two different tools.
3. Failure to implement thorough change management
Many changes occur when new tools are introduced, and resistance often goes hand in hand with them. Change management isn't enough, because it's not enough to get people on board, or to reassure those working with the tool. Certain functions may feel threatened, and the aim is to remove their obstacles.
4. Not clearly defining roles
The RACI matrix (Responsible, Accountable, Consulted, Informed) can be used in a project of this type, as it defines task levels and provides guidance to the employees involved.
They trust us
"Over the past 30 years, we have seen the emergence of new challenges for business departments. Firstly, the need to accelerate decision-making based on reliable data. But also the need to be able to measure company performance and adapt forecasts to an uncertain environment. To this end, we are convinced of the importance of deploying a performance management system adapted to the issues at hand, in order to be more competitive and develop your business on a long-term basis."
Micropole