Business Performance

Effective business performance management (BPM) is central to the success of all organisations. BPM refers to the approach an organisation takes to define, assess and improve the delivery of its business goals. Performance management can focus on the performance of an organization, a department, an employee, or the processes in place to manage particular tasks. 

The purpose of BPM is to enable an organisation to deliver its goals as effectively as possible. This is achieved by employing the available resources, including its people, to develop and implement a strategy that will be delivered through its structure. This aspect of BPM is termed organisational setting and is broken down into five sub-components:

• Vision and mission; Performance management begins with purposes and objectives, which are covered by the concepts of mission and vision. The mission can be defined as the, ‘overriding purpose of the organisation in line with the values or expectations of stakeholders.’4 The vision can be defined as setting out, ‘the desired future state: the aspiration of the organisation.’4 the vision and mission define what the organisation is aiming to achieve,
• Strategic approach; While the vision and mission define what the organisation is aiming to achieve, the strategic approach defines how this will be done. key success factors (KSFs) will be identified which are assessed as, ‘those activities, attributes, competencies, and capabilities that are seen as critical pre-requisites for the success of an organisation in its industry at a certain point of time. Following on from this are the key performance measures, these are, ‘The financial or non-financial measures (metrics) used at different levels in organizations to evaluate success in achieving their objectives, KSFs, strategies and plans.
• Resources; The development and implementation of BPM requires financial and human capital resources (including management capability and leadership). IT systems are of particular interest given their central role and their continuous evolution. The level of resources available, and decisions about how they are deployed, will have a major impact on how BPM operates
• Organisational structure; Aspects of organisational structure include reporting lines, job descriptions and the degree of centralisation. The structure of an organisation will not only impact upon how it carries out its core operations, but also on its performance management processes. Structure will influence matters such as: information production, its flow, ownership and responsibilities, and the nature of associated control systems.
• Culture; is sometimes defined as the ethos of the organisation. It can be visualised as ‘a net, which is woven around deep basic assumptions, beliefs, understanding, sense making and values shared by the people of an organisation, supported by common ways of working and rituals. Organisations may comprise of a mosaic of realities rather than a single uniform culture, and by the fact that culture is always is flux. ‘It is a living, evolving, self- organising reality that can be shaped and reshaped but not in an absolute or even predictable way.’

Information is the currency of BPM and includes both future projections and actual outcomes. the performance information being produced is fit to support decision making, tailored financial and non-financial reports, analyses and KPIs. 

Performance information is of no practical value unless it is understood and acted upon. Communication and how the information is presented are therefore critical. Performance information is only valuable when it is used to achieve an organisational purpose. how it is interpreted and acted upon by management matters

There are a number of types of performance information use:

• Strategic change; The evaluation of performance information may lead the organisation’s stakeholders to judge that its original strategic objectives are no longer appropriate. This may lead to a reassessment of the strategic approach. Alternatively, in some cases, a new strategy may emerge in a more incremental manner through ongoing changes to operations
• Operational management and control, If performance information indicates that the strategy is sound but plans and targets are not being met then management can make changes to operational activities. These changes can include the following actions.
• Remedial action, where it is assessed that shortfalls are due to a failure of execution (eg, staff changes, closer supervision, or perhaps in some circumstances more empowerment and loser controls).
• Changes to inadequate operational processes (eg, rearranging work flows, changing production planning).
• Product or service changes.
• Marketing and pricing adjustments, if it assessed that there is a market or demand problem.
• Purchasing changes (eg, reviewing make or buy decisions).
• Restructuring, if it is assessed that fundamental changes are required (eg, implementing a comprehensive profit improvement plan). operational management and control can inform continuous improvement, even when plans and targets are being met.
• BPM process change; and
• Motivating staff. is key to successful performance management. Organisational success depends upon people implementing the plans and carrying out the operational activities that have been designed to achieve the strategy. It is important that people understand what they are required to deliver and are motivated to work in a way that will help achieve this. The Framework identified a range of factors, both hard (staff appraisals, reward schemes) and soft (initiatives concerning communication, staff morale) that can be used to motivate staff.