Many online articles talk about “performance management”, but financial managers rarely seem to pay much attention to it. Everyone wants to be more efficient, but when all your time is devoted to performing accounting operations and overseeing transactions, implementing a performance management process that incorporates best practices and all the relevant tools can seem like a daunting prospect.
The good news is, there are several tools out there to help organizations track how well they're achieving their goals. And, they don't have to invest a lot of time and money before they start reaping the benefits. All the organization has to do is choose the right tool for the desired objective, make sure it's properly implemented, and share the results throughout the organization. To help you make the right choice, this article summarizes the options currently available and the reasons for choosing each one.
PERFORMANCE MANAGEMENT TOOLS
Performance management consists of setting up a process that:
No matter what tool you use, the main steps are the same. Choosing the right tool depends on the objective, the financial resources and time available, and the organization's level of performance management maturity. If you’d like to get an idea your organization's level of performance management maturity, take a look at the CAM-I (Consortium for Advanced Management International) study.
The article provides a comprehensive list of tools organizations can use to manage their performance. Here's an excerpt:
Excerpt from the CAM-I Report The Performance Management Maturity Framework
Table 4: Performance Management Improvement Techniques
WHO USES PERFORMANCE MANAGEMENT TOOLS?
Performance management isn’t just for executives. In fact, any advisory committee that's closely aligned with the organization's objectives will only achieve optimal performance when these objectives have been communicated to the rest of the organization. In other words, performance management involves a cultural shift that must be implemented at every management level, as long as those managers’ roles help the organization achieve its objectives. A prerequisite for performance management is empowering people in management positions.
THE IMPORTANCE OF USING THE RIGHT INFORMATION TO SUPPORT DECISION MAKING
Ensuring the organization’s strategy and goals are aligned is key to determining relevant performance indicators. With so many factors competing for our attention, it's important to set goals that are aligned with the organization's strategy, and to ensure these goals are the basis for your decisions.
The organization's strategy must be clearly established, take into account the specifics of all areas, and be quantified using available information to support timely decision making. Strategy mapping is perfect for this job, but even just keeping everyone's specifics in mind when setting goals, and identifying how different people contribute to fulfilling strategy, can be enough to enable most organizations to set consistent and effective performance goals.
THE ROLE OF ORGANIZATIONAL PERFORMANCE MANAGEMENT SYSTEMS
Managing a performance ecosystem can be an arduous process. Depending on the tool that's being used, Finance teams often have to merge information from multiple systems, extract data from multiple organizational levels, get feedback through variance justification or by documenting irregularities, and then put all the component parts back together again.
In order to provide information in a timely manner and to ensure that the manual, time-consuming, repetitive tasks required to support the process are minimized, we recommend using specialized performance management tools.
Specialized, high-performance software includes features that enable you to:
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