Never mind for now that there is confusion in the marketplace as to what an enterprise-wide performance management framework is. Those narrow definitions of it as being only a financial control and budgeting scheme will eventually expand to its more appropriate full description. What is more interesting to me are the many variations of performance management approaches.
Just like our grandmothers each had their own recipe for a holiday fruit cake, organizations are concocting their own customized versions of the performance management framework.
Increasingly, there is consensus that performance management is not a process, but rather it is the integration of multiple methodologies, like customer relationship management, strategy maps, balanced scorecards, and lean/Six Sigma quality management. Each of these components, like cog gear-teethed wheels in a machine, are to be synchronized – better, faster, smarter and cheaper. How are organizations mixing these ingredients and baking them into their performance management framework?
In the
performance management framework recipe, what matters more is not necessarily the ingredients – its various component methodologies – but rather the sequence in which they are added and combined. For example, some organizations may design an
activity-based cost management system to measure and manage product, channel and customer profitability and potential value; and afterward implement a strategy map and balanced scorecard system with performance metric dashboards. Others may reverse the order. Alternatively, some organizations with competitive cost pressures may start with integrating their process management and cost measurement system.
The sequence of integration depends on which components will provide the highest value-creating lift, and it is admirable to see executive teams who select a good integration sequence. But just like our grandmother’s holiday fruit cake, eventually all of the essential ingredients must be included. No one likes an omelet without eggs.
Gary Cokins
gary.cokins@sas.com
