Business performance management (BPM) (also known as corporate performance management (CPM) enterprise performance management (EPM),) is a management approach which encompasses a set of processes and analytical tools to ensure that a business organization's activities and output are aligned with its

goal A goal or objective is an idea of the future or desired result that a person or a group of people envision, plan, and commit to achieve. People endeavour to reach goals within a finite time by setting deadlines. A goal is roughly similar to ...

s. BPM is associated with

business process management Business process management (BPM) is the discipline in which people use various methods to Business process discovery, discover, Business process modeling, model, Business analysis, analyze, measure, improve, optimize, and Business process auto ...

, a larger framework managing organizational processes. It aims to measure and optimize the overall performance of an organization, specific departments, individual employees, or processes to manage particular tasks. Performance standards are set by senior leadership and task owners which may include expectations for job duties, timely feedback and coaching, evaluating employee performance and behavior against desired outcomes, and implementing reward systems. BPM can involve outlining the role of each individual in an organization in terms of functions and responsibilities.

History

By 2017,

Gartner Gartner, Inc. is an American research and advisory firm focusing on business and technology topics. Gartner provides its products and services through research reports, conferences, and consulting. Its clients include large corporations, gover ...

had reclassified CPM as " financial planning and analysis" (FP&A) and "financial close" to reflect an increased focus on planning and the emergence of new solutions for financial close management.

Definition and scope

New technology realizes corporate strategic outcomes and describes risk-management programs.

Application

Performance management principles are commonly applied in the workplace but can also be used in other settings where individuals interact with their environment to achieve specific outcomes, such as healthcare. The effective implementation of performance management is crucial for maximizing team potential and enhancing daily employee performance.. It must not encourage internal competition, but teamwork, cooperation, and trust. Performance management aligns company goals with those of teams and employees to increase efficiency,

productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proce ...

, and

profitability In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both Explicit co ...

. Its guidelines stipulate the activities and outcomes by which employees and teams are evaluated during

performance appraisal A performance appraisal, also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal, sometimes shortened to "PA", is a periodic and systematic process whereby the job performance of ...

. Many types of organizations use performance management systems (PMS) to evaluate themselves according to their targets, objectives, and goals; a research institute may use PMS to evaluate its success in reaching development targets. Complex performance drivers such as the societal contribution of research may be evaluated with other performance drivers, such as research commercialization and collaborations, in sectors like commercial agriculture. A research institute may implement data-driven, real-time PMS to address complex performance management challenges in a country developing its agricultural sector..

Werner Erhard Werner Hans Erhard (born John Paul Rosenberg; September 5, 1935) is an American lecturer known for founding est (offered from 1971 to 1984). In 1985, he replaced the est Training with a newly designed program, the Forum. Since 1991, the Forum ...

, Michael C. Jensen, and their colleagues developed a new approach to improving performance in organizations. Their work emphasizes how constraints imposed by one's worldview can impede cognitive abilities, and explores the source of performance which is inaccessible by cause-and-effect analysis. They say that a person's performance correlates with their work situation, and language (including what is said and unsaid in conversations) plays a major role. Performance is more likely to be improved when management understands how employees perceive the world and implementing changes which are compatible with that worldview.

Public-sector effects

In the public sector, the effects of performance-management systems have ranged from positive to negative; this suggests that differences among systems and the context in which they are implemented affect their success or failure.

How it can fail

Employees who question the fairness of a performance-management system or are overly competitive will affect its effectiveness; those who do not feel adequately rewarded become disgruntled with the process. Without proper system planning, employees may view it as mandating compliance.

Organizational development

organizational development Organization development (OD) is the study and implementation of practices, systems, and techniques that affect organizational change. The goal of which is to modify a group's/organization's performance and/or culture. The organizational chan ...

(OD), performance can be thought of as actual versus desired results; where actual results fall short of those desired is the performance-improvement zone.

Performance improvement Performance improvement is measuring the output of a particular business process or procedure, then modifying the process or procedure to increase the Output (economics), output, increase efficiency (economics), efficiency, or increase the effect ...

aims to close the gap between the two. Other organizational-development definitions differ slightly. According to the U.S. Office of Personnel Management (OPM), performance management is a system or process in which work is planned and expectations are set; performance of the work is monitored; staff ability to perform is developed; performance is rated and the ratings summarized, and top performance is rewarded.

Design and implementation

An organization-wide 360-degree feedback process integrated into the organization's culture can be a powerful tool for communicating and instituting change, rapidly touching all members of the organization when new markets, strategies, values and structures are introduced into the system. Each year, companies spend considerable money on their performance-management systems. For performance management to succeed, businesses must continue to adapt their system to correct current deficiencies. Some aspects, such as goal setting or performance bonuses, may resonate more with employees than others.

Outcomes

According to Richard et al. (2009), organizational-performance metrics encompass three outcomes: * Financial performance, such as profits, return on assets, and

return on investment Return on investment (ROI) or return on costs (ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favorab ...

* Product market performance, such as sales and

market share Market share is the percentage of the total revenue or sales in a Market (economics), market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those ...

* Total shareholder return,

economic value In economics, economic value is a measure of the benefit provided by a goods, good or service (economics), service to an Agent (economics), economic agent, and value for money represents an assessment of whether financial or other resources are ...

added, and similar

Organizational effectiveness Organizational effectiveness is a concept used to gauge how Effectiveness, effective organizations are at reaching intended outcome (probability), outcomes. Organizational effectiveness can be used to evaluate and improve organizational active cr ...

is a similar term.

Technology

Business performance management requires large organizations to collect and report large volumes of data. Software vendors, particularly those offering

business intelligence Business intelligence (BI) consists of strategies, methodologies, and technologies used by enterprises for data analysis and management of business information. Common functions of BI technologies include Financial reporting, reporting, online an ...

tools, offer products to assist in this process. BPM is often incorrectly understood as relying on software to work, and many definitions suggest software as essential to the approach. Interest in BPM by the software community may be sales-driven.

References

External links

* Plug-In T12 Business Process http://www.sci.brooklyn.cuny.edu/~firat/mis/PlugInT12.pdf * * Business Finance:
Bred Tough: The Best-of-Breed, 2009
' (July 2009)
Defining success through strategic planning and priority goal setting

The Balanced Scorecard

Organizational Performance Management
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