Effective Performance Management (PM) is among the top priorities for management teams, and is an important tool to operationalize and support the organization’s strategies and objectives. Our new management-level study at 20 Norwegian companies provides insights and input to companies in their work towards improving PM practices.
Capgemini’s definition: “PM is a structured approach to enhance the ability of companies and its employees to deliver on strategic objectives”
The study is based on Capgemini’s global framework, which ties together 5 key components of successful PM (as outlined in the Figure below).
Leadership and Governance:
One of the top drivers for PM is implementing strategy, while respondents indicate that the management team can improve in inspiring the organization and provide a clear vision. Companies that invest in communication and have engagement from the management team, achieve greater success in engaging the organization in implementing strategy.
Priorities and Measures:
There is an increased focus on risk management and its effects on performance. Many companies are struggling with the integration, but companies that have succeeded reports increased margins compared to their competitors.
Companies struggle with cascading KPIs further down from the corporate level. A lack of cascading can result in unclear and faulty priorities and a PM framework that fails to set directions throughout the organization.
Information and Insight
The study reveals that respondents experience limited access to critical information. The information presented lacks focus and does not reflect key business drivers. Respondents express that they can improve their decision-making process from ambition to action.
Processes and Systems
Capgemini experience that companies have invested in one or several BI/PM systems, but often the problem is not the system itself but how it is used. To achieve the expected business benefits, BI/PM investments need to be aligned with the overall strategy, and top management needs to be in the front seat related to implementation and establishing a performance culture.
Capabilities and Culture
Information and knowledge sharing is something all strive for and find difficult to succeed at. The study shows that companies invest in governance models and IT systems for knowledge sharing, but still struggle. As people are strong drivers of information and knowledge sharing, hence important to create and foster a culture of collaboration and teamwork.
The Capgemini framework represents a long term commitment to improvements in PM, and will ensure that development remains on track and is driven forward. Investing time and resources establishing a well-anchored PM framework ensure operationalization and implementation of the organization’s strategy and objectives. Potential benefits are:
- Increased strategic goal achievement
- Create a performance culture
- Improvements in risk management
- Increased sales and customer satisfaction
- Effective profitability analysis, predictive analysis and management reporting
- Increased focus on efficiency and reducing cost
- Robust foundation for decision making and planning
To achieve the benefits that PM can provide, a holistic approach and systematic improvements in all 5 components of the PM framework is key success criteria.