Business performance management (BPM) (also known as corporate performance management (CPM)[2]enterprise performance management (EPM),[3][4]organizational performance management, or performance management) is a management approach which encompasses a set of processes and analytical tools to ensure that an organization's activities and output are aligned with its goals. BPM is associated with business process management,[5] 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.[6] 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.[7] BPM can involve outlining the role of each individual in an organization in terms of functions and responsibilities.[8]
History
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By 2017, Gartner 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.[9]
Definition and scope
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New technology realizes corporate strategic outcomes and describes risk-management programs.[10]
Application
Performance-management principles are used most often in the workplace and can be applied wherever people interact with their environments to produce desired effects, such as health settings.[11] How performance management is applied is important to get the most out of a group, and can improve day-to-day employee performance. It must not encourage internal competition, but teamwork, cooperation, and trust.[12]
Performance management aligns company goals with those of teams and employees to increase efficiency, productivity, and profitability.[13] Its guidelines stipulate the activities and outcomes by which employees and teams are evaluated during performance appraisal.[14] 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.[15] 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.[16][17] A research institute may use data-driven, real-time PMS to deal with complex performance-management challenges for a country developing its agricultural sector.[18][19]
Werner Erhard, 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.[20]
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.[21][22]
How it can fail
Employees managed by those with unclear expectations may erroneously think that they are performing well.
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.[23]
Organizational development
In organizational development (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 aims to close the gap between the two.[24]
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.[25]
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.[26] 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.[27]
Outcomes
According to Richard et al. (2009), organizational-performance metrics encompass three outcomes:[28]
Financial performance, such as profits, return on assets, and return on investment
Product market performance, such as sales and market share
Total shareholder return, economic value added, and similar
Business performance management requires large organizations to collect and report large volumes of data. Software vendors, particularly those offering business intelligence 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.[30] Interest in BPM by the software community may be sales-driven.[31][32]
^Mojdeh, Sana (2005-12-20). Technology-enabled Business Performance Management: Concept, Framework, and Technology(PDF). 3rd International Management Conference. pp. 1–9. Archived from the original(PDF) on 2011-07-22. Retrieved 2010-02-21. Confusion also arises because industry experts can not agree what to call BPM, let alone how to define it, META Group and IDC use the term 'Business Performance Management', Gartner Group prefers 'Corporate Performance Management', and others favor 'Enterprise Performance Management'.
^Zaffron, Logan, Steve, David (Feb 2009). Performance Management: The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life (1st ed.).{{cite book}}: CS1 maint: multiple names: authors list (link)
^"Performance". U.S. Office of Personnel Management. Retrieved 2019-02-28.
^Madden, Bartley J. (September 2014). Reconstructing Your Worldview. Learning What Works Inc. p. 99. ISBN978-0988596931.
^Nielsen, Poul A. 2014. "Performance Management, Managerial Authority, and Public Service Performance." Journal of Public Administration Research and Theory. 24(2):431–458.
^Gerrish, Ed. 2015. "The Impact of Performance Management on Performance in Public Organizations: A Meta-Analysis." Public Administration Review 76(1):48–66.
^Peacock, M., Stewart, E. B., & Belcourt, M. (2020). Managing Employee Performance. In Understanding human resources management: A Canadian perspective (pp. 211-239). Toronto: Nelson Education.
^Bracken, D., & Rose, D., "When does 360-degree feedback create behavior change? And how would we know it when it does?", Journal of Business and Psychology, 26(2), 183-192
^Richard, Pierre J.; Devinney, Timothy M.; Yip, George S.; Johnson, Gerry (2009-02-06). "Measuring Organizational Performance: Towards Methodological Best Practice". Journal of Management. 35 (3). SAGE Publications: 718–804. doi:10.1177/0149206308330560. ISSN0149-2063. S2CID143585204.
^Upadhaya, Bedanand; Munir, Rahat; Blount, Yvette (2014). "Association between performance measurement systems and organisational effectiveness". International Journal of Operations & Production Management. 34 (7). Emerald: 853–875. doi:10.1108/ijopm-02-2013-0091. ISSN0144-3577.
Business Intelligence and Performance Management: Theory, Systems, and Industrial Applications, P. Rausch, A. Sheta, A. Ayesh (Eds.), Springer Verlag U.K., 2013, ISBN978-1-4471-4865-4.
Performance Management - Integrating Strategy Execution, Methodologies, Risk, and Analytics. Gary Cokins, John Wiley & Sons, Inc. 2009. ISBN978-0-470-44998-1
Journal of Organizational Behavior Management, Routledge Taylor & Francis Group. Published quarterly. 2009.
Handbook of Organizational Performance, Thomas C. Mawhinney, William K. Redmon & Carl Merle Johnson. Routledge. 2001.
Improving Performance: How to Manage the White Space in the Organization Chart, Geary A. Rummler & Alan P. Brache. Jossey-Bass; 2nd edition. 1995.
Human Competence: Engineering Worthy Performance, Thomas F. Gilbert. Pfeiffer. 1996.
The Values-Based Safety Process: Improving Your Safety Culture with Behavior-Based Safety, Terry E. McSween. John Wiley & Sons. 1995.
Performance-based Instruction: Linking Training to Business Results, Dale Brethower & Karolyn Smalley. Pfeiffer; Har/Dis edition. 1998.
Handbook of Applied Behavior Analysis, John Austin & James E. Carr. Context Press. 2000.
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