Business performance management is a critical part of planning, monitoring the growth and progress of any business. Constantly evaluating business processes to make improvements that are more efficient in terms of both costs and achieving business goals.
Ever even heard of it? This is a huge growing market for business improvement that you can’t ignore. The business and enterprise business performance market is growing so fast and is expected to grow from USD 7.28 billion in 2018 to USD 11.72 billion by 2023.
What are the major factors driving this growth the desire to reduce operational costs, wanting to improve overall business performance, embracing a more data-driven decision-making process and making business strategies transparent to everyone within the business?
The simple reason why you need to start looking at business performance is once you measure performance against the business goals you can identify and lower process costs, improve productivity, efficiency and overall effectiveness.
What is Business performance?
Business Performance Management (BPM), otherwise known as Corporate Performance Management or Enterprise Performance Management, is an initiative to align strategic objectives with all business activities, with an overall goal to manage business performance with increased efficiency and productivity.
Although sometimes confused with business intelligence (BI), BPM goes much further than that of its analytical sister (BI), cementing the notion of continuous improvement deep into the heart of business culture, making for a robust – yet flexible – business structure that continuously looks to better itself.
Business Intelligence vs Business Performance Management
Business intelligence (BI) – is the practice of collating, analysing and presenting data. Approaching from the bottom up, BI uses data collection to transform findings into data that can be utilised for meaningful management. For example, looking back at historical records of enterprise activities (such as supply chain management) to find an explanation as to why an event occurred i.e.negative publicity.
Business Performance Management, however, is much more than data analysis and using records to find out why, it’s operational too. Taking a top-down, strategic approach, BPM uses key measures (such as OKR, KPIs and performance appraisals) to assess performance, set goals, develop knowledge, establish plans of action and put into practice improved processes. It’s simply not business as usual, it’s about continuous improvement, and ensuring that BPM is revisited at frequent intervals throughout the year.
Should I be using both business intelligence and Business Performance Management?
Of course!
The more successful companies will use both BI and BPM to operate efficiently, as both have useful implications for businesses.
Whilst BI is used to ensure companies can identify the root cause of a problem, BPM will help determine key areas of improvement, and thus the strategic goals to drive the company nearer to its goals.
Business Performance Management Cycle
When we talk about continuous improvement of performance, following a cyclic process makes perfect sense.
Much like the Plan-Do-Check-Act cycle, the components that make up the Business Performance Management Cycle are interdependent of each other. In other words, changes in one area affect another; and so the framework should be viewed as a whole.
Think of it like spices and herbs added to your favourite dish – the different flavours are dependent on one another to ensure the taste is just right (like dill and lemon juice, rosemary and black pepper, and garlic with well… anything).
Let’s have a look at the separate components of the cycle:
Planning
Like every worthy business process, planning is an integral starting point. This is where you’ll roadmap the way to reaching your goals (using the SMART method of course).
As well as the overall strategy and goal-setting for the organisation, personal and team goals will be determined at this stage too. This will include specific tasks, actions, behaviours and targets – all produced in line with organisational objectives.
When management teams later come to discuss individual and team goals with employees, the approach to developing a strategy is a collaborative one, and the Manager has the opportunity to explain why these specific goals have been set.
Better understanding = higher investment in completion.
An additional option here is to provide each employee with a tailored development plan, demonstrating to the employee that the company is invested in them too. This is something that can play an enormous part in an employee feel valued by their employer, leading to a higher employee retention rate.
Monitoring
To reach optimum levels of effectiveness, management should arrange to meet employees on a quarterly basis – at the very least.
With the continual shift of organisational goals, meeting often allows for changes to be fed down to the employees more frequently, whilst also giving both parties the opportunity to check progress and solve problems that may have arisen. Additionally, with SMART goals requiring tasks to be divided into small, manageable steps, frequent meetings allow for management to oversee the separate steps in closer detail.
Reviewing
Reviewing happens at the end of the year to see if goals were met. This is where praises can be sung, and/or concerns raised on performance issues – hopefully, it’s the former!
This is yet another opportunity for the management to build collaboration with employees, as questions are answered together (input should be from both sides). Example questions include: was the original goal realistic? Were useful experience or skills gained by the employee? How could future goals be set differently?
This is also where the mention of bonuses and incentives may also come into play…
Rewarding
The final component before we set off back around the cycle is the reward stage – an essential part of the BPM cycle.
After giving a full year of effort into achieving organisational goals, an employee requires a reward to commemorate their efforts. Without this, it is highly likely they will lose motivation going into the next year, which may mean they turn their back on the organisation altogether.
Rewards could be a variety of things, depending on the type of organisation and their capacity. Bonuses in some organisations would be fitting, whereas in others a company-wide acknowledgement would do better. Increased holidays, special projects, or an increase in compensation are all possibilities too.
Whatever you do, don’t skip this step!
And this is where the cycle begins anew…
Why Business Performance Management?
Business performance management is a very broad concept, but it enables you to analyse goals and help a business to save on operational costs while improving profit at the same time.
Business performance management is used to improve the performance of personnel and management.
As you can see from the cycle, BPM is extremely employee-focused. Followed correctly, the employee has an undivided opportunity to develop their skills and abilities, which in turn creates greater job satisfaction and leads to higher employee retention.
Not only this, the organisation has the opportunity to revisit its structural goals on a regular basis, allowing for a quicker response to market changes. Being flexible allows for active competition in the game – the game which is continuously changing. Alongside a concrete method of monitoring, the organisation can be safe in the knowledge that their goals are being driven forward in the directions they wish – spanning the entirety of the business.
Tracking Business Performance Metrics
Business and Enterprise performance management software in many different varieties available.
From helping with project management to helping teams stay organised, on time and manage time effectively, tracking budgets, and internal business support portals like CRMs help your team manage customers and sales processes.
Sometimes we forget one additional really important part of the performance cycle.
Every team member has tasks, processes and procedures to perform their job to the best possible standard.
Do you know how well your team is carrying out their everyday tasks? How do you know steps are not being missed or shortcuts are taken? Are your SOPs being followed? How are you tackling reducing human error? You need to think about using business process management software.
Checkify is a superpowered checklist software for business process management allowing you to create checklists to follow enforce accountability.
Documenting standard operating procedures as a checklist inside Checkify allows you to create a central repository where everyone can see exactly how a task should be completed to get the best possible results.
Everyone can run checklists from the process templates library. This allows tracking of every time a process is used and display their progress real time.
In other words, everyone has access to detailed step by step instructions of every task, process and standard operating procedure within the business to follow. Track their progress real-time as they work through the steps and tick tasks off as they go.