TAKING ACTION
The final step in developing an integrated performance management plan-taking action-sounds like an anticlimax, but it isn't. It is the organization's ultimate goal, and all of the organization's other functions and processes exist to ensure that employees are performing the right activities and have the necessary resources. These activities-- manufacturing products, performing services, serving customers-are the core of the company. They are why it exists.
A key purpose of performance management is to align the entire organization behind the goal of turning the strategic plan into effective action. Most companies have processes in place for planning, budgeting, and other critical management activities, but all too often these processes are not linked together or integrated throughout the organization. To a great extent, developing more effective performance management means identifying the disconnects and then creating linkages to bring the processes-and the organization-together.
Throughout this change process, it is critical that senior management lead the effort and make it clear that the changes will be implemented and that obstacles to change will be removed. It is also critical that management communicate its determination down through the entire organization. Communications should serve to inform employees, to involve them in the process, and ultimately to empower them to implement change-and to keep implementing change on an ongoing basis.
Are Rolling Forecasts a Panacea?
MYTH OR REALITY?
* Fewer than 20% of multinationals use them in some form
* Although about 65% of CFOs view rolling forecasts as very valuable, less than 15% use them extensively
* Of companies using rolling forecasts, five- or six-quarter forecasts are more prevalent than four-quarter ones
WHATS NEEDED TO MAKE IT WORK?
* A focus on fewer data elements and less information
* Cascading of firm top-down targets
* Effective and timely management reporting-typically, technology enabled
* Philosophical change on how to manage, view, and compensate performance
IS IT RIGHT FOR YOUR COMPANY?
* Unless planning, budgeting, and forecasting are already integrated, rolling forecasts may be more difficult to implement than a traditional process
* If a culture demands more information and is slow to react, rolling forecasts may not work
* A company faced with a highly dynamic external environment may be well suited for rolling forecasts
Author's note: Corporate experiences cited in this article are derived from Gunn Partners Performance Management Process Forums and Gunn Partners Best Practice Forums.
Article courtesy of YellowBrix, Inc.
About the author: Omar Aguilar is the finance and cost-management practice leader at Gunn Partners (
www.gunnpartners.com), a management consulting firm focused solely on improving the relevance and value of administrative and staff functions of Global 1,000 companies and supporting change initiatives championed by key staff executives. You can reach him at
oaguilar@unnpartners.com.
