Eliyahu Goldratt, in his book, "The Haystack Syndrome," states:
"...Tell me how you measure me and I will tell you how I will behave. If you measure me in an illogical way... do not complain about illogical behavior..."
Performance measurement systems are not necessarily illogical; it is when the fundamentals that they are based on undergo a dramatic shift that the validity of the existing measurement system gets questioned. When the U.S. economy moved from a habitual 2-3% growth rate to a -4% drop, most organizations got caught on the wrong foot as their systems were not geared towards managing recessionary pressures. Suddenly cost and investment are no longer considered different.
Such sudden shifts in market conditions call for a structured approach towards re-establishing the organization's goal, re-defining the initiatives, re-planning of milestones, more focused monitoring, quicker interpretation of results and dedicated execution - all geared towards not only surviving today but also preparing for tomorrow's growth. And this needs to be done fast enough to react positively towards market fluctuations. The process that encapsulates such a mechanism is also known as
Enterprise Performance Management (EPM).
EPM as a whole is neither a one-time initiative nor is it a time-bound project. It is not about only implementing tools and technologies, though the right combination of tools and technologies act as an important facilitator for the success of EPM. It is more importantly about establishing a set of processes and policies that inculcates a performance oriented culture within the organization. After all tools have been implemented, processes established and policies enacted, it finally boils down to whether each employee believes that her actions have a direct bearing to her company's larger performance objectives.
Enterprise Performance Management -- An Execution Perspective
Enterprise Performance Management encapsulates the ability of the organization to establish the following process:
Figure 1: The Performance Management Cycle
Define Goals: Through the goal-setting exercise, the senior management clearly communicates, both internally and externally, the targets that they are attempting to achieve and hence the direction that is being set for the organization over a short, medium and long-term period. Let's consider a CPG firm ABC Ltd., dealing with Personal Care products, that has set up a goal of "
Increasing the Market Share in the Western Region by 10%"
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