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No matter what business you are in, performance is the name of the game. In the past, the accountant was the person responsible for all of the financial activity of a business, regularly churning out vast quantities of numbers and figures that only accountants could understand and which may have been out of date by the time they were deciphered for the non-accountant.

However, gone are the days of the accountant and senior management being the only people in an organisation required to understand the business position and related financial information. This is now a multidisciplinary effort.

Most Irish organisations develop annual plans, budgets and strategies. However, there is one underlying problem with many of these planning exercises - they are not always linked with activities and initiatives that drive value into the business. The message to the business is normally diluted and misunderstood by the people who need to drive the change to support these planning activities.

So what is the solution? Over the last number of years people have started to develop reports that are accessed daily, weekly or monthly to look back at the performance of the business and annual or rolling plans to look forward. The solutions to support these activities are often developed remotely from each other - a mistake that creates the gulf that cannot then be brought back together. Integrated Performance Management (IPM) combines strategic planning and budgeting, reporting and performance measurement, organisational alignment and compensation- replacing a jumble of disconnected processes and reports with a single version of the truth that decision-makers can use to do their jobs better. A well-executed IPM program will help articulate complicated strategy and provide clear focus to those individuals who are most influential in driving success where it counts.

During the past decade, companies have spent heavily on Enterprise Resource Planning (ERP) and other integrated systems to improve their performance. These solutions now produce vast amounts of transactional data, but yet many companies still don't have the information needed to make critical business decisions.

The problem is a lack of meaningful, timely, and useful information, coupled with the absence of consistent processes to enable better decision-making. In addition, many current performance management systems are backward focused and do not help with one of the primary challenges facing businesses today - how to execute and understand competitive strategies.

MANAGEMENT ROLE

Management need to be involved to develop and communicate strategies, drive accountability, improve decision quality, and realise the benefits of measurable performance improvement. There are a number of considerations that should be taken on board to make this critical process an ongoing success:

Communicate strategic imperatives in a uniform voice It is the primary responsibility of the executive team to set a strategy for their organisation and focus resources on execution. IPM is a vital component of successful strategy execution, helping to identify and communicate those actions and measures that drive value. An IPM programme provides the guidance to move from strategy to execution in a clear, focused and efficient manner.

Measure what matters. Companies often focus on performance measures that are abstract and disconnected from day-to-day operations. They might mean something to top executives, but to everyone else, they're just numbers on a page. Employees at every level need something meaningful and directly related to the work they do. Focusing on performance management will help you to break down complex strategy into simple, specific metrics. This is necessary in order to monitor ongoing performance, evaluate targets and communicate progress to key stakeholders.

Present a single version of the truth. Companies tend to have too many reports that offer too little insight. Each group has its own favourite reports based on non-standard performance measures that prevent apples-to-apples comparisons across the company. What decision-makers really need is accurate, reliable data that is handled consistently across the entire enterprise. To make that happen, create a "performance accountable organisation" that works to improve the quality of information necessary to evaluate performance, without the haze and confusion of legacy reporting environments.

Ground plans in reality Most forecasts and budgets contain so much padding and go through so many levels of revision that in the end they're barely recognisable. Many strategic plans are based on data that has little to do with real-world operations. The result is a questionable plan that managers spend most of their time working around. A more efficient approach is to use your strategy and key performance indicators to develop budgets and planning models that are based on operational data. Use IPM to implement a collaborative planning process that integrates strategy, finance, and operations.

Bring high-level targets down to earth Performance measures are supposed to give a company direction and focus. But if employees can't relate the high-level measures to their daily activities, they may simply ignore them. The key to success is tying a company's overall strategy and goals to detailed performance metrics that are clear at all levels. To reach more realistic targets, design target setting processes that are truly integrated - targets for new product launches should connect with estimates of new sales and make sense for production planning.

Reward and recognise people Many companies hesitate to reward employees when overall financial performance is poor - even when an individual does a great job. But when people perform the way you want them to, rewarding them for a job well done is the best way to drive continued performance. Integrating incentive compensation, recognition and rewards into the overall process of performance management helps ensure employees are being motivated to do what you want them to do. IPM makes it easier to design and implement reward programs that make sense in the context of your strategic objectives.

THE LEADING TEAM As can be gathered this is not a straightforward process that can be achieved immediately. However, its success can greatly depend on the leading team. This team should:

4Be cross-functional. There is a large input required from the entire organisation and this should be understood from the start.

4Pick the owner with care. In a lot of cases the finance department should not be the owner of this project.

4Understand that it is not an IT project. The IT element of this project may be a large element of the project, but should not be the driver of the project. The solution or an existing or an existing company solution may exist to support the project to enable the IPM goals.

4Don't try and build Rome in a day. It may take time, however, gaining confidence and buy-in with the process and ensuring that there is cross-functional involvement for the early adopted performance measurements.

4Don't use IPM as another stick. A well-defined IPM solution should support the goals of all in the business and not be seen as another management stick in the business

4Keep it simple. Keep reports simple and intuitive with access easily obtainable by the user. Users should be fully trained to understand the impact of their actions on the performance measures that they are "involved" in.

4A single point is best. There should be a single point for all users to obtain the organisation's IPM. This should be available to employees who are on site or on the road through a web front end or through handhelds.

4Stay flexible. The solution should remain flexible to support any changes in the business environment while ensuring that there is clarity for the users in understanding any changes. Define the standards carefully at the start to minimise any initial changes.



Organisations should view IPM as an evolutionary process. During the 1990s, many companies invested massive amounts of money on their IT infrastructures and base transaction processing systems (for example, ERP) in addition to process re-design initiatives. These investments often failed to provide as much management information as had been desired. However, ERP packages have created a fundamental base of transactional data that provides the sort of robust data necessary for the IPM framework to work. The next step in this evolution is to focus on the management processes themselves. IPM has come of age.

Therefore, the IPM phase of the evolution is focused on management processes and information as opposed to purely backend efficiencies and data. IPM leverages the earlier ERP investments as opposed to duplicating them. IPM initiatives are relatively small compared to ERP implementations and have the potential to unlock a great deal of value. In other words, most of the heavy lifting has already been done and companies can now look to significantly improve their management capabilities with relatively small and focused IPM project investment.