Business performance management

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Organizational performance and its types. Organizational Performance.jpg
Organizational performance and its types.

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. BMP is associated with business process management, [5] a larger framework managing organizational processes.

Contents

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

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

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. Animal job interview.jpg
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]

Organizational effectiveness [29] is a similar term.

Technology

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]

See also

Related Research Articles

Organizational learning is the process of creating, retaining, and transferring knowledge within an organization. An organization improves over time as it gains experience. From this experience, it is able to create knowledge. This knowledge is broad, covering any topic that could better an organization. Examples may include ways to increase production efficiency or to develop beneficial investor relations. Knowledge is created at four different units: individual, group, organizational, and inter organizational.

A performance appraisal, also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal, sometimes shortened to "PA", is a periodic and systematic process whereby the job performance of an employee is documented and evaluated. This is done after employees are trained about work and settle into their jobs. Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations.

<span class="mw-page-title-main">Knowledge transfer</span> Sharing knowledge for problem solving

Knowledge transfer is the sharing or disseminating of knowledge and the providing of inputs to problem solving. In organizational theory, knowledge transfer is the practical problem of transferring knowledge from one part of the organization to another. Like knowledge management, knowledge transfer seeks to organize, create, capture or distribute knowledge and ensure its availability for future users. It is considered to be more than just a communication problem. If it were merely that, then a memorandum, an e-mail or a meeting would accomplish the knowledge transfer. Knowledge transfer is more complex because:

<span class="mw-page-title-main">Job satisfaction</span> Attitude of a person towards work

Job satisfaction, employee satisfaction or work satisfaction is a measure of workers' contentment with their job, whether they like the job or individual aspects or facets of jobs, such as nature of work or supervision. Job satisfaction can be measured in cognitive (evaluative), affective, and behavioral components. Researchers have also noted that job satisfaction measures vary in the extent to which they measure feelings about the job. or cognitions about the job.

Goal setting involves the development of an action plan designed in order to motivate and guide a person or group toward a goal. Goals are more deliberate than desires and momentary intentions. Therefore, setting goals means that a person has committed thought, emotion, and behavior towards attaining the goal. In doing so, the goal setter has established a desired future state which differs from their current state thus creating a mismatch which in turn spurs future actions. Goal setting can be guided by goal-setting criteria such as SMART criteria. Goal setting is a major component of personal-development and management literature. Studies by Edwin A. Locke and his colleagues, most notably, Gary Latham have shown that more specific and ambitious goals lead to more performance improvement than easy or general goals. The goals should be specific, time constrained and difficult. Vague goals reduce limited attention resources. Unrealistically short time limits intensify the difficulty of the goal outside the intentional level and disproportionate time limits are not encouraging. Difficult goals should be set ideally at the 90th percentile of performance,assuming that motivation and not ability is limiting attainment of that level of performance. As long as the person accepts the goal, has the ability to attain it, and does not have conflicting goals, there is a positive linear relationship between goal difficulty and task performance.

<span class="mw-page-title-main">Performance indicator</span> Measurement that evaluates the success of an organization

A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity in which it engages. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.

<span class="mw-page-title-main">Business analyst</span> Person who analyses and documents a business

A business analyst (BA) is a person who processes, interprets and documents business processes, products, services and software through analysis of data. The role of a business analyst is to ensure business efficiency increases through their knowledge of both IT and business function.

Conflict management is the process of limiting the negative aspects of conflict while increasing the positive aspects of conflict. The aim of conflict management is to enhance learning and group outcomes, including effectiveness or performance in an organizational setting. Properly managed conflict can improve group outcomes.

Competence is the set of demonstrable characteristics and skills that enable and improve the efficiency or performance of a job. Competency is a series of knowledge, abilities, skills, experiences and behaviors, which leads to effective performance in an individual's activities. Competency is measurable and can be developed through training.

<span class="mw-page-title-main">Performance measurement</span> Process of collecting, analyzing and/or reporting information regarding performance

Performance measurement is the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component.

Greenberg (1987) introduced the concept of organizational justice with regard to how an employee judges the behavior of the organization and the employee's resulting attitude and behaviour. For example, if a firm makes redundant half of the workers, an employee may feel a sense of injustice with a resulting change in attitude and a drop in productivity.

BSC SWOT, or the Balanced Scorecard SWOT analysis, was introduced in 2001, by Lennart Norberg and Terry Brown.

Organizational behavior management (OBM) is a subdiscipline of applied behavior analysis (ABA), which is the application of behavior analytic principles and contingency management techniques to change behavior in organizational settings. Through these principles and assessment of behavior, OBM seeks to analyze and employ antecedent, influencing actions of an individual before the action occurs, and consequence, what happens as a result of someone's actions, interventions which influence behaviors linked to the mission and key objectives of the organization and its workers. Such interventions have proven effective through research in improving common organizational areas including employee productivity, delivery of feedback, safety, and overall morale of said organization.

Talent management (TM) is the anticipation of required human capital for an organization and the planning to meet those needs. The field has been growing in significance and gaining interest among practitioners as well as in the scholarly debate over the past 10 years, particularly after McKinsey's 1997 research and the 2001 book on The War for Talent. Michaels, Ed; Handfield-Jones, Helen; Axelrod, Beth (2001). The War for Talent. Harvard Business Press. ISBN 9781578514595. Talent management in this context does not refer to the management of entertainers. Talent management is the science of using strategic human resource planning to improve business value and to make it possible for companies and organizations to reach their goals. Everything done to recruit, retain, develop, reward and make people perform forms a part of talent management as well as strategic workforce planning. A talent-management strategy should link to business strategy and to local context to function more appropriately

Training and development involve improving the effectiveness of organizations and the individuals and teams within them. Training may be viewed as related to immediate changes in organizational effectiveness via organized instruction, while development is related to the progress of longer-term organizational and employee goals. While training and development technically have differing definitions, the two are oftentimes used interchangeably and/or together. Training and development have historically been topics within adult education and applied psychology but have within the last two decades become closely associated with human resources management, talent management, human resources development, instructional design, human factors, and knowledge management.

Business process management (BPM) is the discipline in which people use various methods to discover, model, analyze, measure, improve, optimize, and automate business processes. Any combination of methods used to manage a company's business processes is BPM. Processes can be structured and repeatable or unstructured and variable. Though not required, enabling technologies are often used with BPM.

Personnel psychology is a subfield of industrial and organizational (I-O) psychology. Personnel psychology is the area of I-O psychology that primarily deals with the recruitment, selection and evaluation of personnel, and with other job aspects such as morale, job satisfaction, and relationships between managers and workers in the workplace. It is the field of study that concentrates on the selection and evaluation of employees; this area of psychology deals with job analysis and defines and measures job performance, performance appraisal, employment testing, employment interviews, personnel selection and employee training, and human factors and ergonomics.

Reward management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization.

Responsible Research and Innovation (RRI) is a term used by the European Union's Framework Programmes to describe scientific research and technological development processes that take into account effects and potential impacts on the environment and society. It gained visibility around the year 2010, arising from predecessors including "ELSA" studies prompted by the Human Genome Project. Various slightly different definitions of RRI emerged, but all of them agree that societal challenges should be a primary focus of scientific research, and moreover they agree upon the methods by which that goal should be achieved. RRI involves holding research to high ethical standards, ensuring gender equality in the scientific community, investing policy-makers with the responsibility to avoid harmful effects of innovation, engaging the communities affected by innovation and ensuring that they have the knowledge necessary to understand the implications by furthering science education and Open Access. Organizations that adopted the RRI terminology include the Engineering and Physical Sciences Research Council.

Personal initiative (PI) is self-starting and proactive behavior that overcomes barriers to achieve a goal. The concept was developed by Michael Frese and coworkers in the 1990s.

References

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Further reading