Corporate performance management is one of the most important management functions in a corporation. It is all about measuring results, planning results and ultimately controlling results. In this article you will get to know a quick introduction to CPM.
Before we start off, let’s make something clear first. CPM is not all about managing and controlling profit margins, budgets and cash flows. It’s part of CPM, yes, but if you are only looking at the financial perspective you’re missing something out. Looking at financial results is looking at the internal perspective. You can conclude nothing from any vectors outside. You will innovate or anticipate when to adapt to a changing market.
An important, non financial activity for the Corporate Performance Management is managing the share holders. It’s important that shareholders interests are met to ensure the continuity of the business. No matter which perspective you choice, there are four primairy steps to take when applying Corporate Performance Management.
- Setting a norm
- Measuring the data
- Analyze the data according to the norm. If the norm is too far off, a redefinition of the norm might be required. This can be the case if a unrealistic norm is set due to lack of experience
- Analyze how to improve on the norm and take action based on this information.
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