Corporate Performance Management

What Is Corporate Performance Management (CPM)?

Corporate performance management (CPM) is a tool corporations utilize to create organizational strategies via data analysis, prescribed methodologies, reporting, and processing to track and manage the organization’s performance. It offers an integrated approach to budgeting, forecasting, and business planning for finance, marketing, sales, and human resources.

CPM enables companies to comprehensively analyze their goals, operations, successes, and setbacks. Moreover, by using CPM practices, corporations can enhance the function of multiple business areas. Generally, it has three core areas – metrics, processes, and strategy. It uses dependable metrics to help organizations increase revenue and boost profits.

• Corporate performance management refers to a process that involves corporations coming up with new strategies that can enhance business performance. The procedure allows corporations to align their goals and strategies to their executions and plans to control their success. 
• The human performance management process focuses on employees, whereas CPM does not.
• There are various benefits of corporate performance management. For example, it can provide corporations with useful insights that help businesses evaluate specific strategies’ viability. Moreover, it can enable corporations to improve their financial health.
• Two popular frameworks incorporated when performing the CPM process are Six Sigma and BSC.

Corporate Performance Management Explained

Corporate performance management refers to the systems, strategies, methods, and other procedures utilized to manage and analyze the business performance of a corporation. This tool allows companies to utilize tested and proven processes and techniques to improve business management. Senior executives and leadership teams often utilize information sourced from CPM practices to define and execute management strategies.

There are three core areas in CPM. Let us look at them in detail.

• Metrics: This concept incorporates some key performance indicators or KPIs to assist leaders in assessing their strategies’ success. A few crucial CPM metrics include acquisition costs, customer retention, conversion budget, employee retention, sales growth, and gross margin.
• Strategy: It includes the methodologies a company’s leaders utilize to define the management approach.
• Processes: CPM involves looking at the processes carried out by an organization and evaluating how it handles its production activities, business practices, and employees.

The information used to create CPM metrics is sourced from a corporation’s books of accounts, including income statements and balance sheets. Individuals must note that there may be other sources, too, like forecasting and budgeting data, which include reports, for example, inventory, revenues, and expenses. In the case of this concept, the main aim is to offer insights utilizing procedures like scenario analysis, data reporting, financial planning, and more.

One must remember that CPM is not a strategy. Rather, it is a collection of multiple intelligent business tools managers utilize to gauge their corporation’s performance. Hence, companies must install feasible frameworks to ensure actual performance management.

Some common frameworks are:

• EFQM Excellence Model
• Six Sigma
• Balance scorecards
• KPIs

Process Steps

The corporate performance management process involves the following steps:

#1 - Identify The Goals

The first step involves establishing the corporation’s performance expectations and goals. It can help select dependable KPIs that can improve the goals. Moreover, it can help align departments, such as finance, sales, and risk management, toward the company’s mission.

#2 - Select A Software

With the company’s objectives in mind, consider identifying which software best suits the organization’s requirements. Moreover, one must ensure that the chosen software can provide useful data and record certain KPIs useful to the organization.

Although using software isn’t mandatory for CPM, it can help in integrating results, offer valuable insights, and produce estimates. The software also provides corporations with a single source of information, which streamlines the analysis and reporting process.

#3 - Incorporate A Framework

CPM frameworks can help a company’s leaders to make the company’s strategies focused, strategically align the business areas with the set goals, and make informed organizational decisions. Some popular frameworks include Six Sigma and balanced scorecards or BSC.

#4 - Communicate Expectations

One must remember that communicating the plans across a corporation is crucial to align the business areas and assist all individuals within the organization to understand the importance of the efforts. By sharing goals, performance, and expectations, companies can ensure that every stakeholder supports the proposed strategies.

#5 - Accumulate And Analyze Data

In the last step of the corporate performance management process, individuals must utilize a preferred strategy or software solution to accumulate data on the KPIs. Then, they must create reporting procedures that help in understanding the current operations and enable them to view their strategies’ successes. This can help compare the actual results with the formalized expectations.

Utilizing the framework and results, assess the strategies and processes’ success. Moreover, use the business management tools for identifying optimization opportunities.

Examples

Let us look at a few corporate performance management examples to understand the concept better.

Example #1

Wolters Kluwer, a worldwide leader in software solutions, professional information, and services, announced on August 17, 2023., Mengxiang Technology chose CCH Tagetik CPM software to provide support to its detailed budget management requirements. A consulting firm named HFGR was selected to be the execution partner for the project. The award-winning corporate performance management will help Menxiang’s finance management to –

• Deliver financial management procedures that are more efficient.
• Concentrate on strategic goals.
• Ensure the standardization of the budget model for achieving fast consolidation of budgeting across different departments to allow for bottom-up and top-down operations.
• Prepare a comprehensive budget online, etc.

Example #2

Suppose the leadership team of Company ABC was not satisfied with the business performance. It decided to utilize the corporate performance management process. It enabled the business to perform a detailed analysis of its operations, successes, goals, and setbacks and formulate new strategies that could help it improve its performance.

 As part of the process, the company identified its goals, selected the best-suited CPM software, and incorporated a Six Sigma framework. As a result of using this process, Company ABC delivered a significantly improved performance in the next financial year.

Benefits

The benefits of corporate performance management are as follows:

• The insights offered by CPM can be extremely useful. The results can tell corporations a lot regarding the current performance. Moreover, they can help businesses gauge specific strategies’ viability.
• CPM enables corporations to formulate effective strategies by aligning every business area. Such strategies can support the entire business’s long-term objectives.
• This process helps businesses align around the strategic priorities. Corporations can combine the CPM efforts with risk management processes and supply chain management (SCM). When the three areas of the organizations work together, businesses can align the goals, operations, and metric tracking techniques to formulate actionable strategies for the business and optimize the organizational practices.
• Many companies utilize CPM reporting to assess budgets and find ways to minimize the operational costs. Through the upgradation of the financial planning procedures to include CPM, organizations can adopt a systematic and streamlined approach toward finance management.

Corporate Performance Management vs Enterprise Performance Management vs Human Performance Management

The concepts of CPM, enterprise performance management, and human performance management can be confusing for individuals new to the world of finance. To avoid confusion and fully understand their purpose and meaning, one can look at their critical differences highlighted in the table below.

Corporate Performance Management	Enterprise Performance Management	Human Performance Management
CPM is a process that involves using metrics all over a business, typically focused on financial health.	Enterprise performance management refers to the procedure of tracking performance across an enterprise to improve the performance of the business. It extends from finance and includes marketing, supply chains, sales, and other departments.	It is a subdivision of human resources seeking to enhance employee satisfaction, operational capability, and productivity.
CPM does not refer to or outline employees,	It does not focus on employees. Moreover, unlike CPM, it may be used in a non-corporate environment.	Unlike CPM, it is focused on employees.

Frequently Asked Questions (FAQs)

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