Make a Difference with Agile Practices in Corporate Performance Management!
Corporate performance management is of critical importance in enhancing and sustaining the success of an organization. However, it is not limited to just evaluating and managing employee performance. It also provides a framework to assist the organization in achieving its strategic goals. This framework reflects the company’s vision, mission, and long-term objectives, and determines employees’ contributions to these goals. Corporate performance management serves as a guide for setting, monitoring, and achieving strategic objectives. Therefore, it is not just a function but a critical element that determines the overall success of the organization. In this article, we will explore the significance of corporate performance management and how agile corporate performance management differs from the traditional approach.
Corporate Performance Management and Strategic Objectives
Corporate performance management provides a roadmap for identifying and achieving the strategic objectives of an organization. Strategic objectives reflect the company’s long-term vision and mission and are established at all levels of the organization. These objectives are typically expressed in measurable and concrete terms, such as increasing market share, growing revenue, or reducing costs. The corporate performance management process identifies employee contributions necessary to achieve these strategic objectives and ensures focus on these goals.
The traditional approach to performance management typically relies on tracking annual goal achievements and lacks flexibility. Let’s consider an example of implementing a Balanced Scorecard (BSC). A company implementing BSC in a traditional manner focuses on defining the company’s strategic objectives within a specific time frame (usually one year) and then monitoring the process of achieving these objectives. For example, Company A, while creating a new strategic plan, identifies specific goals based on the financial, customer, internal business processes, and learning and growth perspectives:
- Finansal Perspective: Company A’s financial goal is to achieve a 10% increase in annual net income. This may include objectives related to annual revenue growth and profitability.
- Customer Perspective: Company A establishes customer-focused strategies to increase customer satisfaction. The goal in the customer perspective is to achieve at least a 90% satisfaction level in annual customer satisfaction surveys.
- Internal Business Processes Perspective: Company A focuses on internal business processes to enhance operational efficiency and reduce costs. The goal in this perspective is to achieve a 15% increase in productivity in production processes.
- Learning and Growth Perspective: Company A implements training and development programs to enhance employees’ skills and foster innovation. The goal in this perspective is to ensure that all employees participate in at least one training program annually.
Traditional performance management is usually a highly structured, formal process and uses a specific framework and methods to evaluate performance. This approach can make it difficult to flexibly adjust and update goals in a rapidly changing business environment.
Agile Practices in Corporate Performance Management
The agile approach offers a more flexible, faster and effective performance management process for determining, monitoring and achieving strategic goals. Flexible goals are set and the process of employees achieving goals is improved with a continuous feedback loop.
What can a company that recognizes the limitations of the traditional performance management approach and wants to adapt agile practices do differently?
In summary; Agile corporate performance management allows organizations to achieve their strategic goals more flexibly, quickly and effectively. Companies that recognize the limitations of traditional methods and adopt agile practices can make significant differences in gaining competitive advantage and adapting to the changing business environment. Agile practices such as setting flexible goals, employee participation and collaboration, value-oriented performance tracking, continuous improvement and learning allow companies to gain competitive advantage and sustain their success.
