The Importance of Performance Management

In an exclusive interview with Business Management, Frank Buytendijk explains how to survive and thrive in today’s tough market.

BM. In your book, Performance Leadership, you propose a different view on performance management. Can you tell us more about this?
Frank Buytendijk. Performance is all about motivation, dedication, teamwork and matters of the heart. Management is more associated with plans, control, accountability and matters of the mind. All we focus on in performance management are the matters of the mind. Performance management is a contradiction in terms. Performance Leadership is based on lessons in per¬sonal development that people should develop on four dimensions. The physical dimension is needed to stay healthy and have energy for the other dimensions. The mental dimension helps us get ahead: Where are we now, where do we want to be, how do we get there? The social/emotional dimension helps us to develop ourselves as balanced people, being an asset to our environment. The spiritual dimension, lastly, helps us to think about what we stand for. These same dimensions can be applied to organiza¬tions. The physical dimension compares to efficient day-to-day operations, to allow management to focus on improvement and innovation. The mental dimension dovetails with strategy, again asking: Where are you now, where do you want to be, how will you get there? For the social dimension, we need to examine where busi¬ness performance really comes from. How do we make sure that the value we add is not subtracted from somewhere else? Do we really add value or do we see business as a zero-sum game. Perhaps the most concrete of is the spiritual dimension, if we translate that to organizational values. Every organization has core values, attracts certain people, and has a certain culture, and that creates the actual drive of the organization. Performance Leadership describes how to address all four dimensions.

BM. One of the calls to action in your book is to encourage finance and IT leaders to look beyond reporting and decision support to drive business performance within the organization. Can you explain what that means?
FB. Traditionally, an organization is defined as a group of people with a common goal. But if you take a stakeholder view, they actually have very different goals. Customers want a good product for a reasonable price. Shareholders want maximum return. Employees need to pay the mortgage. I define an organization as a unique collaboration of stakeholders who, through that organization, reach goals and objectives that none of them could have reached by themselves. Eighty percent of decisions impacting your bottom line are taken outside the walls of the organization, in the wider performance network. Performance management is first and foremost about understanding the contributions of all stakeholders, and how to manage them. The business from the customers, skills and services from suppliers and partners. Regulators offer fair competition, shareholders offer capital, society supplies a business infrastructure. And you can only count on contributions if you also consider stakeholder requirements. This leads to entirely different performance management implementations, less aimed at internal control and more on stakeholder interaction. Now more than ever, we need to stick together, loners won’t survive.

BM. In today’s market, companies must do whatever they can to increase efficiency and maintain profitability. How does enterprise performance management technology help?
FB. Three imperatives for surviving and even thriving in today’s market. First, you need to enforce transparency, immediately. If you don’t have access to the right data about the market and your organization, you’re flying blind. The basis of performance management is a solid business intelligence foundation. Second, adopt rolling forecasts next to or instead of a traditional budget. Sticking to the plan is useless, you need to stick to reality that is changing every day. Lastly, use performance management to build or rebuild trust in your organization and in your market. Say what you do, and do what you say. Share critical information with all your stakeholders, through supplier scorecards, customer service levels, sustainability reporting or do like the New York City, posting all performance indicators on your website.

Frank Buytendijk, VP and Fellow for Oracle’s Enterprise Performance Management Global Business Unit, is a leading expert in business intelligence and performance management.  Before joining Oracle, Buytendijk was VP of research at Gartner. Buytendijk is also a Visiting Fellow at Cranfield University School of Management.