Performance Measurement and Management
A time-proven management assumption claims that you can not manage what you can not measure. Regrettably, a number of companies still resort to only financial indicators for the assessment of their activities, limitations of which are widely known and criticised.
Financial indicators are based on historical information and reflect only one aspect of the implementation of the company's operational strategy.
Whereas other essential elements, such as clients, stakeholders, process efficiency, growth and development, employees, are left behind the system of performance assessment and management, although, usually they are the driving forces for the company’s success (financial as well) in the future.
One-sided orientation towards financial indicators prevents the company from understanding factors which determine its operating results and timely responding to a changing environment. It also fails to ensure the quality of management solutions and the strategy-focused motivation system.
Challenges faced by organisations
Solutions offered by PwC
- Description of the operational strategy of the organisation is not exhaustive and it is not communicated to different levels of the organisation.
- Interconnection between a strategic and operational planning is not distinct, higher and lower-level objectives are not logically linked.
- Operational performance indicators are not sufficiently linked with the organisation’s operational strategy and do not reflect its underlying provisions.
- Establishment and calculation of operational performance indicators are performed on a non-systematic basis and they are not regularly assessed.
- Managers and employees cannot give definite explanations about the connection between their activities and the strategy of the organisation and criteria used for the evaluation of their efforts.
- Assistance in developing the operational strategy and preparing the system of strategic objectives using the balanced scorecard methodology—a strategy map.
- Development and implementation of the system intended to measure and manage results of the combined activity of the organisation.
- Establishment of operational performance indicators for different levels of the organisation’s objectives.
- Assistance in drafting requirements applicable in choosing and implementing the IT solution designed to calculate and manage operational performance indicators.