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Employees need to know what actions to perform, the operating constraints and the outcomes that are expected from their activities.

To do this they need systems that inform them of their responsibilities and give immediate feedback on actions and the forecast situation.

Financial numbers will not convey this adequately as financial data is usually the result of a set of actions, not the cause.

Alongside the authority to manage resources to achieve goals, they need to be aware of any changes they make to the business environment or the activities of others that could impact their areas of responsibility. Users cannot operate in a vacuum.

Technology

From the above, traditional systems based on budget vs. actual reports are seen as woefully inadequate for managing performance.

Traditional ‘performance management’ systems are based on an accounting view of the organisation, rather than on managing activities that generate financial success.

These systems act more like a rear-view mirror as they tell you the results of what happened in the past but give little or no indication of what needs to happen to achieve strategic goals in the future.

Today’s performance management systems approach strategy as a moving ‘cause and effect’ picture based on actions.

They warn when actions are not being implemented or are unlikely to help realise high-level strategic goals.

Although these systems still produce the accounting based view of the world necessary for financial disclosure, they focus on the management of activities and resources to implement and achieve strategic success.

Chris Field is Performance Management Business Consulting Manager, UKIMEA, at Infor.

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Related links

• Infor