Performance Management — that is, managing performance and results — is important because it:
- keeps you informed about how the business is doing
- supports decision-making
- helps implement strategy by actively involving the entire organization
Every company ultimately has the goal of making money, or more precisely, ensuring adequate returns over time for owners and stakeholders. To do this, it must combine effectiveness and efficiency — that is, doing the right things and doing them well.
- Doing the right things means aligning everyone in the company with the vision, mission, and values that guide every activity.
- Doing things well means maintaining a triple balance: economic, financial, and asset-related.
Naturally, achieving and maintaining this balance is complex, relying on a continuous cycle of planning, execution, monitoring, and adjustment. Ideally, companies would create an environment where information is shared and accessible, creativity and innovation are encouraged, governance is based on clear objectives, values, and boundaries, resources are available when and where needed, and control is based on key market and competitor-driven indicators rather than internal negotiation.
Clearly, adopting a proper performance management system allows constant monitoring of both financial and non-financial goals — such as customer satisfaction, number of complaints, or the percentage of orders shipped within X hours.
In short, it’s about organizing the company to navigate today’s turbulent, hyper-competitive markets and increase the chances of success. But how many companies do you really know that operate this way?
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