REFERENCEBy David F. Carr | Posted 2003-08-13 Email Print
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"Corporate Performance Management"—how new can that be? Isn't that the basic charter of C-level executives? Yes, but now technology can help streamline the process.: Performance Improvement Cycle">
REFERENCE: Performance Improvement CycleCorporate Performance Management (CPM) is a formal term for the actions most successful companies are already taking. Below, we outline the distinct steps in the CPM life cycle.
Step 1: PlanDevelop strategy; establish metrics.
- Forecast Market to grow 2%; competitors likely to cut prices.
- Goal Grow market share by 5% without hurting profits or quality.
- Budget Reduced by 5% to enable competitive price cuts.
- Tactics Cut manufacturing costs by 9%.
- Metrics Market share, operating costs, manufacturing costs.
Step 2: ManageCreate goals for divisions; develop ways to meet them.
- Goal Reduce costs at factories.
- Programs Overtime Restriction; Early Quality-Assessment.
- Metrics Overtime at each factory, defect rate, cost per unit.
Step 3: MonitorAnalyze metrics using a methodology such as Six Sigma, Balanced Scorecard or Activity-Based Costing.
- Status Market share not growing due to slow growth of overall market.
- Outcome Overtime reduction beat plan in first quarter, but defect rate rose and customer satisfaction dipped.
Step 4: AdjustRevise strategy, goals, metrics, then move on to MANAGE.
- Revised Forecast Market to grow 1%.
- Goal Same-grow market share 5% without affecting profits or quality.
- Strategy Balance cost-cutting against quality, customer satisfaction.
- Tactics End restriction on overtime; allow more if necessary to restore product quality; put emphasis on reducing cost of materials.