Corporate Performance Management - ' REFERENCE'

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Corporate 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.

Develop 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.

Create 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.

Analyze 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.

Revise 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.

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