The recent resurfacing of the BI vs. PM controversy got me thinking about the longstanding confusion between financial, workforce, and IT performance management. When most people hear the term performance management, they think of what I might describe as human capital management. That is clearly different than budgeting, planning, and consolidation. The multiple uses of PM explain why we’ve started using the phrase “strategy management”.
So what is strategy management? Strategy management is the process of developing, articulating, and deploying an organization’s goals and objectives. Strategy management cascades goals and objectives throughout all levels of an organization to ensure that all outcomes are synchronized. Strategy management prioritizes an organization’s efforts so that it ensures that it is working on the highest impact activities. Strategy management may also monitor an organization’s process towards its objectives using key performance indicators.
That’s right, I said may. Monitoring progress using business intelligence or other data-centric technology is not required to increase an organization’s performance. The hackneyed phrase “what gets measured, gets done” is often not true. We’ve all read horror stories of how bad measures lead to bad behavior. Personally, I prefer the Einstein attributed quote “Not everything that counts can be counted and not everything that can be counted, counts.”
Said another way, strategy management helps every stakeholder understand an organization’s strategy and how they can impact it. With increased understanding comes increased motivation. Motivated employees are more productive which leads to higher organizational performance.
So before you start your financial, workforce, operational or IT performance management project, consider whether you need to manage your strategy first.