A structured business performance management cycle: the road to success?

Discover how a structured business performance management cycle led by the executive team can drive results, set the pace and empower your organization.

Executive summary

A structured business performance management culture fostered by the executive team through a structured performance review cycle will drive performance and set the pace across the organization. It is crucial for executive leadership to be clear about the need for discipline and commitment to performance whilst at the same time setting the pace and empowering the organization to drive results.

In today's challenging and rapidly changing business environment industrial companies are under increased pressure to meet a diverse set of stakeholder requirements. Challenges include ensuring stable and profitable growth whilst at the same time transforming the company to ensure it meets current and future changes in the business environment.

Industry issues and challenges

Executive teams are challenged to drive outcomes and ensure strategic focus and alignment across a range of functions. In doing so, it is crucial that the executive team sets the pace and demonstrates its commitment to achieving results. So, what can executive teams do to meet this challenge and how do they set the pace and drive results?

In our practice we find that a rigorously implemented, well executed and structured business performance management cycle, with hands-on involvement of the company's executive team (up and including CEO level), is a crucial and often under-appreciated tool for achieving the company's objectives.

Best practices for a structured business performance management cycle

Having worked with the best in the business and based on our assessment of high performing industrial companies we have identified the following best practices:

• Successful companies have implemented a structured performance business management cycle across all functions comprising weekly, monthly, quarterly and yearly reviews with mandatory attendance of all relevant stakeholders.
• They appoint executive level sponsors for each review meeting to drive commitment across the organization.
• They rigorously define roles and responsibilities of all participants in the performance review cycle.
• They use the yearly cycle to review and implement the company's strategic plan and translate this into challenging yet realistic tactical and operational plans. Ensure commitment to both strategic and lower-level plans across the organization.
• They use the quarterly cycle to review current performance versus budget and strategic plans and adjust tactical planning as necessary to drive results towards achieving the company's strategic objectives.
• They use the monthly cycle to review performance versus operations plans and take immediate corrective action to clear any hurdles towards achieving the plans in the here and now.
• They use the weekly cycle to ensure operations are on track towards achieving the monthly targets, to enhance forecast accuracy and drive a sense of urgency throughout the organization.
• Critically important: whilst executive management participates at all these levels to ensure ownership, they resist the temptation to micromanage. Best in class companies will make sure executive leadership systematically empowers the organization to own the problem and quickly find fixes.
• They design information systems that standardize reporting and enforce a signal number policy. Thus, improving data reliability and ensuring any diagnosis about the situation of the business is quick to grasp.
• Above all, they assign clear responsibilities for collecting and reporting relevant operation and financial data to all involved in a timely fashion.

This article was written by Erik Delnoij.