Power of Performance Management : How Leading Companies Create Sustained Value

by de Waal, André; A.

• ISBN13: 9780471383475
• ISBN10: 0471383473
• Edition: 1st
• Format: Hardcover
• Copyright: 2001-01-25
• Publisher: Wiley

Summary

A groundbreaking new approach to creating and delivering world-class shareholder value Creating the right performance management framework is the key to delivering sustained, world-class value. Under increasing pressure from shareholders to create sustained wealth, CFOs, CEOs, and controllers are desperate for new business planning methods that will help them meet constantly growing expectations. This book provides the framework for developing a strategic plan to develop world-class performance management capabilities. Numerous case studies and best practice examples help identify the key issues companies face in their drive to deliver and create value as well as the new role management must play in order to maximize performance management capabilities. The book also explores the various information technologies that support performance management.

Author Biography

ANDRé A. de WAAL is a partner with Arthur Andersen Consulting, the Netherlands. He has degrees in chemistry and business administration and is certified in pro-duction and inventory management. As a consultant, he has focused on projects including the selection and implemen-tation of production, logistic and financial software packages, cost analyses, and designing logistic concepts and information technology infrastructures. He most recently worked on a benchmark study for a Dutch multinational performed in Japan, Germany, and the United States. Mr. de Waal has published over twenty articles and five books on the topic of performance management.

Table of Contents

Introduction	1	(1)
World-Class Integrated Performance Management Process: The Benchmark	1	(3)
How to Use This Book	4	(1)
Notes	5	(2)
Challenges for Performance Management in the New Economy	7	(12)
On the Road to World-Class Performance Management	7	(3)
Importance of World-Class Performance Management	10	(5)
Performance Management Challenges	15	(4)
Establish a Consistent Responsibility Structure	19	(38)
Challenge of Consistency	19	(2)
Choose and Apply a Consistent Parenting Style	21	(4)
Choose and Apply a Consistent Parenting Structure	25	(5)
Set Strict Corporate Strategic Guidelines and Targets	30	(1)
Behavioral Implications of Consistency	31	(1)
Case: A Change in Parenting Style at AVR	31	(13)
Case: Practical Implications of Updating SVB's Parenting Style	44	(12)
Notes	56	(1)
Balance Long-Term and Short-Term Focus	57	(24)
Challenge of a Dual Focus	57	(2)
Split the Strategic Plan	59	(3)
Split the Forecast	62	(4)
Behavioral Implications	66	(1)
Case: Splitting the Strategic Focus at Emerson Electric Co.'s Copeland Corporation	67	(12)
Note	79	(2)
Make Value-Based Strategies Operational	81	(60)
Challenge of Value Thinking	81	(7)
Implement the Balanced Scorecard	88	(4)
Develop Critical Success Factor and Key Performance Indicators	92	(16)
Link Quality Frameworks with Performance Measurements	108	(3)
Focus on Value Creation	111	(6)
Behavioral Implications of Value Thinking	117	(1)
Case: Improving Value Thinking Worldwide at Sara Lee/DE	117	(23)
Notes	140	(1)
Embrace Information Transparency	141	(28)
Challenge of Transparency	141	(1)
Push-and-Pull Information: Management by Surfing Around	142	(4)
Create a Performance Management Portal	146	(2)
Standardize the Financial Data	148	(2)
Conduct Management Team Meetings in a Decision Room	150	(1)
Behavioral Implications of Information Transparency	151	(1)
Case: Creating a Performance Management Portal at Wakefield MDC	152	(9)
Case: Efficient Consolidation at Philips	161	(7)
Notes	168	(1)
Focus on What Is Truly Important	169	(32)
Challenge of Information Overload	169	(2)
Apply Budget Contingencies	171	(4)
Focus on Exceptions	175	(2)
Focus on Action Management	177	(1)
Concept of Return on Management	177	(3)
Vary the Timing and the Content of Performance Review Meetings	180	(2)
Raise the Frequency of Budgeting	182	(1)
Link Forecasting to Special Events	182	(1)
Behavioral Implications of Focusing	183	(1)
Case: Focusing on Performance Indicators at KLM Royal Dutch Airlines	184	(11)
Case: Limiting the Amount of Information at NEC	195	(5)
Notes	200	(1)
Enforce Performance-Driven Behavior	201	(58)
Challenge of the Right Behavior for Implementation	201	(1)
Align Individual Objectives with Strategic Objectives	202	(5)
Incentives Based on Contingencies	207	(1)
Link Time Horizons of Forecasting and Compensation	208	(1)
Use Synergy Indicators	209	(5)
Behavioral Implications of the Performance Orientation	214	(1)
Case: Aligning the Organization at Social Housing Association Het Oosten	215	(16)
Case: Introducing Synergy Indicators at Power Supply Inc.	231	(7)
Case: Stimulating Performance Behavior at Xerox	238	(12)
Case: Developing Synergy Indicators for The Clock	250	(7)
Notes	257	(2)
Balance Integration with Simplification	259	(24)
Challenge of Keeping It Simple	259	(1)
A Limited Set of Key Value Drivers Provides the Link	260	(2)
Integration of the Ideas	262	(1)
One Step Further: Beyond Budgeting	262	(12)
Case: Simple but Effective Performance Management at Business Systems Corporation	274	(6)
Notes	280	(3)
Implementing the Ideas	283	(22)
Getting It All to Work	283	(1)
Implementation Guidelines	283	(2)
Project Plan for Developing a Balanced Scorecard	285	(7)
Barriers to Change	292	(3)
Role of the Finance Function	295	(3)
Feasibility Analysis	298	(5)
Notes	303	(2)
Appendix: Management Information and Reporting Analysis	305	(16)
Index	321