Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics: 21 (Wiley and SAS Business Series) - Hardcover

Cokins, Gary

Hardcover

ISBN 10: 0470449985 ISBN 13: 9780470449981

Publisher: Wiley, 2009

Synopsis

Praise for Praise for Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics

"A highly accessible collection of essays on contemporary thinking in performance management. Readers will get excellent overviews on the Balanced Scorecard, strategy maps, incentives, management accounting, activity-based costing, customer lifetime value, and sustainable shareholder value creation."
―Robert S. Kaplan, Harvard Business School; coauthor of The Balanced Scorecard: Translating Strategy into Action, The Execution Premium, and many other books

"Gary Cokins demonstrates in this book that performance management is not a mysterious black art, but a structured, process-oriented discipline. If you want your performance management system to be a smoothly running analytical machine, read and apply the ideas in this book―it's all you need."
―Thomas H. Davenport, President's Distinguished Professor of Information Technology and Management, Babson College; coauthor of Competing on Analytics: The New Science of Winning

"Drawing on a deep reservoir of knowledge and experience gained from hundreds of customer engagements around the world, Gary Cokins offers an authoritative examination of the major dimensions of performance management. Cokins not only paints a rich and textured view of the major principles and concepts driving performance management implementations, he offers a nuanced look at the important subtleties that can spell the difference between success and failure. This is an informative and enjoyable text to read!"
―Wayne Eckerson, Director of Research, The Data Warehouse Institute (TDWI); author of Performance Dashboards: Measuring, Monitoring, and Managing Your Business

"[In this] very insightful book, the view of an integrated performance management framework with a goal to link various operational activities with business strategy is an excellent approach to manage and improve business. Gary's explanation of risk-based performance management, for providing the capability to achieve long-term objectives with reliably calculated risks, is definitely thought provoking."
―Srini Pallia, Global Head and Vice President of Business Technology Services, Wipro Technologies, Bangalore, India

"Gary Cokins is clearly one of the world's thought leaders in the area of performance management, and the need for integrated performance management, improvement and execution is clearly at a premium in these challenging economic times. This book is a must read for CEOs, CFOs, and management accountants around the globe seeking higher levels of sustainable business performance for their stakeholders."
―Jeffrey C. Thomson, President and CEO, Institute of Management Accountants

About this title

About the Author

Gary Cokins is Global Product Marketing Manager for Performance Management at SAS, the world's leader in business analytics, data management and performance management software. An internationally recognized expert, speaker, and author on advanced cost management and performance improvement systems, he works closely with SAS customers, partners, industry analysts, and internal stakeholders to ensure that SAS continues to deliver high-value solutions to the market that meet the needs of customers worldwide.

"A highly accessible collection of essays on contemporary thinking in performance management. Readers will get excellent overviews on the Balanced Scorecard, strategy maps, incentives, management accounting, activity-based costing, customer lifetime value, and sustainable shareholder value creation."
―Robert S. Kaplan, Harvard Business School; coauthor of The Balanced Scorecard: Translating Strategy into Action, The Execution Premium, and many other books

"Gary Cokins demonstrates in this book that performance management is not a mysterious black art, but a structured, process-oriented discipline. If you want your performance management system to be a smoothly running analytical machine, read and apply the ideas in this book―it's all you need."
―Thomas H. Davenport, President's Distinguished Professor of Information Technology and Management, Babson College; coauthor of Competing on Analytics: The New Science of Winning

"Drawing on a deep reservoir of knowledge and experience gained from hundreds of customer engagements around the world, Gary Cokins offers an authoritative examination of the major dimensions of performance management. Cokins not only paints a rich and textured view of the major principles and concepts driving performance management implementations, he offers a nuanced look at the important subtleties that can spell the difference between success and failure. This is an informative and enjoyable text to read!"
―Wayne Eckerson, Director of Research, The Data Warehouse Institute (TDWI); author of Performance Dashboards: Measuring, Monitoring, and Managing Your Business

"[In this] very insightful book, the view of an integrated performance management framework with a goal to link various operational activities with business strategy is an excellent approach to manage and improve business. Gary's explanation of risk-based performance management, for providing the capability to achieve long-term objectives with reliably calculated risks, is definitely thought provoking."
―Srini Pallia, Global Head and Vice President of Business Technology Services, Wipro Technologies, Bangalore, India

"Gary Cokins is clearly one of the world's thought leaders in the area of performance management, and the need for integrated performance management, improvement and execution is clearly at a premium in these challenging economic times. This book is a must read for CEOs, CFOs, and management accountants around the globe seeking higher levels of sustainable business performance for their stakeholders."
―Jeffrey C. Thomson, President and CEO, Institute of Management Accountants

From the Inside Flap

Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics

An organizational transformation has taken place, in which the source for every organization's return on financial spending is shifting from tangible assets, like equipment, to intangible assets, like information and its people. But transforming an organization is much like having heart surgery while running a marathon without a finish line.

Written by Gary Cokins, one of the most well-known gurus of performance management, Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics is your finish line!

Beginning with a tongue-in-cheek description of how not to pursue a performance management culture, this big-picture book clarifies what performance management really is, what it does, how it enables better decisions and how to make it work. Revealing the relevant aspects of performance management, it discusses why integration of multiple management methodologies and behavioral change management are crucial to overcome managers and employees' natural resistance to change.

In Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics, you will discover:

• How to successfully implement and integrate the various methodologies of performance management

• How methodologies like forecasting demand, measuring performance, measuring segmented profits and costs, and planning for resource levels can themselves be integrated

• Why analytics of all flavors, and especially predictive analytics, improves decision making

• The importance of behavioral and change management issues

• The difference between business intelligence and performance management

• How to measure and manage customer profitability and future value

• How governance and social responsibilities for people and the environment can be addressed using the same performance management methodologies used to improve an individual enterprise's economic performance

• The role risk management plays in performance management

• What a future vision of enterprise risk-based performance management may include

Part of the Wiley and SAS Business Series, Performance Management is an invaluable resource providing guidance, wisdom, and support to all industry leaders and managers. A compilation of the author's media articles and blogs, it is an in-sightful reflection of his gift for demystifying the complicated. Engaging and intuitive, it explores what it will take for you―and every CEO, CFO, vice president, and manager―to successfully implement the full vision of the performance management framework within your organization.

Excerpt. © Reprinted by permission. All rights reserved.

Performance Management

Integrating Strategy Execution, Methodologies, Risk, and AnalyticsBy Gary Cokins

John Wiley & Sons

Copyright © 2009 Gary Cokins
All right reserved.
ISBN: 978-0-470-44998-1

Chapter One

Rules for Ensuring Poor Performance

In 1773, Benjamin Franklin, one the founding fathers of the United States, wrote a pamphlet aimed at the royalty of England, titled Rules by Which a Great Empire May Be Reduced to a Small One. Satire is one way to get your point across. I apply my own style of satire in this chapter to appeal to organizations to cease their hesitation and skepticism and embrace the benefits of performance management. I apologize in advance if I offend anyone, but sometimes there is truth in humor.

* * *

Imagine I took over the management of a poorly performing organization and wanted to keep it that way. For example, I might not want it to grow so quickly that it would leave me less time to pursue my hobbies. What steps would I take?

First, I would ensure that all of the managers and employees are totally ignorant of the executive team's strategy. That way, no one will understand how the work they do each week or each month contributes to successfully achieving the strategy. Next, I would figure out ways to ensure that managers and employees do not trust one another. I would discourage dissent and debate. It would be tricky to preserve some level of harmony by not allowing healthy conflict among managers who are already distrustful of each other, but I think I could do it.

Next, I would avoid holding anyone accountable. That would be fairly easy, because I would disallow reporting of performance measures. Anyone mentioning the phrase "the balanced scorecard" would be summarily fired. I would allow employees to measure their local processes and results in dashboards. After all, I do not want the organization to go bankrupt; I just want poor performance. But I would restrict any measures from being key performance indicators because we would not want to monitor our progress toward any targets that are strategic. I would try to disallow setting of targets, but some managers have a nasty habit of liking them. I think those managers believe that if they could make it appear that they are better performers than others, then I would reward them with a "pay-for-performance" bonus system. If I allow people to be motivated this way, performance might improve. I am not going to fall for that trick.

I would freeze our managerial accounting system to remain in its archaic state. It probably was designed in the 1950s, but our external financial auditors would always be giving us an OK grade. I would allow managers to hire more support overhead to manage the resulting complexity, but I would preserve the primitive overhead cost allocations to processes and products using those distorting and misleading broad averages, such as product sales volume or number of units produced. Most employees would already know that these cost allocations cause big cost errors, but I would want to keep them guessing about which products make or lose money and what it actually costs to perform our key business processes. I do not think my financial controller will correct this, but I need to keep a watchful eye because my accountants are getting much smarter about how to improve operations and serve as strategic advisors to me.

We would need to be careful about how much information we collect and report about our customers. Obviously, we would report their sales volume data, but I would not segment our customers into any groupings. I would keep sales reporting at a lump-sum level. I do not want anyone asking questions such as "Which types of customers should we retain, grow, acquire, or win back from competitors?" To keep our company from tanking, I would encourage sales growth by putting big signs in the marketing department saying "More sales at any cost!" I would prevent my chief financial officer from harboring any thoughts of measuring customer profitability. That would be easy, because our arcane cost accounting system would not be capable of calculating that information. The marketing people typically spend their budget with a spray-and-pray approach, anyway. Targeting specific types of customers and getting a high-yield payback from our marketing spend would be beyond their level of thinking. I would maintain our advertising spending as the black hole that no one understands.

I would, of course, implement an enterprise resource planning system. I would not want to be at a cocktail party with other executives and admit I do not have one. That would be too embarrassing, like a teenager without an iPod. Luckily, ERP systems alone will not improve performance; they produce mountains of transactional data for daily control, but not meaningful information from which anyone could make wise judgments or good decisions.

Our budgeting system would be another way to ensure our poor performance. Since the budget numbers are obsolete a couple of months after we begin the fiscal year, assembling the budget for six months during the prior year would provide a great distraction and prevent anyone from working on more important things. Plus, I would love to send the budget back down a few times to be redone to lower the budgeted costs. Everyone would moan. I would be very stingy about giving managers any budget for one-time projects. When those kinds of initiatives sneak in, companies always get a jolt of productivity improvement, which is counter to poor performance.

We would squeeze our suppliers. We could talk about partnering and collaboration, but any attempt to actually do so would be squashed immediately. Never trust a supplier. If you drive one out of business, you can always find another.

I do not think I could stop employees from using spreadsheets. They are contagious. But since every department would have its own spreadsheets, it would be like a Tower of Babel. Employees would waste a lot of time trying to make their numbers match. I might allow a few departments to purchase a common database to warehouse their information. Fortunately, there would be lots of incorrect input data in it, so that bad experience would burst their bubble. Those employees with spreadsheets might want to use them for forecasting and planning. I would put a stop to that by calling it gambling and promote our company as being conservative. Gambling is for fools, so I would set a policy forbidding risk taking.

I know that operating a poorly performing business is an extremely difficult job, but I think I would be up to the task. Suppressing the efforts of all those employees and managers who want to think, contribute, and make the business successful requires constant vigilance. The business world is full of subversive ideas that could hamstring my efforts to keep the business floundering aimlessly.

I am particularly concerned about this new concept called performance management. Whatever it is, I will stop it from happening. I believe that with hard work and dedication, I could keep any company from reaching its profit-making potential.

(Continues...)

Excerpted from Performance Managementby Gary Cokins Copyright © 2009 by Gary Cokins. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: Wiley
• Publication date: 2009
• ISBN 10: 0470449985
• ISBN 13: 9780470449981
• Binding: Hardcover
• Language: English
• Edition number: 1
• Number of pages: 272