The performance measurement systems that we often find in companies are characterised by the redundancy of measurements and the poor link with the company business model. This makes these systems of little use to supporting company and bureaucratic decisions which are heavily influenced by technical and organisational restrictions.
You need to increase the effectiveness of these systems by redesigning instruments and processes that can guarantee (a) alignment between people and different organisational units, (b) the ability to indicate excellent aspects and weaknesses of the company by working on weak signals, (c) the will to adapt when faced with increasingly dynamic strategies and contexts.
Over the years, we have learned to understand that “every company requires specific measurements”. This knowledge has led us to develop “design” and “implementation” methodologies for Performance Measurement systems that can adapt to any business environment.
Our Performance Measurement is characterised by three fundamental concepts:
SPEAKING JUST ONE LANGUAGE
How do you guarantee an adaptive and flexible Performance Measurement system? You need to design a system as a set of independent instruments, trying to prevent that possible data shortages in certain areas generally affect the company’s ability to monitor its results. However, while single instruments must be designed individually and independently, it is nevertheless essential that they are designed with overall consistency, taking relevant measurements as a reference with the company strategy for the various organisational levels and standardising how information is collected, processed and represented. Only in this way can the reporting system become an official reference point for the whole organisation.
CHECKING DETERMINING FACTORS
The analytical capacity of organisations on various levels is increasingly managed by identifying relationships between economic-financial results and underlying determining factors of results represented by non-economic-financial operational indicators, which better represent the volumes of business and the complexity to be managed at an operational level.
The introduction of these indicators into your reporting system lets you switch from checking only results to checking the reasons that guide these results, guaranteeing greater protection of key functions also in the field of budgeting, where certain peripheral requirements should be explained better as they are linked to precise indicators.
PICKING UP ON WEAK SIGNALS
Restricting the function of performance measurement systems to just one analysis of ex-post results would be extremely simplistic and inaccurate, and economic-financial results are essentially “lag” indicators which, as such, provide a type of retroactive measurement. While the phenomenon of big data has called into question the central role of operational information as instruments for predicting future trends, which therefore represent “lead” indicators that can pick up on weak signals in company performances, allowing swift, responsive action to the company’s critical issues, not only involving the accounting department but the organisation as a whole.
- Economic-Financial Reporting – knowing how to read and articulate company results to make assessment and decision-making processes more incisive
- Management Dashboards – organising smart dashboards so you can launch effective diagnostic processes
- Integrated Reporting – integrating results and determining factors so you can keep learning about management
- HR Radar – keeping staff costs and the factors behind them under control
- Sales Radar – keeping sales under control by monitoring commercial outcomes and processes
- Analytical Accounting & Costing – being aware of the costs and factors (of the structure and operations) that influence their dynamics
- Product & Customer Profitability Analysis – being fully aware of the real value generated by your products/services and by your clients