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Making BPM Work

  • September 01 2004, 1:00am EDT
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Business performance management (BPM) collectively represents all the processes, methodologies, metrics and systems designed to manage performance. It is, by nature, an information-driven management function.

Software is obviously a central tool in successfully implementing BPM initiatives. However, early adopters of BPM are finding that without addressing the so-called "soft" issues related to corporate culture, companies will be challenged to maximize the return on their BPM investments.

The essential planning steps involved in implementing BPM must focus on identifying key performance metrics and information technology requirements. Yet to truly make BPM work, the planning process must also address communication and corporate culture issues that will enable employees to understand, embrace and directly support the BPM initiative.

BPM champions are finding that there are three key culture-related factors that are necessary preconditions to create a performance-driven organizational mind-set. We will examine these in a moment. First, let's look at a critical aspect of BPM, which ties directly to the cultural considerations central to achieving BPM success.

The Fundamental Nature of BPM

BPM is founded on the process of amassing and strategically disseminating organizational data and intelligence. Specifically, this involves two core steps:

  • Identifying the unique financial and operational information that relates to the key value drivers for the business and gauge a company's business performance.
  • Making sure that data is channeled to the people and departments who need it for budgeting, supply chain analysis, pricing analysis, promotional performance and forecasting purposes (to name just a few BPM applications).

However, information never flows automatically in a corporate context, nor do institutional knowledge and intelligence. They must be collected and actively moved through the enterprise. This holds true in any managerial milieu. It is particularly crucial in the context of BPM.
Adopting BPM requires creating a new organizational mind-set - one that is decidedly information sharing-oriented. While there are many important considerations, successfully forging this mind-set at all levels of the enterprise entails focusing on three cultural variables. They relate to the following:

  1. Open-book management.
  2. BPM-focused learning and development.
  3. Management's orientation to risk-taking and failure.

Open-Book Management

As the defining trait of BPM, information sharing starts at the top of an enterprise. If management wants employees to proactively exchange knowledge and organizational intelligence, it must first show a willingness to do so itself.

Open-book management is predicated on senior management's ongoing dissemination of strategic and financial information. Leaders regularly communicate how the business is doing - regardless of whether the news is good or bad. This contrasts with organizations whose leaders do not communicate such information because it is deemed proprietary to the executive suite or irrelevant to the general employee population.

Maintaining an open-book policy is crucial in a BPM-focused organization. Senior executives must deliver detailed reports on how the business is performing vis-á-vis precise business drivers and strategic goals. It is this exact information that managers need to implement BPM.

BPM champions must assess the extent to which an open-book orientation exists in their culture. If it doesn't, they must determine what management information employees need to know to support BPM processes. Then, they must ensure that those employees start to receive and understand said input on a regular basis.

BPM-Focused Learning and Development

A company's practices in the realm of learning and development are another important cultural consideration for BPM.

The foregoing points have focused on the internal distribution of information tied to business performance metrics - information that needs to be channeled to employees at all levels. Unfortunately, there's no use in giving people information if they don't understand what it means.

Certainly, most mid-level and senior managers understand the principles of operations and finance. They know what their company must do to develop and deliver its offerings profitably. However, the fact is that the largest group of employees - the employees with the greatest impact on the daily operations of the business - are workers in the trenches. These are the people who, by and large, are unlikely to have a grasp of core financial concepts, performance improvement practices and the tenets of operational excellence. Yet, it is these factors that characterize BPM's philosophical foundation.

Skilled individual contributors who occupy the lower levels of the management hierarchy may need help in understanding those concepts in terms they can relate to and grasp. Herein lies the essence of BPM-oriented employee training, which may be necessary. Without a firm understanding of the determinants and drivers of corporate value, employees - at all levels of the enterprise - cannot productively channel their energies and motivation accordingly.

Companies embracing BPM must ask this question: Do the people at every level of our organization understand what our strategic drivers are and what they personally need to do to help ensure their attainment? If the answer is no, specialized training initiatives may need to be instituted for select employee groups.

Management's Orientation to Risk-Taking and Failure

BPM represents a broad new way of looking at business planning and monitoring. With such an orientation comes a new way of developing enterprise-wide programs and executing core business activities. Tried and true practices may no longer be appropriate; that is, they may not support BPM systems and protocols. When that is the case, managers and supervisors must change how they plan, set priorities and execute tasks.

As they work to institute new BPM methods, managers are, in fact, taking chances. It invariably becomes a case of trial and error. Importantly, the issue here relates not to "error" but rather to the punitive "trial." Mistakes will be made by employees. The cultural question is this: How are mistakes typically viewed and acted upon by management?

A company's fundamental orientation toward risk-taking and its subsequent response to employees' mistakes is a noteworthy cultural characteristic. Does management actively promote and reward risk-taking? Or, does it espouse risk-taking behavior but actually reward risk-averse behavior? This is a key culture-related question to ask in light of the fact that BPM is an evolving discipline and, more importantly, its implementation involves changes in business processes. Missteps will be taken on the road to BPM excellence. Management must recognize that this is inevitable. To foster change (in this case, BPM-focused change) requires encouraging people to pursue new methods without fear of undue reprisal.

By all accounts, BPM generates information that is widely accessible by employees and empowers them to make decisions - including ones that may be deemed risky by senior management. Fortunately, with BPM, employee decisions will be based on data and analysis, not on subjectivity and the proverbial "gut feel." Nonetheless, for executives implementing BPM, it is necessary to assess their organizations' true orientation to risk-taking and their response to failure - and to then take this into account when establishing BPM policies and evaluative criteria.

With BPM, all levels on an enterprise must function as interdependent conduits of business data and intelligence. Introducing specialized systems and processes to do so is only the first phase of a longer-term challenge that involves addressing critical culture-related issues.

The best BPM tools and systems will never yield the desired benefits if the right organizational climate isn't present. Focusing on cultural considerations will help ensure the success of BPM programs by effecting widespread understanding, appreciation and adoption of BPM by employees.

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