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What is Corporate Performance Management?

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  • Written By: D. Burke
  • Edited By: Jenn Walker
  • Last Modified Date: 30 August 2016
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Corporate performance management, or CPM, is a practice that involves evaluating the financial and operational performance of a company and putting processes in place to improve the strategic decisions made by managers and leaders in the organization. It is usually undertaken in order to help the company achieve a certain goal or goals. How corporate performance management is practiced can vary by company, but usually includes the introduction of tools that allow management to set strategic goals, analyze overall company performance, manage performance, and monitor reporting accuracy.

The quality of decisions made by organizational leaders can have a significant impact on outcomes for operations. For this reason, the use of corporate performance management can be helpful in facilitating better decision making. The practice can often improve the execution of strategy used by the organization and provide a foundation for measuring and monitoring the quantitative results of strategic decision making.

The specific corporate performance management tools used by each organization will vary based on the needs of the organization and the external environment in which the organization operates; the tools are typically driven by technology that allows for an analytical review of company performance. Corporate performance management often depends on collecting and analyzing significant amounts of performance-related data, so there are many software programs available for this specific purpose. It is possible to incorporate performance management practices without these tools, but it is usually more difficult.

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The use of proactive strategies for monitoring and evaluating organizational performance is critical to the ability of a performance management process to provide managers and leaders with support for decision making and strategic development. Proactive strategies involve essential elements such as establishing key performance indicators (KPIs) in operations. KPIs are typically used by the organization to monitor important areas of performance. When changes in these indicators are noted, leaders can proactively respond before significant problems occur for the organization. Proactive monitoring and response improves the performance management process and enables leaders to achieve tighter control over the organization's operations.

The ability of leaders to implement corporate performance management across all departments in the organization also is relevant to the success of the practice. Cross-functional implementation is needed to help ensure that business units in the organization are focused on similar goals and using metrics and measures that are relevant to other departments in the organization. Synthesis of departmental activities through corporate performance management can allow executives to comprehensively evaluate organizational performance while spurring transparency and flexibility in operations.

Comprehensive and consistent use of a performance management process can often provide numerous benefits for an organization, including improving accuracy in reporting, gaining better control of operations, and increasing flexibility in decision making. The process also can increase transparency for more efficient organizational development. The real-time monitoring and reporting of outcomes can give managers more control over their departments as well.

By clearly defining corporate goals and the process by which those goals can be achieved, corporate performance management can help guide a company. Success for the organization does, however, require that managers and leaders use the data captured through the performance management tools for process and operational improvement. Failure to make changes or improvements may create further challenges for the organization and eliminate the benefits that can be achieved.

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