7 key practices for better performance managementBusiness leaders need to adopt new ways to manage performance that build on the talents of their people; leverage their business models, systems, processes and procedures; and actively engage with shareholders, according to a new report.
Finding the best way to enable your people to move your business forward is one of the biggest challenges that organisational leaders face in today's environment.
Many businesses struggle to find the best way to capitalise on the talent of their employees while fulfilling customers' needs.
A new research report published Thursday by AICPA & CIMA and the World Business Council for Sustainable Development (WBCSD) found that businesses need to adopt new ways to manage performance that build on the talents of their people; leverage their business models, systems, processes, and procedures; and actively engage with stakeholders.
Reimagining Performance Management identifies seven key practices that business can use to deliver better performance:
- Create "one version of the truth", a clear line of sight between activities and strategy to help employees develop ownership and accountability;
- Include relevant factors from outside the company, such as environmental and social impact, in business values and day-to-day decision-making to attract and retain talent;
- Engage employees with developing and refining business strategies to meet objectives;
- Combine responsibilities for both strategic goals and functional excellence to sharpen performance;
- Improve cooperation and coordination across functional silos to optimise decision-making and resource allocation;
- Align personal objectives and incentives with organisational strategy at all levels of the business;
- Connect external and internal information with financial outcomes to ensure effective decision-making.
"If the pandemic has taught us anything, it's that the ways we manage businesses today should be different from the ways we managed them in the past," Andrew Harding, FCMA, CGMA, chief executive–Management Accounting at the Association of International Certified Professional Accountants, representing AICPA & CIMA, said in a news release
Harding said leaders need to effectively engage their employees in conversations about strategy, create a culture of performance and accountability, and allocate resources in ways that ensure efficient and effective delivery of the business strategy.
Peter Bakker, president and CEO at WBCSD, said businesses need to think innovatively to play a lead role in solving climate change, biodiversity loss, and inequality. He said management accounting needs to change so that it is not based on models that externalise costs and leave communities and the environment to pick up the bill.
"Successful businesses need to create value for all stakeholders, not just a few," he said. "Increasingly forward-thinking businesses have already started to transition, and it's time for management accountants to step up and provide the information needed for sound and effective decision-making."
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is FM's editorial director.