Performance management (PM) can be an essential tool for small businesses as they make the transition into mid-sized organisations.
So says David McWilliam, director at Cortell Corporate Performance Management, who notes that one of the challenges that mid-sized companies face is keeping a finger on the pulse of various aspects of the business.
"Performance management includes systems and processes that establish what the business should be doing (driver-based budgets). It must also examine how the systems and processes are doing against expectations (targeted reporting and scorecards); analyse why they have not performed as expected (business intelligence); and also take corrective action (rolling forecasts)," he states.
According to McWilliam, when a small business transitions to a mid-sized organisation due to growth, many of the processes and reporting functions become outdated. Furthermore, he says, these functions are not able to deliver transparency as work, volumes and the geographic footprint increase.
"In fact, many of these processes and reporting functions were manual and sufficed for a small-sized business but hinder visibility into the performance of various areas of the business as it expands," he explains.
"It is crucial for mid-sized businesses to have insight into how the business is doing, why and what they should be doing - this is where performance management comes into play."
Mid-sized companies, as well as many large organisations, currently spend hours of expert resources building spreadsheets to achieve less than desirable results, he points out.
To McWilliam, the "intelligence" that PM delivers also allows mid-sized businesses to remedy a problem sooner rather than later. He adds that traditionally, manual reporting processes provided businesses with a historical picture or snapshot on the performance of a particular area of business.
Having an automated PM solution with real-time information, he says, allows these companies to respond faster to problems and remedy to limit damage.
Additionally, McWilliam states that the dashboard functionality of these solutions provide management with an easy to interpret "snapshot" into the performance of various areas of the business without having to "wade" through volumes of reports and information, making the organisation more agile.
He is also of the view that any business needs to examine performance continually and small business are often able to do this informally. However, he notes that as a small business grows, formal systems and processes need to be in place.