Key takeaways:
Corporate performance is an overall assessment of how successfully a corporation is performing. Typically, this means monitoring its most important financial, market, and shareholder performance parameters.
In reality, “keeping an eye” on corporate performance isn’t enough to ensure business success.
Enter corporate performance management (CPM). CPM is the collection of intentional strategies, metrics, processes, and systems used to strive for a thriving organization.
Corporate performance management can feel very broad if not considered through a financial lens.
While every element of running the business could be considered CPM, when it comes to financial management, CPM is most related to all the motions and methodologies needed to align the company's financial activities with its overall goals.
Frequently, CPM operates as a subset of business intelligence that monitors corporate health according to key performance indicators (KPIs) such as revenue, return on investment (ROI), overhead, and operational costs.
Like all mission-critical business strategies, CPM is a collaborative effort: you need metrics from every department to understand the organization's accurate financial health. In order to collect data across departments, corporate performance management teams up with financial planning and analysis (FP&A).
FP&A is the set of strategic activities (planning, budgeting, forecasting, and financial analysis) that enable a company's ongoing financial health and ability to grow.
It’s been said you can’t manage what you can’t measure, so partnering with FP&A to collect and analyze financial data is critical for CPM teams. FP&A enhances the finance department’s ability to manage performance by integrating corporate strategy and decision-making—all part of CPM.
Various factors are considered when monitoring an organization's financial health against its goals.
Of course, to set those goals, strategic planning is the essential first step in corporate performance management. From there, organizations typically create budgets and forecasts to create projections for the strategic plan.
Finance teams continuously aggregate data, run analyses, and build reports to monitor performance against the plans and projections.
Managing risk effectively is key to steering a company toward success. CPM offers a structured approach to identify and address potential risks before they become significant issues. By continuously monitoring data, organizations can act swiftly, keeping their financial health in check and ensuring sustainable growth.
Instead of reviewing data weekly, monthly, or yearly, CPM software empowers organizations to view data—and the analysis of this data—in real time. This means more timely decisions and less opportunity for errors to become serious financial issues. This rapid feedback loop not only prevents small discrepancies from snowballing into major financial problems but also allows companies to capitalize on opportunities before competitors who rely on traditional reporting cycles can react.
Data collection, consolidation, reporting, closing, and analysis can all be prone to human error and time-consuming. Corporate performance managers utilize automation and integration of source systems to minimize opportunities for human error.
By connecting directly to ERP, CRM, and other operational systems, they eliminate redundant data entry and create audit trails that ensure accuracy. This integration not only reduces errors but also cuts processing time from days to hours, allowing finance teams to focus on analysis rather than data wrangling.
CPM software makes managing strategic projects easier with smart automation, advanced data consolidation, and seamless collaboration. With real-time feedback and company-wide cloud access, communications are streamlined and all teams can work off a single source of truth.
With the stakes of unorganized data, inaccurate analysts, and unreliable reporting being so high—namely, being blindsided with serious financial struggles, strong CPM is key.
CPM requires input from all departments to create a sophisticated planning process. However, gaining access to data across departments isn’t as easy as it may sound. Sources of data on the financial health of the company might include the following teams and systems:
Add all these pieces together and it’s clear sophisticated CPM reigns supreme over manual methods.
CPM software solutions track key performance metrics that are needed for decision-making and financial planning. These metrics can include:
These metrics (and more) provide managers with an overview of company-wide financial performance from which they can determine what changes need to be made for adjustments.
Though similar concepts, corporate performance management, human performance management, and enterprise performance management have different priorities. For this post, we’ll be covering CPM.
Corporate Performance Management: As discussed, corporate performance management (CPM) utilizes metrics from all over an organization, generally more focused on the company's financial health.
Human Performance Management: Human performance management (HPM), on the other hand, is a subset of human resources that seeks to improve employee productivity, satisfaction, and operational capability.
HPM is measured by employee reviews, turnover rates, and the overall employee “health” of the company.
Without the right systems in place, corporate performance management can become complex and overwhelming for finance teams. Teams need a centralized system to monitor and improve the company's financial health.
Since CPM incorporates so many essential functions of FP&A like planning, forecasting, budgeting, analysis, and reporting, teams often get stuck scrambling through spreadsheets without an elegant system in place.
When you're on the hunt for corporate performance management software, prioritize solutions that integrate smoothly with your existing systems. You’ll want software that encourages collaboration and provides real-time insights to keep everyone on the same page.
A dependable corporate performance management system is like a financial compass for your organization. It allows finance teams to track and manage key metrics such as revenue and expenses easily. With the right tools in place, your team can make informed decisions that propel your company towards its financial objectives.
For forecasting and budgeting, you'll need a system that offers flexibility and accuracy. Seek out software that helps you create detailed forecasts and budgets based on real data. This way, you’ll have the tools to plan effectively, allocate resources wisely, and support your company’s growth ambitions.
Data reporting is the backbone of any CPM system. Look for software that simplifies generating insightful reports, offering real-time data access and visualization. This empowers finance teams to monitor progress, make timely decisions, and communicate financial insights effectively to different departments and stakeholders.
Disclosure management is vital for maintaining transparency and compliance. The right corporate management system will assist in preparing and submitting financial reports efficiently. By managing disclosures effectively, you’ll build trust with stakeholders and maintain your organization's good standing.
The focus of corporate performance management isn’t just measuring and analyzing. It uses data and analysis to develop intentional strategies to support and save a company's financial health.
It's important for each department in the organization to work together on clear, personalized goals. Goals allow employees to focus on what is important instead of getting distracted by less important issues.
Clearly defined goals also help improve personal performance because when you have a specific goal to work towards you do so with full attention.
Finding the right CPM tools and software is probably the most critical step of all. Not all software solutions are created equal and it's important to look at everything they offer prior to making a decision. Historically, finance teams at small and mid-sized businesses typically run on spreadsheets and dedicated accounting software solutions.
Unfortunately, many of these tools leave room for errors and omissions. Sometimes they're not even entirely reliable. (Spoiler: that's why we built Cube.)
Corporate performance management is only as strong as manager implementation. Training managers on what metrics to look for and how to improve them allows for standardized CPM strategies across the organization.
CPM training can cover the benefits of CPM implementation, communication strategies, using CPM software for peak performance, financial and operational modeling, conducting performance reviews, and what-if scenario planning.
Because CPM integrates data from all departments before determining financial health, offering CPM training beyond your finance team can help break down silos and alert managers to key metrics in their own departments.
CPM offers several features to make planning faster such as easy-to-read dashboards, faster insights, and more efficient data gathering.
All of these save time upfront and eliminate the need to go back and revisit something that may have been missed due to human error.
CPM is a continuous, mission-driven process that enables businesses to understand their data, allocate the right resources, and make smarter decisions quickly—if they use the right software.
Cube’s platform unifies all your data into a single source of truth while connecting to your existing tech stacks such as ERP, CRM, HRIS, and business intelligence.
This allows corporate performance managers to streamline data collecting from multiple sources, seamlessly model how changes to key assumptions affect overall outputs, store all calculations in a central location, and manage from a single source of truth.
Ready to see more? Book a demo with Cube.