"Knee jerk" reactions in the face of economic crisis do not work
TORONTO, June 2 /CNW/ - Do effective performance management (PM)
practices drive superior performance? Absolutely yes, shows the results of a
new survey from PricewaterhouseCoopers (PwC) in collaboration with the Telfer
School of Management at the University of Ottawa and the Canadian Advance
Technology Alliance (CATA), titled, "Performance management matters:
Sustaining superior results in a global economy". According to the survey,
those who achieved high financial performance were 26% more effective on
average across 46 different PM practices.
The survey of over 400 senior leaders in both the public and private
sector around the world showed that not only are high performers executing
more effectively on their performance management practices, but they are also
achieving much greater benefit from these efforts. High performers rated the
contribution of these practices 31% higher on average across 11 different
strategic, competitive, operational and financial outcomes.
Furthermore according to the study those who had higher financial
performance versus the competition outperformed lower financial performers by
54% on average across seven different key objectives. For example, the high
- 67% more successful in entering new markets;
- 61% more successful in generating growth through innovation; and
- 51% more successful in introducing new products.
"Organizations with weaker PM programs are more inwardly focused, and
more concerned about yesterday's results than on the future direction of the
organization," says Philip Townsend, PwC Partner, National Performance
Management Services Leader. "As a result, they are less likely to identify
emerging opportunities or threats and less able to react in a sound fact-based
manner. In addition, they are more likely to react to situations, such as the
current downturn, with a "knee-jerk" approach to slashing costs, which may
compromise future success in better times. In contrast, organizations with
strong PM programs are better equipped to forecast emerging risks and manage
more proactively to mitigate the impact."
Scott McLean, a Partner in PwC's Advisory Services adds, "All
organizations are currently being challenged to manage effectively through the
current economic recession brought on by the global financial crisis. As a
result, the importance of effective PM practices has been heightened even
The survey found that, high performance is driven by seven key PM
1. Taking a broad, holistic approach: High performers look at their
business from a broader perspective than low performers, and build
their PM programs to respond to this more holistic view. They place
greater focus on issues such as creating accountability through
performance evaluation (26%), brand image/recognition (22%), employee
satisfaction (21%), product/service innovation (15%), service
quality (15%), customer satisfaction (14%). The only area where high
and low performers were comparable was in core issues such as
competitive pricing and reducing the cost structure. Townsend notes,
"In today's world, these are "table stakes" that will not create a
sustainable competitive advantage in the marketplace."
2. Creating linkages, integration and alignment: High performers were
16% more effective in overcoming challenges related to linkages and
integration across their PM practices. In addition, despite their
focus on a broader array of business drivers, they were 25% more
effective in aligning their measurement and reporting systems with
the key business drivers most relevant to them.
3. Building broad support for the PM effort: Cultural resistance is
often cited as one of the key barriers to a successful PM program,
and the survey results supported this view. High performing
organizations were on average 13% more effective in obtaining senior
management support, building consensus and buy-in, overcoming
cultural resistance and the fear of change, and breaking down
internal silos to achieve agreement on what needs to be done.
4. Adopting high value planning practices: Three specific planning
practices were noted where performers reported 31% greater
effectiveness overall. These included value stream mapping, vision,
mission and values statements, and environmental or social
5. Turning analytics into a competitive advantage: High performers are
43% more effective in their use of alerts or warning systems,
driver-based forecasting and data mining. Townsend comments, "These
techniques enable them to manage by exception and be proactive rather
than reactive to emerging issues and opportunities."
6. Developing advanced PM technology capabilities: While basic
spreadsheet tools are still predominant across all groups, high
performing organizations report 23% greater effectiveness in their
implementation and use of some of the more advanced forms of PM
technology, such as dashboards and business intelligence tools that
enable them to turn analytics into a competitive advantage.
7. Avoiding making it too complicated: While high performing
organizations employ a wide variety of advanced practices and tools,
part of the reason they are successful is that they avoid the
potential pitfall of overcomplicating things.
"Our research demonstrates that organizations that apply integrated
approaches to performance management clearly experience higher levels of
performance on sustained basis," says Stuart Smith, PwC Vice-President,
Performance Management Services. "Shifts in market forces and demographics
will continue to compel organizations to find ways to engage their customers
and people more effectively. Alignment between strategy, tactics and reward
are the essential ingredients for success."
Copies of the survey and a Q&A discussion with Philip Townsend and Stuart
Smith are available at www.pwc.com/ca/pmreport. For more information on PwC's
Performance Management services please visit. www.pwc.com/ca/pm.
About PricewaterhouseCoopers LLP
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(www.pwc.com/ca) and its related entities have more than 5,200 partners and
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PwC Economic and Credit Crisis Task Force
PwC recognizes that a global crisis requires a global and coordinated
The PwC Economic and Credit Crisis Task Force (the "PwC Task Force")
brings together a Canadian team of senior cross-functional experienced
practitioners who understand market volatility and the diverse challenges
facing companies today. By leveraging knowledge, experience and networks, the
PwC Task Force can advise and guide Canadian companies through a multitude of
capital market and economic crisis issues. For more information please visit
For further information:
For further information: Carolyn Forest, (416) 814-5730,
email@example.com; Kiran Chauhan, (416) 947-8393,