With the SPMM – St. Gallen Performance Management Model we do not merely want to make a theoretical and conceptual contribution to the further development of management systems, but also want to apply this knowledge in practice. We are therefore implementing the SPMM in company practice on various levels.
From the current implementations in practice, we have derived a three-stage approach for the transformation of the financial management model, which has proved to be successful.
In the first step of the transformation, it is important to ensure the preconditions for a clear organizational alignment. These include, for example, clarity about the strategy and business model, a key performance indicator structure derived from this, as well as the derived value drivers, all of which are individually modified to fit the various management levels within a specific company. A clear formulation of the strategic goals with regard to the market and/or competition and – in larger companies – a systematic classification of the organizations management units into performance categories, ranging from “high value adding” to “turnaround cases,” are also part of a management model’s fundamental alignment with the SPMM principles.
A second step addresses the operationalization of the strategic goals by means of a flexible, relative target setting system with a self-adjusting improvement logic. This step ensures that the strategic goals’ ambitions are, with the help of a self steering approach, systematically broken down into the organization. This target setting approach is based on a simple logic: A high potential utilization leads to low improvement targets, and low potential utilization leads to high improvement targets. The goals derived from the relative improvement targets create a self-adjusting and fair target-setting system, which acts as a “catalyst” for a higher degree of self-control in the entire performance management system. This target setting system also enables more flexibility and self-control within the following resource allocation process.
In a third and evolutionary process step the coordination and resource allocation process is made more flexible by replacing the traditional budgeting approach with a rolling planning and forecasting approach. Additional systematic adjustments to the measurement and assessment practices lead to a more natural interlinkage between operational and strategic performance management processes with a higher degree of self-controlled coordination, which substantially enhances an organization’s agility. The use of a flexible target-setting system ensures in parallel the systematic alignment with the organization’s strategic goals, and thus a high degree of alignment also in bigger and more complex companies.
We developed an assessment in order to quickly provide a first status assessment for a companies current performance management system. By means of self-assessment by managers various questions measure the degree of application of SPMM practices and processes in an organization. It has been shown that companies which are using the SPMM design principles perform significantly better than companies with a traditional management approach both, with respect to their financials, as well as with respect to their employee and customer satisfaction ratings.
The outcome provides an introduction to the discussion of the own performance management’s strengths and weaknesses. In the meantime, we have gathered profiles of more than 200 companies. This enables us to make an informed comparative assessment by means of an individual benchmark.
The implementation at a specific company is a very individual process, which should be optimally adjusted to the respective circumstances and requirements. If you are interested, please contact us.