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What is Business Performance Management? An Overview

Business Performance Management emphasises the importance of accountability and transparency within an organisation. By promoting an environment of accountability where teams and individuals accept responsibility for their roles in accomplishing strategic objectives.

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Businesses often rely on the performance of their employees for better results and their success. However, it is impossible to maintain the same enthusiasm among employees towards work, which can negatively impact the organisation’s performance as a whole. This is where Business Performance Management comes in. 

Business Performance Management is streamlines approach to monitor, analyse, and enhance an organisation's performance to achieve its objectives. Thus, it is crucial to learn about this approach and thrive in the competitive business environment. 

Don't know where to begin from? Worry no more, this blog is for you. Read this blog to learn everything about Business Performance Management, including its importance, types and cycle. Also, explore the activities conducted during its implementation. 

Table of Contents  

1) What is Business Performance Management?  

2) Why is Business Performance Management important?  

3) Types of Business Performance Management  

4) The Business Performance Management Cycle  

5) Three main activities of Business Performance Management  

6) Conclusion  

What is Business Performance Management?  

Business Performance Management (BPM) is a strategic approach that enables organisations to monitor and manage their performance effectively. It includes various processes to ensure alignment with strategic objectives, including goal setting, monitoring, analysis, and optimisation. Using Key Performance Indicators (KPIs) and metrics, Business Performance Management provides insights into the health and efficiency of business operations.  

By consistently monitoring and analysing, organisations can pinpoint improvement areas, enabling informed decision-making to boost performance. Through Business Performance Management, companies make informed decisions, staying agile in dynamic markets. Today, BPM has become a guiding framework that enables organisations to achieve their goals.  

Why is business Performance Management important?  

Business Performance Management holds significant importance for organisations due to the following key reasons:  

1) Aligning with goals 

By systematically evaluating performance metrics across departments and functions, Business Performance Management ensures that every aspect of the business contributes effectively to the organisation's overarching goals. This alignment facilitates better decision-making and resource allocation, as resources can be directed towards activities that directly support strategic priorities. 

Moreover, Business Performance Management enables organisations to adapt quickly to changing market conditions by continuously monitoring performance and adjusting strategies as needed. By fostering a culture of goal alignment and accountability, BPM enhances the organisation's capacity to excel and stay ahead in the market. 

2) Considering alternatives  

Business Performance Management facilitates well-informed decision-making by analysing decisions and strategies and improving performance with various insights. Through comprehensive data analysis and performance evaluation, organisations can identify inefficiencies, problems, and areas for improvement across different business processes.  

By exploring alternative approaches, Business Performance Management enables organisations to optimise their operations, enhance productivity, and mitigate risks effectively. This proactive decision-making equips businesses to respond and capitalise on opportunities in dynamic, competitive markets. Thus, it helps ensure persistence and success. 

3) Keeping everyone accountable 

Business Performance Management imparts accountability, clarifying roles, responsibilities, and performance expectations for individuals and departments within organisations. Defining clear metrics and performance indicators provides a framework for evaluating individual and collective contributions towards organisational goals. 

Further, transparency cultivates accountability, prompting employees to take ownership and pursue excellence in their organisational roles. By encouraging transparent communication and collaboration, Business Performance Management motivates teams to pursue shared goals, thereby boosting organisational performance. 

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Types of Business Performance Management 

Now that you know Business Performance Management definition, it is time to understand its various types:  

1) Financial Performance Management 

Financial Performance Management involves analysing, monitoring, and optimising financial metrics and outcomes within an organisation. It encompasses budgeting, estimating, financial reporting, variance, and profitability analysis. Organizations utilise Financial Performance Management for resource allocation, goal achievement, and strategic decision-making based on financial insights. 

2) Operational Performance Management 

Operational Performance Management targets efficiency and effectiveness in organisational processes. It involves monitoring key metrics, identifying improvement areas, and implementing enhancements to align with goals. This approach aids in cost reduction, productivity enhancement, and delivering superior products or services to customers. 

By prioritising operational metrics and strategic objectives, organisations drive continuous improvement. It serves as a framework to streamline operations, optimise processes, and elevate performance. With a focus on KPIs and ongoing refinement, businesses achieve greater efficiency, effectiveness, and customer satisfaction. 

3) Strategic Performance Management 

Strategic Performance Management involves aligning organisational objectives with strategic priorities and monitoring performance against long-term goals. It encompasses strategic planning, goal setting, performance measurement, and strategic alignment. Organisations utilise strategic Performance Management to ensure alignment with their strategic direction.   

4)  Employee Performance Management 

Employee Performance Management focuses on managing and improving the performance of individual employees within an organisation. Business Performance Management involves the following: 

a) Setting expectations 

b) Offering feedback 

c) Coaching 

d) Evaluating performance 

e) Addressing training needs 

f) Rewarding high performance to improve growth effectively 

Effective employee Performance Management helps organisations enhance employee engagement, motivation, and productivity. This, in turn, leads to better organisational Performance. 

5) Customer Performance Management 

Customer Performance Management involves understanding customer-facing processes and interactions. It strives to improve customer satisfaction, loyalty, and retention. Business Performance Management involves collecting and analysing customer feedback. It measures satisfaction and loyalty metrics and identifies areas for improving the customer experience.   

Finally, it implements initiatives addressing customer needs and preferences. Organisations use customer Performance Management to build strong customer relationships, increase lifetime value, and drive business growth.  

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The Business Performance Management Cycle 

Business Performance Management Cycle consists of the following four stages:  

1) Evaluate and plan 

In this initial stage of the Business Performance Management Cycle, organisations comprehensively assess their current Performance levels. They cautiously define their short-term and long-term goals and create strategic plans to attain them.     

This stage establishes the planning for the entire BPM process, ensuring clarity in direction and alignment of efforts across the organisation. Establishing clear objectives and outlining necessary steps leads organisations toward success and sustainable growth, encouraging competitive advantage.  

2) Monitor performance metrics 

Once goals are set, organisations embark on a continuous journey of monitoring performance metrics and KPIs. Through real-time data analysis, they keep monitoring progress, swiftly identifying areas of strength and weakness. 

This proactive approach enables timely decision-making and adjustments, ensuring that organisational efforts remain aligned with strategic objectives. Closely monitoring performance metrics provides insights for informed decisions, helping organisations to sustain competitive advantage in dynamic markets. 

3) Review and analyse 

Organisations regularly conduct thorough reviews and analyses of performance data to gain deeper insights into trends, patterns, and Performance drivers. This stage assesses achievements against targets and explores deviations from expected outcomes, supporting strategic alignment and improvement. 

By delving into the root causes of these deviations, organisations can identify opportunities for improvement and refine their strategies accordingly. Through rigorous review and analysis, organisations gain a deeper understanding of their performance dynamics. This enables them to base decisions on data and adjust to market changes with agility and precision. 

4) Improve and repeat 

Building upon the insights gained from the review and analysis stage, organisations start a journey of continuous improvement and refinement. They implement corrective actions and process enhancements to address identified areas of improvement and ensure lessons learned are easily integrated into future planning and execution.   

Organisations promote ongoing improvement to achieve success, adaptation, and growth. They adapt to evolving market dynamics through iterative improvement cycles and grab emerging opportunities, keeping them ahead in today's fast-paced Business landscape.  

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Three main activities of Business Performance Management 

Three main activities of Business Performance Management include the following:  

1) Information consolidation 

Information consolidation serves as the foundation of effective decision-making within an organisation. Beyond data gathering, it organises, synthesises, and analyses information from various sources like financial reports and customer feedback. 

By integrating data from various departments and systems, businesses can gain holistic insights into their performance. This comprehensive view enables stakeholders to identify patterns, trends, and correlations that inform strategic decisions and operational improvements. 

Moreover, organisations can use advanced analytics and data visualisation tools to transform raw data into actionable insights. This can empower decision-makers at all levels to drive Performance excellence. 

2) Goal selection 

Goal selection is a strategic process that considers an organisation's mission, vision, and overall goals. Beyond simply setting goals, this activity involves aligning them with the organisation's core values, competitive landscape, and market dynamics. 

Through collaborative discussions and stakeholder engagement, businesses can define SMART goals that serve as clear benchmarks for Performance evaluation. Moreover, goal selection involves prioritising objectives based on their strategic significance. This process considers the potential impact on key stakeholders. 

This helps ensure focused efforts and resource allocation. Organisations can foster alignment, accountability, and a shared sense of purpose across the workforce by establishing a logical framework of goals. 

3) Management intervention 

Management intervention is a proactive approach to addressing performance gaps and driving continuous improvement within an organisation. In addition to reacting to deviations, this involves proactively using real-time data and analytics to anticipate challenges and opportunities. 

By adopting a systematic problem-solving approach, management identifies root causes, evaluates alternatives, and implements targeted interventions to optimise performance. This may involve the following: 

a) Utilising Agile methodologies 

b) Encouraging a culture of experimentation 

c) Empowering frontline employees to contribute innovative solutions 

Furthermore, effective management intervention requires ongoing monitoring and feedback mechanisms to track progress, adjust strategies, and ensure alignment with objectives. Organisations adapt to changing market conditions through timely and determined actions, mitigate risks, and sustain competitive advantage in dynamic environments. 

Conclusion  

Optimising organisational performance through Business Performance Management is vital for achieving strategic objectives. By adopting a systematic Performance Management approach, organisations can navigate market changes and maintain long-term success in competitive Business environments. 

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Frequently Asked Questions

The three main activities in Business Performance Management are evaluation and planning, monitoring Performance metrics, and reviewing and analysing data. These activities involve assessing current performance, tracking progress, and gaining insights. 

The role of a Business Performance Manager involves overseeing the entire Business Performance Management Cycle. This includes evaluating current performance, setting goals, monitoring metrics, analysing data, implementing improvements, and ensuring alignment with strategic objectives. 

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The Ultimate Guide to Performance Management: 5-Step Process and Best Practices

Published: January 20, 2022

Peter Drucker once described customers as the "most important stakeholders." While this may be true, your customers are dependent on one thing.

No, it’s not your product (though that’s definitely important). It’s actually your employees. Without your employees, products won’t get made, customers won’t learn about those products, and there will be no one there to sell or deliver those products, or provide customer service to them after they’ve purchased.

While your customers may be your most important stakeholders, in a business or organization, your employees are your biggest asset. Their performance, mindset, attitude, and loyalty can make or break your company's performance and determine whether or not you will have any customers to sell to.

Because of this, you will want to ensure that your employees are meeting expectations, and improving in necessary areas. Performance management aims to foster the best possible employees so your organization can thrive well into the future.

What is performance management?

Performance management is a process that allows managers to assess their employees’ work and support of business objectives. The goal of performance management is to track and improve the skills employees need to perform their necessary job duties.

Elements of performance management include giving performance appraisals, utilizing key performance indicators (KPIs) and management dashboards, peer review, 360-degree feedback (multiple individuals from managers to subordinates assist), and the use of employee management software.

A similar term, performance appraisal, also focuses on goals and self-improvement, but is focused on the individual and does not take the strategic goals of the organization into account.

Performance management is not only important to the organization, it’s essential for the individual as many growth opportunities including bonuses, promotions, and ultimately dismissals, are tied to this process.

Effective Performance Management

Effective performance management will look different depending on your specific industry and your organizational goals. However, there are two approaches you can take to get started.

Behavioral Approach

This works well when your employees work (and achieve) as part of a team and measuring individual results is difficult to do. In this approach, you evaluate your employees based on their behaviors and effort. Feedback looks like identifying current behaviors, communicating desired future behaviors, and providing training or coaching to bridge the gap between where they are and where you would like them to be.

Results-oriented Approach

This approach is ideal when performance metrics are easy to quantify such as meeting a sales quota, clocking billable hours, or reaching certain call statistics. In this approach, you focus on the quality and quantity of the end result.

Performance Management Process

A performance management plan consists of a five-step process. Let's take a closer look at the five steps.

While employees’ goals and responsibilities are outlined in the job description when they come on board, it’s essential to review this information with them regularly. Clearly set and communicated goals will help your employees understand what is expected of them and when they are falling behind.

Management should be monitoring their employees’ performance continuously. If you only check in once or twice a year, a slight veer off the prescribed path could have lasting impacts on one’s performance. That’s why staying in constant communication with your employees and keeping an open environment for feedback is essential all year long. This is especially true with fully remote teams, so this is where employee monitoring software can be a crucial tool in your arsenal.

If you have identified areas of improvement for your employee, you can work with them to provide training, mentoring, educational courses, or other materials that can help them get back on track or fill any skill gaps.

Without a rating scale, it can be difficult to recognize whether employees are improving from their development plan. Additionally, with a rating scale that is communicated to employees, they know where they currently stand, and what is needed to move them to the next level of performance.

While every step of the process is necessary, the reward may be the most important. Positively reinforce employees who are hitting their goals or working towards them. Recognize them for their hard work and for striving to be better and do better for the organization.

This can be in the form of bonuses, thank you cards with token gifts, public recognition, or through an employee rewards program. It not only inspires the employee who is being recognized but motivates others who may need an extra incentive.

Remember that the performance management process is a cycle that must be continuously employed throughout an individual’s time at your organization.

You’re never "done" with performance management and this should be conveyed to your employees when they join the company, and then communicated to them throughout their employment. Without open communication throughout the process, employees may become complacent in their lackluster job performance or disengaged.

Performance Management Best Practices

This concept and process have been around for years and thankfully, there’s no need to reinvent the wheel. There are a number of performance management best practices that you can incorporate into your plan.

• Re-evaluate goals regularly. If there’s anything the COVID-19 pandemic has taught us, it’s that societal shifts can demand a new approach to business. Goals may need to change and clinging to old decisions in a new world could cause you to penalize (and lose) good employees.
• Employ SMART goals. In order to be achievable, goals must be clearly defined and communicated, and Specific, Measurable, Actionable, Relevant, and Time-bound. Employees will be more likely to achieve goals when they are properly crafted.
• Utilize the objectives and key results methodology. The OKR methodology can help your team set, communicate, and track organizational goals. This will foster accountability among your employees.
• Have performance conversations throughout the year. Performance management conversations should not reveal any surprising information to the employee or manager. Ideally, managers are having open conversations with their team members about performance throughout the year, and performance reviews should serve as a check-in documenting performance over a specified time period. When you communicate regularly with each of your employees, they learn to expect constructive feedback and look forward to these encounters.
• Standardize and automate your process. All employees should follow the same performance management process, and be held to an even standard. In addition to making the process fair, there comes a tipping point when you may have too many employees to manage throughout a continuous cycle, and having a set process and automated software solution to manage performance reviews can be a helpful asset.

While creating a performance management plan in your organization will take some time and effort, it’s a necessary process for a thriving organization. Knowing which employees are excelling in their roles and reaching (or exceeding) goals, which employees need more support is priceless information.

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Ultimate Guide to Performance Management Planning

• March 5, 2024

Imagine being the HR leader in a fast-growing startup. Your team is great, but you know there’s room for improvement. The problem? Conducting performance evaluations feels like a shot in the dark without a clear plan. That’s where performance management planning comes in – the key to better evaluations and boosting employee productivity.

In this blog post, we discuss everything you need to know to plan your performance management process more effectively.

What is Performance Management Planning?

Performance management planning is the process of proactively outlining how you’ll evaluate and develop your employees’ performance. It’s a strategic process designed to:

Align individual and team goals with organizational objectives : Ensure everyone understands how their contributions directly impact the company’s success.

Drive continuous improvement : Equip employees with the tools and support needed to actively develop their skills and reach their full potential.

Boost employee engagement : Foster a culture of open communication, honest feedback, and development, keeping your workforce motivated and engaged.

Make data-driven decisions : Collect valuable insights from performance metrics to inform strategic decisions and track progress toward organizational goals.

By implementing performance management planning, you’re creating a structured and consistent approach to evaluation, ensuring both fairness for employees and measurable results for the organization.

What are the key elements of a successful performance management plan?

The key elements of a successful performance management planning process include clear performance goals and expectations, regular feedback and coaching, performance evaluations based on objective criteria, opportunities for development and growth, and a system for recognizing and rewarding high performance.

Forward-thinking organizations leverage technology like Peoplebox’s performance management platform to help them make their processes and performance management planning a breeze. Try it out yourself!

How to Implement a Good Performance Management Plan for Employees in Your Organization

Imagine you’re the HR manager at a thriving company, and you’re eager to elevate the performance of your talented team. Here’s a step-by-step journey to implement performance management planning seamlessly:

Step 1: Setting Organizational Goals

The foundation of an effective performance management system is built upon clear and measurable organizational objectives. These objectives should align with your company’s mission and vision, acting as the guiding light for your entire system. Here’s how to achieve this:

Brainstorm and prioritize goals: Collaborate with key stakeholders across various departments to identify and prioritize high-level objectives. Consider factors like market trends, customer needs, and your company’s long-term aspirations. Engage in open discussions to gather diverse perspectives, ensuring a comprehensive understanding of what truly matters to the organization.

Adopt Effective Goal-Setting Frameworks: OKRs, or Objectives and Key Results, are an impactful framework to adopt at this stage. They provide a structured and measurable way to set and track goals. Objectives define what you want to achieve, and Key Results quantify the progress. Incorporate OKRs into your goal-setting process to enhance clarity, accountability, and alignment with organizational priorities.

Cascade goals : Breaking down overarching organizational goals into smaller, departmental, and individual goals is crucial. This cascading approach creates a line of sight for employees, allowing them to understand how their individual contributions directly impact the bigger picture. 

Pro Tip : To foster a sense of shared responsibility and motivation, involve employees in the goal-setting process. Solicit their input, encourage them to share insights, and consider their perspectives when defining objectives. This inclusivity not only enhances the quality of goals but also ensures that employees feel a genuine connection to the organizational mission.

Step 2: Establishing Performance Management Framework:

Now that you’ve set the stage for your performance management journey, it’s time to establish a robust framework that will guide you through the process. Here’s how you can do it:

Choose a performance management model: Outline the specific processes and procedures for managing performance within your organization. This includes determining how performance will be assessed, monitored, and reviewed. There are many performance management models that you can leverage. If you aren’t familiar with them, we recommend checking out our latest blog post, “ Performance Management Models: A Comparison .” 

Choose Relevant Performance Metrics and Evaluation Methods : Identify key performance indicators (KPIs) and metrics that align with your organizational objectives and individual job roles. These metrics should be measurable, meaningful, and directly tied to desired outcomes. For example:

• For customer service roles: Customer satisfaction score, average resolution time, first contact resolution rate.
• For sales roles: Sales quota attainment, average deal size, lead conversion rate.
• For marketing roles: Website traffic, conversion rate, social media engagement metrics, brand awareness metrics.

Use performance measurement platforms such as Peoplebox to gauge Key Performance Indicators (KPIs) against set targets, ensuring that your decisions consistently align with your overarching goals.

Role of Technology in Performance Management: Leverage technology to streamline and enhance your performance management processes. Invest in performance management software platforms, like Peoplebox’s performance management platform, that offer features such as goal setting and tracking, feedback collection and analysis, performance review automation, and reporting capabilities. 

These tools can help automate administrative tasks, facilitate communication and collaboration, and provide real-time data and insights for informed decision-making.

Step 3: Developing Performance Goals

Now, it’s time to translate organizational strategic goals into individual and team performance objectives. And for this, as we discussed above, we will be looking into OKRs.

OKRs, or Objectives and Key Results, are a goal-setting framework used by many successful organizations, including Google and Intel. They are valuable because they provide clarity, focus, and alignment throughout the organization. Here’s how to set them effectively:

Set Ambitious Objectives: Objectives should be clear, inspiring, and ambitious. They should stretch employees to achieve their full potential while also aligning with the organization’s strategic priorities . For example, an objective could be to “Increase customer satisfaction by 20% within the next quarter.”

Define Measurable Key Results: Key Results are specific, measurable outcomes that indicate progress toward the objective. They should be quantifiable and achievable within a set timeframe. For instance, key results for the above objective could include “Reduce average response time to customer inquiries by 50%” or “Achieve a Net Promoter Score of 9 or higher.”

Let’s consider an example of an OKR for your marketing team

Objective : Increase Brand Visibility and Recognition

Key Results:

• Achieve a 30% increase in website traffic from organic search within the next quarter.
• Increase social media engagement by 25% measured through likes, shares, and comments.
• Secure coverage in at least five prominent industry publications or websites.

If you are new to OKRs, we understand it can seem daunting. To make it easier for you, we have curated a list of 70+ OKR examples that you can easily use for your organization.

Step 4: Designing Performance Reviews

Performance reviews, the next step in the performance management planning process, are a critical component of the employee performance management process, providing an opportunity for managers and employees to assess progress, provide constructive feedback, and set goals for the future. Here are key aspects to consider:

Frequency and format: Determine the frequency of performance management cycle based on your chosen process, complemented by regular informal feedback sessions. At Peoplebox, we recommend having weekly check-ins and one-on-ones in addition to monthly, quarterly, and annual performance reviews for an effective performance management plan.

Peoplebox lets you schedule and conduct dedicated one-on-one meetings for in-depth discussions and personalized goal setting.

Best practices for conducting one-on-one meetings:

• Set an agenda in advance: Ensure both parties know what topics will be discussed, allowing for preparation and a focused conversation.
• Create a safe and open environment: Encourage honest communication and active listening to foster open dialogue and feedback exchange.
• Focus on solutions, not just problems: While addressing challenges, emphasize collaboration on solutions and actionable steps for improvement.
• Follow up with notes and action items: Document key points discussed, decisions made, and next steps to ensure accountability and progress tracking.

Continuous feedback : Foster a culture of ongoing feedback through one-on-one meetings, project check-ins, or anonymous feedback tools . Timely and specific feedback allows for course correction and continuous improvement.

Conducting effective meetings : Coach managers with essential skills for conducting performance appraisals. If your organization is new to a streamlined performance management process, you can check out our blog post on performance management training for a comprehensive understanding of the process.

Here are some more tips to ace performance reviews in your organization:

Set Clear Expectations : Clearly communicate performance expectations, ensuring alignment with organizational goals.

Frequent Check-Ins: Conduct regular, informal check-ins to provide timely feedback and address concerns promptly.

Acknowledge Achievements: Recognize and celebrate employee achievements to boost morale and motivation.

Balance Feedback: Offer a balanced approach by highlighting strengths and addressing areas of improvement .

Link to Development: Connect performance assessments with personalized development plans and growth opportunities.

Data-Driven Insights: Utilize data and performance metrics to support feedback, making evaluations more objective.

Provide Training for Managers : Train managers in effective feedback delivery, fostering a positive and constructive review process.

Step 5: Communicating and Engaging the Employees:

In performance management, clear communication and employee engagement are essential for building trust, fostering a sense of ownership, and ultimately achieving desired outcomes. Here’s how you can ensure effective communication and engagement throughout the process:

Transparency is key : Clearly communicate the purpose and benefits of performance management system to both employees and managers. This helps everyone understand their roles and responsibilities within the system.

Define expectations: Clearly outline performance expectations for each role. This includes outlining key responsibilities, desired skillsets, and desired behaviors. Utilize specific and measurable criteria to avoid ambiguity and ensure everyone is on the same page.

Open dialogue : Encourage open and honest two-way communication throughout the process. This allows employees to ask the right questions, share their perspectives, and provide feedback on the system itself.

Involve employees in goal setting: Encourage employees to participate in setting their own performance goals with guidance from their managers. This increases buy-in and fosters a sense of ownership towards achieving those goals.

With performance management platforms like Peoplebox, your employees can easily set measurable goals and make sure they are aligned with the organization’s goals.

Use Multiple Channels: Utilize various communication channels, such as team meetings, emails, and collaboration platforms. This ensures that information is disseminated effectively to cater to diverse communication preferences.

Pro Tip: Recognize and reward outstanding performance to showcase the value of the performance management system and motivate employees to strive for excellence.

Step 6: Evaluating and Adapting the Plan:

While performance management is a continuous process, one of the most important steps is evaluating and adapting the performance management plan. It should be a living document, not a static one. Here’s how to ensure its effectiveness:

Regular evaluations: Conduct periodic reviews to assess the effectiveness of the performance management system. Gather feedback from employees and managers through surveys, focus groups, or one-on-one discussions.

Collect feedback : Utilize various methods to gather quantitative and qualitative data on the system’s effectiveness. This might include employee satisfaction surveys, analysis of performance metrics, or tracking improvement in key areas.

Make adjustments: Based on the gathered feedback and data, adapt the performance management plan to address identified issues and improve its effectiveness. This could involve adjusting the review process, revising metrics, or incorporating new technology solutions.

By following these steps and continuously adapting your approach, you can implement a performance management planning system that fosters growth, engagement, and success within your organization. Remember, effective performance management is an ongoing journey, not a destination. 

By investing in your people and creating a supportive environment for continuous learning and employee development, you can unlock the full potential of your team and drive your organization forward.

Use Peoplebox for Performance Management

Peoplebox offers a seamless approach to performance management, revolutionizing how organizations assess and enhance the performance of employees. From streamlined goal setting with OKRs to facilitating real-time feedback and coaching, Peoplebox empowers organizations to foster a culture of continuous improvement and drive business success. 

With its user-friendly interface, comprehensive features, and commitment to data-driven decision-making, Peoplebox stands out as the go-to solution for organizations looking to elevate their performance management practices and unlock the full potential of their workforce. 

Let us help you unlock your team’s potential. Contact us today !

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How to Measure Your Business Performance

• 14 Nov 2023

Measuring your business’s performance is essential to its long-term success. By assessing its operations, you can make informed decisions, find ways to improve, and establish accountability in the workplace .

Despite these benefits, many businesses struggle to use the vast amounts of data they have access to. According to a report by data storage company Seagate , businesses act on just 32 percent of the data available to them—with the remaining 68 percent going unleveraged.

If you want to help your organization achieve its strategic objectives, here’s why it’s vital to measure business performance and how to do it.

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Why Measure Your Business Performance?

Measuring business performance is critical to ensuring effective strategy formulation and implementation . It can also help identify obstacles and setbacks that impact your company’s success—similar to risk management .

According to the online course Strategy Execution , performance measurement comprises the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities.

Engaging in performance measurement helps you and organizational leaders , investors, and employees understand how your roles and responsibilities relate to your business’s strategy—creating a culture of accountability and commitment to achieving its goals and objectives .

How to Measure Business Performance

Long-term business success doesn’t just result from effective strategy execution; it also relies on a holistic approach to monitoring, measuring, and evaluating performance. This involves creating objective and subjective measures—often called key performance indicators (KPIs) .

While objective measures—like revenue and profit margin—are crucial to assessing performance, subjective measures are often overlooked.

“If a measure is objective, you can independently verify it,” says Harvard Business School Professor Robert Simons, who teaches Strategy Execution . “You and I could look at the same set of data and draw the same conclusion. A subjective measure, by contrast, requires judgment.”

For example, measuring employee engagement can help gauge the amount of internal support for your business strategy. High employee engagement can also greatly impact your company’s bottom line—increasing profitability by up to 23 percent .

“These measures work well only when there's a high degree of trust between employees and managers,” Simons says in Strategy Execution . “Employees must feel confident that subjective measures are applied fairly.”

Using diagnostic control systems —information systems managers use to monitor organizational outcomes and correct negative performance—you can ensure consistency and standardization when measuring success.

Examples of diagnostic control systems include:

• Performance scorecards
• Project monitoring systems
• Human resources systems
• Standard cost-accounting systems

Before implementing such systems and measuring your business performance, here are three factors to consider.

3 Considerations When Measuring Business Performance

1. financial goals.

Measuring business performance starts with financial goals. This is largely because your company’s financial value is its first indicator of success or failure. Financial goals also help ensure your diagnostic control systems effectively monitor profitability and provide insight into how to fix problems.

To set financial goals, you can use a profit plan —a summary of a specific accounting period’s anticipated revenue inflows and expense outflows—presented in the form of an income statement . Profit plans serve several purposes; their most important is creating control systems that place responsibility on management.

“Individual managers can be held accountable for achieving specific revenue and expense targets and the overall profitability of the business,” Simons says in Strategy Execution .

To confirm that your profit plan holds you and others accountable for your organization’s financial health , Simons suggests asking the following:

• Does the business create enough profit to cover costs and reinvest in future endeavors?
• Does the business generate enough cash to remain solvent through the year?
• Does the business create sufficient financial returns for investors?

“Once managers have completed the profit planning process,” Simons says, “people throughout the organization will be in agreement about the direction of the business and the assumptions that underpin the forecasts.”

Related: 7 Financial Forecasting Methods to Predict Business Performance

2. Non-Financial Goals

While financial metrics are critical to assessing short-term profitability, non-financial goals can impact your business’s long-term success.

Objectives like improving customer satisfaction, boosting employee engagement, and enhancing ethical practices can all drive business performance—even financially.

“An organization that's focused just on financial goals will rarely achieve those goals for a long period of time,” says Tom Polen, CEO and president of medical technology company Becton Dickinson, in Strategy Execution . “It's all the other goals that are going to feed into the financial goals.”

In the course, Polen says he consistently communicates his organization’s strategic objectives to employees and uses an incentivization system to reward those working to support non-financial goals.

“As a health care provider, the most important thing—bar none—is quality,” Polen says. “While we’re focused on financial goals, our quality goals—which cut across manufacturing, regulatory, marketing, and medical—contribute to making sure that we have quality products at the end of the day. And we’ll never sacrifice a quality goal for a financial goal.”

3. Intangible Assets

Your goals aren’t the only thing you can use to measure your company’s performance. Intangible assets—non-physical assets your business significantly values—can also help.

Examples of intangible assets include:

• Research capabilities
• Brand loyalty
• Customer relationships

“These are among the most valuable assets in many of today's businesses,” Simons says in Strategy Execution . “But you won't find them anywhere on an income statement or balance sheet .”

Since you can’t monitor these assets using traditional accounting systems, you can instead use a balanced scorecard —a tool designed to help track and measure non-financial variables.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

For example, if your business strategy focuses on improving an intangible asset, like brand loyalty, you can use a balanced scorecard to track customer satisfaction through surveys and reviews.

In this way, the balanced scorecard offers a comprehensive view of business performance, helping you make informed decisions to protect and enhance intangible assets’ value.

Start Measuring Your Business Performance

Measuring business performance doesn’t have to be difficult. By implementing the appropriate metrics and control systems, you can seamlessly track strategic initiatives’ progress.

By enrolling in an online course, such as Strategy Execution , you can be immersed in a dynamic learning experience featuring real-world examples of businesses that have employed performance measurement strategies to secure long-term success.

Do you need help measuring your business performance? Explore Strategy Execution —one of our online strategy courses —and download our e-book to discover how to think like a top strategist.

About the Author

Performance Management

Ivan Andreev

Demand Generation & Capture Strategist, Valamis

March 14, 2022 · updated April 2, 2024

17 minute read

Increasingly, organizations are understanding that their management systems must be brought into the 21st century if they are going to be competitive in the current market.

Research shows that previous systems, such as yearly appraisals, are outdated and can even serve to decrease employee engagement and motivation. In light of this, more companies are turning to performance management than ever before.

This dynamic and strategic approach to developing improved performance in employees is gaining ground in companies large and small, including many Fortune 500 and industry-leading organizations.

What is performance management?

The importance of performance management, the purpose and goals of performance management, the benefits of performance management, 15 employee performance management best practices, 5 real-world examples of performance management, what is the difference between performance management and performance appraisals.

Performance management is a strategic approach to creating and sustaining improved performance in employees, leading to an increase in the effectiveness of companies.

By focusing on the development of employees and the alignment of company goals with team and individual goals, managers can create a work environment that enables both employees and companies to thrive.

Based on the definition of performance management, a system is built within an organization to measure and improve the performance of the people in that organization.

In practice, performance management means that management is consistently working to develop their employees, establish clear goals, and offer consistent feedback throughout the year.

In contrast to other systems of reviewing employee performance, such as yearly performance appraisals , employee performance management is a much more dynamic and involved process with better outcomes.

For the Human Resources department, performance management is an important system for onboarding , developing and retaining employees, as well as reviewing their performance.

It is increasingly understood that a yearly performance appraisal system does not effectively engage employees, fails to consistently set and meet company objectives, and does not result in a strong understanding of employee performance.

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Why is performance management important?

In any organization, no matter the size, it is important to understand what your employees are doing, how they are doing it, and why they are doing it.

Without a system in place to define roles, understand individual strengths and weaknesses, provide constructive feedback , trigger interventions and reward positive behavior, it is much more difficult for managers to effectively lead their employees.

Smart organizations pair their performance management with an incentive management process. The two systems have a lot in common, from defining roles and setting goals to reviewing and rewarding employee behavior, and as such, do very well when run simultaneously. Using incentive management also means that the all-important ‘reward’ step of performance management is done properly.

Talent management is an important part of every organization. Three of the main problems that organizations face are:

• keeping employees engaged
• retaining talent
• developing leaders from within

These are the issues that performance management very effectively targets.

1. Keeping employees engaged

Engagement of employees is a focus of any management team. In a yearly appraisal system, goals would be given at the beginning of the year and then revisited 12 months later to see if they had been met. This long stretch of time without feedback or check-in is an almost certain engagement killer.

In fact, 94% of employees would prefer their manager gives them feedback and development opportunities in real-time, and 81% would prefer at least quarterly check-ins with their manager, according to the Growth Divide Study .

Studies show that employees do best with feedback on a monthly or quarterly basis, with regular check-ins serving as a zone to problem solve, adjust goals as necessary, and to refresh their focus on the goal. In fact, companies where employees meet to review goals quarterly or more frequently are almost 50% more likely to have above-average financial performance.

When surveyed, employees had some negative feelings about a yearly appraisal system:

• 62% of employees feel that their performance review was incomplete
• 48% did not feel comfortable raising issues with their manager in between performance reviews
• 61% feel that the process is outdated
• 74% feel that they would be more effective with more frequent feedback
• 68% of executives don’t learn about employee concerns until the performance review

All of this adds up to a lot of missed opportunities to solve problems and increase employee performance and engagement.

As employee engagement rises, nine key performance indicators show successful outcomes. Absenteeism, turnover, shrinkage, safety incidents, patient safety incidents and defects in quality are lessened by at least 25%, and often more, across the board. Customer experience, productivity and profitability all show positive outcomes.

This study, by Gallup , was conducted across a broad range of industries, showing that employee engagement is a critical factor, no matter the industry.

2. Retaining talent

Employees who have frequent meetings with management to discuss performance, solve problems and receive training are more likely to stay with the company.

If employees see that their management team is putting in the work to develop them professionally, help them succeed with their goals, and reward performance on a consistent basis, then they are more incentivized to both stay with the company and work harder.

3. Developing leaders from within

This consistent development and partnership between managers and employees allow for the development of leaders from within the company.

Recruiting costs can be extremely high, as are costs for onboarding and training new employees. To be able to groom leaders from within the company means that there is already a proven culture fit with this individual and that training costs and resources spent developing this person into an asset are not lost.

This leadership path also serves as a motivating force for employees, who can see that their hard work will be rewarded with promotions and other benefits.

Performance management also creates a need for management to consistently focus on company objectives and goals, and to consider how best to achieve them. This continual revisiting of goals means that they are more likely to stay relevant, as goals will be adjusted in light of new technology, changes in the market, or other factors throughout the year.

According to Forbes , ‘companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually, and those who do it monthly get even better results.’

The purpose of performance management is to give both managers and employees a clear and consistent system within which to work that, in turn, will lead to increased productivity.

• This system shows employees the pathway to success, allows for the measuring of performance coupled with feedback and offers training and development opportunities.
• Performance management allows management to understand what their employees are doing and track progress on company objectives while providing consistent feedback.

There are five main objectives of performance management:

• Develop clear role definitions, expectations and goals
• Increase employee engagement
• Develop managerial leadership and coaching skills
• Boost productivity through improved performance
• Develop a performance reward program that incentivizes accomplishment

These performance management goals show a clear path from the developing of goals to the rewarding of increased accomplishment. If one of these performance management objectives is not done well, then the others will suffer as a result.

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Performance management has a multitude of benefits for employees and managers, as well as for the company as a whole. If a company can successfully create an environment of engagement where customers are equally engaged by employees on the front line, their outcome is even better.

When organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers. – Gallup

• Having well-defined roles and performance standards makes hiring an easier process, as candidates know what is expected of them, and HR can more easily understand if a candidate is a right fit for the role.
• Those well-defined roles and standards make training easier, as trainers know exactly which areas need to be covered, and which information is nonessential.
• Consistent developing and revisiting of goals ensure that the organization keeps up with changing market forces easily, and reacts quickly as a whole, regardless of the size of the organization.
• Clear expectations and roles set employees up for achieving goals from the start, providing a springboard to success.
• Employees who feel that their company is invested in their success stay with their companies, increasing employee retention.
• Consistent feedback and coaching from managers lead directly to increased engagement from employees while developing the ability to provide good coaching and feedback leads to more skilled managers.
• As employees become more skilled, they can move up through the company, creating a leadership pipeline.
• Productivity will increase thanks to increased engagement, clear goals and upskilling of employees.
• Employees remain incentivized to perform long-term, as they are properly rewarded for their hard work.

While performance management can sound deceptively simple, with just four steps as outlined above, the process itself is very complicated. That’s why we have put together this list of best practices for performance management.

Think of it like the essentials of performance management – these will help make sure that your employee performance management system is performing the way it should.

1. Identify the goals of your performance management initiatives

As you are creating your performance management program, you need to understand what you want to accomplish.

Asking the following questions can help you:

• Is increased productivity a priority?
• Does your organization want to identify leaders from within and develop them?
• Do you want to streamline the compensation process?
• Are you seeking to improve employee retention or engagement?

If you know what you want your program to do, it will be easier to build it to accomplish that goal.

2. Define and describe each role

We mentioned this above, but it bears repeating. It is much harder for an employee to be successful if they don’t know exactly what is expected from them, how they should do it, and what the end result should look like.

3. Pair goals with a performance plan

As you set goals, develop a performance plan to go alongside. Year-long goals often fail, as they are too large and employees can get overwhelmed before they start. A performance plan helps them visualize their path, making it much more likely that they will meet their goal.

4. Monitor progress towards performance targets

Review key areas of performance. Use metrics and analytics to your advantage, tracking how goals are progressing to make sure that interventions can happen early, if necessary.

5. Coaching should be frequent

The point of coaching is to help identify and solve problems before they get too big. If it’s not frequent, it’s not going to help at all. Monthly or quarterly meetings should be held to help keep employees on the right track.

6. Use guidelines to your advantage

Guidelines should be created for each role as part of the first stage of the performance management cycle. These policies or guidelines should stipulate specific areas for, or limits on, opportunity, search and experimentation. Employees do their jobs better when they have solid guidelines to follow.

7. Build a performance-aligned culture

Make sure your workplace has shared values and cultural alignment. A sense of shared values, beliefs and expectations among employees creates a more harmonious and pleasant workplace. Employees should be committed to the values and objectives outlined, and exemplified by, top management.

8. Organize cross-functional workshops

This helps employees – and managers – understand what other departments do, how they think and what their strengths and weaknesses are. They can discover something new and find new connections, which can help them in future work.

9. Management should offer actionable feedback

During these coaching meetings, tensions can arise if the feedback is not given in a constructive, actionable manner. It is not very important to look backward and point fingers, rather management should guide employees towards future success.

10. Keep it professional, not personal

Giving less-than-stellar feedback is hard on both managers and employees, it’s one of the reasons that performance appraisals tend to be a least-liked task. Managers should make sure to keep feedback professional and remember to focus on behavior, rather than characteristics.

For example, pointing out that David regularly turned in important reports late is feedback about a behavior. Saying that David is lazy, and that’s why the reports were often late is feedback about a characteristic. One of these can help an employee own their role in a project’s success (or lack thereof) and the other will make them defensive instantly.

11. It’s not only employees that need training

Management should be trained too. Coaching and offering good feedback are not easy jobs, which is why there are so many specialist coaches out there. For managers to be able to lead well, they should be trained in these skill sets.

12. Take advantage of multiple-source feedback

Ask employees to write feedback for each other. This will give management a more holistic view on employee performance, understand the challenges that teams are facing, and be able to better offer feedback.

13. Don’t depend only on reviews

While the review process is important, it is only one part of the system as a whole. Planning, coaching, and rewarding employees are equally key parts of the system.

14. Problems are not always employee-based

It can be easy to assume that problems are always caused by employees, but that simply is not the case. Problems can arise from external factors such as availability of supplies, internal processes that are causing issues, or organizational policies. Seek out the source of problems as precisely as you can in order to fix them.

15. Recognize and reward performance publicly and frequently

Management cannot expect employees to stay motivated if they are never rewarded, yet many companies overlook this key step. Make sure that employees are compensated and recognized for their hard work, and they will continue delivering for your organization.

Of course, it’s one thing to understand the theory of what performance management is, but it’s another thing to use it in a real company. Let’s take a look at some real-world examples of the performance management process in action:

It’s no surprise that Google would show up on a list of companies that use a newer, innovative system of management. This company has always been a trendsetter, and their performance management process is one that relies on data and analysis, as well as making sure that their managers are well trained.

When assessing their performance management system, Google launched a project dedicated to assessing their managers, which has led to a thorough training and future development process that sets managers, and thus employees, up for success.

They also use a system of setting goals that have caught on across multiple industries. Using their Objectives and Key Results (OKRs) system, they reframe the goal-setting process, with great results.

Another tech trendsetter, Facebook has a performance management process that puts a heavy emphasis on peer-to-peer feedback. In semi-annual reviews, they are able to use that feedback to see how well teams are performing and understand where collaboration is happening – and where it is not. They also have developed an internal software to provide continuous, real-time feedback. This helps employees solve issues before they become problems.

Cargill is a Minnesota-based food-producer and distributor with over 150,000 employees and serves to demonstrate that even huge companies can ditch unwieldy performance appraisals and institute a new system. In following the latest research on the dissatisfaction of management with outdated performance management process, Cargill created their ‘Everyday Performance Management’ system. The system is designed to be continuous, centered around a positive employee-manager relationship, with daily activity and feedback being incorporated into conversations that solve problems rather than rehash past actions.

The Everyday Performance Management system had overwhelmingly positive results, with 69% of employees stating that they received feedback that was useful for their professional development, and 70% reporting that they felt valued as a result of the continuous performance discussions with their manager.

Adobe calculated that managers were spending about 80,000 hours a year on performance reviews, only to have employees report that they left those reviews demoralized and turnover was increasing as a result.

Seeing a system that only produced negatives, Adobe’s leadership team made a bold leap into a performance management system that began by training managers how to perform more frequent check-ins and offer actionable guidance, then the company gave managers the leeway they needed to effectively lead.

Management was given much more freedom in how they structured their check-ins and employee review sessions, as well as more discretion in salaries and promotions. Employees are often contacted for ‘pulse surveys’ – a way for the leadership team to make sure that individual managers are leading their teams well. One of the many positive results of this has been a 30% cut involuntary turnover due to a frequent check-in program.

Accenture is a massive company – over 330,000 people, so changing their systems means a huge effort. When they switched to their new system, they got rid of about 90% of the previous process. Now, they are using a more fluid performance management process where employees receive ongoing, timely feedback from management. This has been paired with a renewed focus on immediate employee development and an internal app for communicating feedback.

There are common threads in all of these examples. Each company has built a system that works for them, rather than following a one-size-fits-all approach. What works for one company might not work for another – it depends on the industry, the speed and flexibility of the company, and the overall goal of the system itself.

With similar names and purposes that sometimes align, it is no surprise that some people find it hard to spot the difference between performance management and performance appraisals.

In fact, performance appraisals are often part of the performance management process , although some companies still rely on performance appraisals alone.

An easy way to understand the difference between the two is that performance appraisals are reactive, and performance management is proactive.

A performance appraisal looks at all of the past actions of the employee within a set amount of time , and rates how well they performed in their role and how many goals they met.

Performance management looks at the present and future of the employee, and what can be done to help future performance and meet future goals . Performance management is focused on the development and training of an employee, and how that can benefit both the employee and the company.

A performance appraisal is a formal, operational task, done according to rigid parameters and in a quantitative manner. HR leads performance appraisals, with input from management. Performance management is much more informal and strategic, led by management with input from the employees in a more flexible manner.

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Performance management: Why keeping score is so important, and so hard

Effective performance management is essential to businesses. Through both formal and informal processes, it helps them align their employees, resources, and systems to meet their strategic objectives. It works as a dashboard too, providing an early warning of potential problems and allowing managers to know when they must make adjustments to keep a business on track.

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Organizations that get performance management right become formidable competitive machines. Much of GE’s successful transformation under former CEO Jack Welch, for instance, was attributed to his ability to get the company’s 250,000 or so employees “pulling in the same direction”—and pulling to the best of their individual abilities. As Henry Ford said, “Coming together is a beginning; keeping together is progress; working together is success.”

Yet in too many companies, the performance-management system is slow, wobbly, or downright broken. At best, these organizations aren’t operating as efficiently or effectively as they could. At worst, changes in technologies, markets, or competitive environments can leave them unable to respond.

Strong performance management rests on the simple principle that “what gets measured gets done.” In an ideal system, a business creates a cascade of metrics and targets, from its top-level strategic objectives down to the daily activities of its frontline employees. Managers continually monitor those metrics and regularly engage with their teams to discuss progress in meeting the targets. Good performance is rewarded; underperformance triggers action to address the problem.

Where do things go wrong?

In the real world, the details of performancemanagement systems are difficult to get right. Let’s look at a few common pitfalls.

Poor metrics

The metrics that a company chooses must actually promote the performance it wants. Usually, it can achieve this only by incorporating several of them into a balanced scorecard. Problems arise when that doesn’t happen. Some manufacturing plants, for example, still set overall production targets for each shift individually. Since each shift’s incentives are based only on its own performance, not on the performance of all shifts for the entire day, workers have every incentive to decide whether they can complete a full “unit” of work during their shift.

If they think they can, they start and complete a unit. But if they don’t, they may slow down or stop altogether toward the end of the shift because otherwise all of the credit for finishing their uncompleted work would go to the following shift. Each shift therefore starts with little or no work in process, which cuts both productivity and output. A better approach would combine targets for individual teams with the plant’s overall output, so workers benefit from doing what they can to support the next shift as well as their own.

Poor targets

Selecting the right targets is both science and art. If they are too easy, they won’t improve performance. If they are out of reach, staff won’t even try to hit them. The best targets are attainable, but with a healthy element of stretch required.

To set such targets, companies must often overcome cultural barriers. In some Asian organizations, for example, missing targets is considered deeply embarrassing, so managers tend to set them too low. In the United States, by contrast, setting a target lower than one achieved in a previous period is often deemed unacceptable, even if there are valid reasons for the change.

Lack of transparency

Employees have to believe their targets encourage meaningful achievement. Frequently, however, the link between individual effort and company objectives is obscure or gets diluted as metrics and targets cascade through the organization. Different levels of management, in an attempt to boost their own standing or ensure against underperformance elsewhere, may insert buffers into targets. Metrics at one level may have no logical link to those further up the cascade.

In the best performance-management systems, the entire organization operates from a single, verified version of the truth, and all employees understand both the organization’s overall performance and how they contributed to it. At the end of every shift at one company in the automotive sector, all employees pass the daily production board, where they can see their department’s results and the impact on the plant’s performance. The company has linked the top-line financial metrics that shareholders and the board of directors care about to the production metrics that matter on the ground. Frontline employees can see the “thread” that connects their daily performance with the performance of their plant or business unit (Exhibit 1).

A senior leader at another manufacturer aligns the whole organization around a shared vision through quarterly town-hall meetings for more than 5,000 staff. Managers not only share the company’s financial performance and plant-specific results but also introduce new employees, celebrate work anniversaries, and recognize successful teams. Most important, if targets are missed, the senior leader acts as a role model by taking responsibility.

Lack of relevance

The right set of metrics for any part of a business depends on a host of factors, including the size and location of an organization, the scope of its activities, the growth characteristics of its sector, and whether it is a start-up or mature. To accommodate those differences, companies must think both top-down and bottom-up. One option is the hoshin-kanri (or policy-deployment) approach: all employees determine the metrics and targets for their own parts of the organization. Employees who set their own goals tend to have a greater sense of ownership for and commitment to achieving them than do those whose goals are simply imposed from above.

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Lack of dialogue.

Performance management doesn’t work without frequent, honest, open, and effective communication. Metrics aren’t a passive measure of progress but an active part of an organization’s everyday management. Daily shift huddles, toolbox talks, after-action reviews, and the like all help to engage team members and to maintain a focus on doing what matters most. Applying the “plan–do–check–act” feedback loop, based on pioneering research from Charles Shewhart and W. Edwards Deming, helps teams learn from their mistakes and identify good ideas that can be applied elsewhere. And in many high-performing companies, supervisors act as coaches and mentors. One-on-one sessions for employees demonstrate concern and reinforce good habits at every stage of career development.

Lack of consequences

Performance must have consequences. While the majority of employees will never face the relentless “win or leave” pressure typical of professional sports, weak accountability tells people that just showing up is acceptable.

Rewarding good performance is probably even more important than penalizing bad performance. Most companies have various kinds of formal and informal recognition-and-reward systems, but few do enough of this kind of morale building, either in volume or frequency. In venues from lunchroom celebrations to town-hall announcements, employee-of-the-month and team-achievement awards are invaluable to encourage behavior that improves performance and keeps it high. One COO at an industrial-goods company keeps a standing agenda item in the monthly business review for recognizing the performance of individuals and teams. Employees on the list may find a gift waiting at home to thank them (and their families) for a job well done.

Lack of management engagement

The words of Toyota honorary chairman Fujio Cho—“Go and see, ask why, show respect”—are now famous as basic lean-production principles. Yet in many companies, senior managers rarely visit plants except during periodic business reviews, and they appear on the shop floor only when a major new capital improvement is to be inspected.

Management interactions with frontline personnel are an extremely powerful performance-management tool. They send a message that employees are respected as experts in their part of the business, give managers an opportunity to act as role models, and can be a quick way to solve problems and identify improvements.

One company’s machinery shop, for example, had developed such a reputation for sloppiness and missed deadlines that managers suggested outsourcing much of its work. When a senior manager was persuaded to visit the workshop, he was appalled at the dirty, cluttered, and poorly maintained environment. Employees reported chronic underfunding for replacement parts and tools, and asked the manager what it would take to save their jobs. He told them to “clean up the shop and give me a list of what needs to be fixed.” Both sides lived up to their commitments, and in less than a year the shop became a reference case for efficiency within the company.

Building a strong performance-management system

The best companies build performance-management systems that actively help them avoid these pitfalls. Such systems share a number of characteristics.

Metrics: Emphasizing leading indicators

Too often, companies measure and manage performance through lagging indicators, such as compliance with monthly output or quality targets. By the time the results are known, it is too late to influence the consequences. The best companies track the same metrics—but also integrate their performance-management systems into critical process inputs. Industrial Internet technologies, such as the SCADA 1 1. Supervisory control and data acquisition. architecture and distributed-control systems, let manufacturing staff know within minutes (or seconds) about variations in performance, even in remote parts of a plant. That lets people react long before the variation undercuts output or quality.

Some changes require almost no investment in technology. At the end of each workday, for example, production and functional teams can complete a checkout form assessing how it went. A combination of quantitative and qualitative metrics and simple graphics (such as traffic lights and smiley faces) provides an easy, highly effective tool for identifying and correcting issues or problems before the next day’s work begins.

As performance-management systems evolve, the metrics they use will become more complex, incorporating continuous rather than discrete variables: “everyone showed up on time today” will become “the team achieved 93 percent on the schedule-performance index using 90 percent of the labor-performance index.” The extra detail better informs decisions such as whether to add more labor to meet a delivery date or to push out a schedule for delivery.

Sustainability: Standard work and a regular heartbeat

Regardless of changes to metrics and targets, the best companies keep the cadence of meetings and reviews constant, so they become an intrinsic part of the rhythm of everyday operations (Exhibit 2).

The emphasis on regular, standardized processes goes beyond explicit performance-management activities and extends deep into every aspect of a company’s operating models. Standard work, for example, is based on three simple rules. First, there should be a standard for all activities. Second, everyone must have the knowledge and ability to meet that standard. Finally, compliance with it must be monitored and measured.

In many functions, the business cycle forces a regular rhythm or cadence: the weekly payroll, the monthly accounting close, or the quarterly inventory review. Good companies take advantage of these requirements to define a few central metrics, such as cycle times and accuracy, thus driving continuous improvement across every function.

As part of a lean-manufacturing excellence program, one industrial-commodities company encourages employees to indicate “what went well today, what didn’t go well today, what management can do to help” on their productionarea boards every day. Supervisors collect the information on index cards and post them on a lean-idea board. Representatives of each function meet with the plant manager every morning and accept or reject the cards or return them for more information. Every accepted card gets an owner and timeline for completion. Company leaders estimate that the boards generate at least $2 million a year in cost savings or higher output—but the impact on employee morale and engagement is “priceless.”

The great re-make: Manufacturing for modern times

This 21-article compendium gives practical insights for manufacturing leaders looking to keep a step ahead of today’s disruptions.

A checklist or standard operating procedure that defines the steps and sequences for every key process usually enforces standard work. In employee onboarding, for example, one company noted that small details—assigning email addresses, telephone numbers, and software and hardware access—were especially important for retaining employees early in their tenures. A checklist is now at the front of each new hire’s personnel file, with a copy in the supervisor’s file. The performance reviews of supervisors now assess how well they handled the onboarding of new employees, and everyone who resigns completes a mandatory exit interview.

Continuous improvement: Standard work is for leaders too

Standard work is essential at all levels of an organization, including the C-suite and senior management in general. Standard work for leaders forces a routine that, while uncomfortable at first, develops expectations throughout an organization. It is those expectations, along with specific metrics, that ultimately drive predictable, sustainable performance.

One global resources company now requires managers to demonstrate that they spend 50 percent of their time on a combination of coaching their people and attending safety briefings, shift huddles, improvement reviews, and production meetings. To free up time, other meetings are scheduled only on one day a week— and conference rooms no longer have chairs.

Taking this approach even further, every autumn a field-services organization commits itself to a comprehensive, enterprise-wide calendar for the entire following year. The calendar sets dates for all conferences, monthly and quarterly management meetings, formal performance reviews, and succession-plan meetings, as well as training and development opportunities. All agendas are fixed, and all meetings are subject to strict time limits. There is little need for additional leeway because internal reporting follows tight guidelines for transparency and timeliness: financial results are published internally every month, while data on the performance of teams and units in meeting annual incentive-plan goals are updated and published monthly on bulletin boards.

Most industrial companies have access to rich data on the performance of their operations. The technological advances associated with increasing use of automation, advanced analytics, and connected devices mean that this resource constantly improves. But how can organizations best use their data? A crucial part of the answer is instant feedback loops, daily performance dialogues, and routine performance reviews. Maintaining the willingness and ability to hardwire these performance-management processes into the rhythm of daily work isn’t sexy—but over the long run, it’s the most effective route to real, sustainable performance improvements.

Raffaele Carpi is a partner in McKinsey’s Lisbon office , John Douglas is an alumnus of the Houston office , and Frédéric Gascon is a senior vice president of RTS and is based in the Montréal office .

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What Is Performance Management?

Table of Contents

When it comes to running a business of any size, information is key. From sales numbers and social media engagement to marketing lead conversion rates and operating costs, knowing how your company is faring compared to its overarching goals is paramount.

While it’s always a good idea to keep an eye on your company at the macro level, you should apply that same attention to detail to individual employees. With a carefully considered performance management process, managers and employees can refocus their efforts and set expectations that line up with the company’s goals.

What is performance management?

Performance management is a tool aimed at maintaining and improving employee performance. Through consistent communication and appropriate systems and processes, performance management helps ensure employees are performing to the best of their ability and meeting important goals.

Performance management consists of planning, monitoring, developing, rating and rewarding . Each step is important, but to be effective, performance management must be implemented strategically, integrated into your company culture , and align with overall organizational goals.

How do you create a performance management plan?

Establishing a strong performance management plan takes effort. Thinking about your company’s needs and ensuring that your managers and other employees understand those goals through consistent communication is a lot to start with, but it can really be a boon to overall productivity and enthusiasm. [ Check out BambooHR , our top pick for the best employee monitoring system for performance management.]

To kick-start the process, here are a few ways you can make sure you and your employees get the most out of performance management efforts.

1. Create measurable performance-based objectives and expectations.

Employees should understand and give input on how each objective’s success is to be measured. Expectations generally fall into two categories:

• Results: These are the goods and services an employee produces, often measured by objectives or standards.
• Actions and behaviors: These are the methods used to make a product or perform a service, and the behaviors and values demonstrated during the process. They can be measured through performance dimensions.

2. Define professional development plans.

Supervisors and employees should work together to create development plans. The plan can focus on skills aimed at mastering the job or on professional development skills beyond the scope of the employee’s job description . Employees should have a say in what new things they learn and how they can use those skills to the company’s benefit.

3. Meet regularly to discuss overall progress and identify potential roadblocks.

Rather than waiting until an annual review, managers and employees should be actively engaged throughout the year to determine overall goal progress.

A major tenet of a good performance management plan is consistent focus on strategic goals and progress. Without that, employees are generally in the dark as to whether they made any solid improvements that contribute to the company.

Since employees need a clear understanding of what’s expected of them and how their goals fit into the company’s overarching success, it’s important to set company goals to define what success even looks like. To that end, Gary Cokins, an expert with decades of experience in enterprise and corporate performance management, said it’s up to the people at the top to establish what the company wants to achieve.

“If managers and employees don’t understand the executive’s strategy, how do we expect them to understand what they do each day, each week and in each decision?” he said. “Without that understanding, it’s hard to make sure everything aligns with the [performance management plan]. It’s the executive’s job to ask, ‘Where do we want to go?,’ but it’s the managers’ and employees’ job to find out ‘what we will do to get there.’” [Read related article: 6 Tips for Writing an Effective Performance Review ]

Performance expectations should go beyond the job description to cover a range of expected outcomes. Here are some examples:

• What goods and services should the job produce?
• What effect should the work have on the company?
• How should employees act with clients, colleagues and supervisors?
• What organizational values should the employee demonstrate?
• What processes or methods should the employee use?

Why is performance management important?

Regardless of how big or small your company may be, performance management is an important thing to consider. In fact, business owners “should be thinking about [performance management] from day one,” according to Christine Tao, co-founder of Sounding Board.

“Performance management is really about understanding and motivating employees to perform effectively to support the broader goals of the organization,” she said. “It’s also about aligning the individual goals of employees to the broader goals of the organization – because if you can do so, you can help the company achieve peak performance in congruence with employees achieving individual peak performance.”

Tao says performance management can help companies of all sizes “really take off and see success that is driven from its teams .” If done correctly, performance management begins with an aligned set of measurable objectives for each employee and engenders a culture of learning and development for higher workplace performance. Armed with the knowledge of what’s expected of them, each staff member should be motivated to improve their skills, competencies, development and delivery of results. 

What are the benefits of performance management plans?

In most companies, the only evaluation employees receive from their supervisor or the human resource department is an annual performance review. In those conversations, employees are generally asked how they felt the past year went and what they can do to improve for the following year before receiving feedback. This boilerplate is potentially useful but predictable.

While that kind of appraisal helps illuminate the existing strengths and weaknesses of an individual staff member, a performance management process focuses on ongoing communication and accountability.

Experts believe that companies with an ongoing performance management process get better results than those that just have check-ins with management or human resources each year, since they can more easily root out what’s not working and double down on what is.

With periodic meetings with management, employees benefit from a continual push to progress, rather than a sudden rush to meet objectives once their review rolls around. Removing that scramble can yield drastically more positive outcomes for employees, managers and organizations.

Once implemented, an effective performance management plan has these benefits for employees, managers and organizations:

• Improved communication: With regular check-ins from managers, employees are encouraged to communicate more freely about the company’s objectives and their performance goals.
• Well-defined rules: With a better understanding of how they will be evaluated moving forward, employees and their managers can gauge how they’re doing without waiting for the next review.
• Reduced stress: Everyone wants to be a good employee. Without feeling like they must try to impress a higher-up all the time, employees can focus on the task at hand. Meanwhile, managers are less likely to worry about offending underperforming employees.

How do performance management plans benefit everyone?

Performance management is a must for any company — regardless of size or industry. When employees receive clear expectations and honest feedback, they can continue to grow in their role, develop new skills and help meet larger company goals. 

Casey Conway and Nicole Fallon contributed to the writing and reporting in this article. Some source interviews were conducted for a previous version of this article.

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Business performance planning overview

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As businesses grow and evolve, planning becomes a critical part of putting strategic goals into operation. However, planning is often complex and time consuming because of disconnected systems, large volumes of data, and manual processes. These issues lead to inaccuracies, delays, and a high total cost of ownership (TCO). At a time when businesses are looking to take full advantage of key opportunities, they lack visibility into data relationships and any outliers.

To support an efficient and accurate planning process, a solution must provide streamlined aggregation of data, a familiar and collaborative set of tools, and the ability to transform a plan into action.

Business performance planning offers financial and operational planning and analytics that create a connected enterprise experience. It uses the familiar productivity tools of Microsoft Power BI and Excel. By using these tools, you can help plan and create what-if scenarios. Through the power of Dataverse, you can use data flows and Microsoft Power Platform to eliminate manual processes and achieve optimal efficiency for your organization.

The business performance planning feature set consists of two main concepts:

• Modeling data that's required for planning
• Acting on the data that's provided

In the business performance planning app, you can create dimensions and cubes, load fact data into the cubes, and define dimension and cube access. In addition, by using the canvas application, Power BI, and Excel, you can modify the dimension data to create new master data.

You can act on the dimensions and cubes in Power BI by applying planning-specific visuals. Use the visuals to easily copy actuals into a preliminary plan, create multiple versions of plans, use write-back capability from Power BI to Dataverse to ensure that you're looking at the latest data, and provide a collaborative experience by entering comments directly in the plan. Because business performance planning is a native Dataverse solution, Power Automate and other Microsoft Power Platform capabilities can be used for notifications, workflows, custom fields, and much more.

An Excel add-in (available in a later release) provides more ways to update dimension data and enter planning-related information.

Key concepts and terms

• Cube – A collection of dimension and fact data that's used for modeling and analytical purposes.
• Dimensions – Descriptors that define the facts. They're typically what you want to use to slice and view your fact data. Common dimensions are people, product, place, and time. A dimension consists of one or more columns. For example, a time dimension might contain the date, month, year, and other aggregation details or attributes. These columns can then be used in the analysis of transactions to create a hierarchical structure that provides a drill-down path from the year to the month to the date.
• Facts – Numeric values that can be aggregated and analyzed. (Aggregation and analysis are the fundamental reasons for defining a cube.) Examples of fact data include sales invoices, production costs, or salaries and wages.

Cube example

Consider the dimensions that you want to create and include when you assemble a cube. The dimensions provide the mechanism for filtering your data in Power BI. When you create the cube, select all the dimensions that you want to include in it. However, keep in mind that you can filter data by those dimensions in Power BI only if the fact data has a relationship with them.

For example, Contoso Company has the following sales data.

A sales director at Contoso might want answers to the following basic questions:

• Who is my best customer?
• Which sales territory has the most sales?

The sales director might also want to do a deeper analysis to understand the trends and relationships between the data. For example, they might want answers to the following questions:

• What are the top-selling products in each territory?
• Do any of the products have a seasonal sales pattern?

By creating a cube that contains Product, Time, Customer, Territory, and actual sales as dimensions, the sales director can filter and group data based on how they want to view it. For example, they might want to group sales by territory so that they can identify the top-selling products in each territory. This grouping can give them insight into when the peak season for sales is. The following table lists the data that the cube shows in this example.

The sales director can use the dimensions that were created during planning to slice their data by territory, product, and date in Power BI. In this way, the sales director can understand trends and prepare a plan that takes into account any trends or outliers.

To identify patterns and filter data, a dimension must map to the sales data in the first table in this article. Therefore, the following dimensions are defined for the cube:

The sales data (fact data) must contain the details for Territory, Product, Time, and Customer.

As part of the planning process, the sales director uses the sales fact data to create a plan for what they think will happen in the upcoming year. During this time, the sales data can be copied into a new scenario that's named Sales plan . The organization then has a starting point for creating a sales plan for the upcoming year. For example, by reviewing their actuals, they can plan for a spike in sales during the summer and a decline in sales during the winter. By taking advantage of the ability to filter and group the data by dimension, they can build a plan based on the insights that they gain from the data.

Configuring and using business performance planning

The process of configuring and using business performance planning involves the following tasks:

• Create dimensions
• Create cubes
• Load fact data into cubes
• Connect Power BI to data
• Install planning visuals
• Configure visuals
• Secure by dimension or cube (available in a later release)
• Share plans

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Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

• Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
• Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
• Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
• Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
• Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
• Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

• Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
• Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
• Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
• Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
• Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

• Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
• Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
• Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
• Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
• Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

• Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

• Create a business plan to determine your company's direction, obtain financing, and attract investors.
• Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
• Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
• You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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The 5 stages of a performance management cycle you should know

May 8, 2024

Bogdan Zlatkov

Table of contents.

Highly-productive employees share several core similarities: 

• They report feeling recognized for their performance
• They’re encouraged to develop further professionally
• They’re fully aware of what’s expected of them
• They’re also aware of how they’re meeting those expectations

What else do all of those factors have in common? 

They’re the core elements of an effective performance management cycle. 

But what exactly is a performance management cycle and what does it involve? How does it help maximize performance within a business? And how can HR teams implement the five key stages to create a powerful lift in employee performance? 

Those are exactly the questions we’ll answer in this guide.

What is a performance management cycle?

Before we dive into the stages that make up an effective performance management program, let’s go over what a performance management cycle truly is—or should be. 

There is still a rift between the “old” way and the “new” way with which HR teams and managers approach performance management. 

On the one hand, there is the traditional process, where reviewing and managing performance happens once yearly and revolves around a singular, annual review.

On the other hand, there is the more modern approach, which is an always-on performance management process built on annual reviews plus frequent milestone reviews (and usually leverages nimble performance management software ). 

A great performance management cycle should be an iterative, ongoing process of employee evaluation. This approach creates a positive work environment—one where open, regular communication and goal-setting boosts morale and motivation to grow—all of which are the biggest factors impacting retention . 

Why does that matter?

It can cost up to two times an employee’s salary to replace them if they quit to go find another job.

Creating a better performance management process does require more input as well as access to connected data , but new tech is now making it easier than ever to make this happen.

Let’s take a look at the five performance management stages.

The 5 stages of a performance management cycle

There are five stages to any performance management cycle. Let’s break down each stage and understand what’s most important to focus on in each stage.

Each performance management cycle should start with managers and employees aligning on performance expectations, performance goals, and key performance indicators (KPIs). This is crucial for ensuring that employees understand the criteria they will be held to in their eventual performance review.

This is also a perfect time to encourage personal employee goals—such as learning new skills, developing competencies, or taking on additional projects—and ideally aligning them with company goals.

These types of goals can keep employees motivated throughout the cycle and may give managers insight into how to coach their direct reports toward achieving more than just their basic job requirements.

Once performance expectations are established in the planning phase, it’s time to move on to implementation. As employees start working towards their goals, managers should actively track their progress.

Monitoring is core to how management teams execute the performance management cycle. At this step, continually observing and providing feedback allows managers to address suboptimal performance on an ongoing basis as well as recognizing overperformance.

A helpful tool for monitoring progress are weekly one-on-one meetings, which give employees and management a chance to align on progress, share feedback, and work through roadblocks.  

It’s important that managers focus on coaching and supporting goal achievement during these meetings instead of micromanaging day-to-day tasks. 

Development goes hand-in-hand with monitoring. That’s why you’ll sometimes see “monitoring” and “developing” grouped together.

It’s important to note that development doesn’t just mean acting on underperformance, you can also zero in on overperformance to boost it even further. 

At this phase, it’s the responsibility of managers to implement creative development opportunities that meet the employee where they are and to take them toward the goals they want to achieve.

Development programs may include:

• Skills gap analyses
• Upskilling/reskilling courses 
• Peer-to-peer coaching
• Matching with an internal mentor
• Team challenges that gamify performance improvement
• Knowledge-sharing activities (hackathons, lunch and learns, etc.)

Next comes the evaluation and scoring of an employee's performance. Transparent communication between the planning and rating stages will minimize surprises when it comes time for ratings. 

This is an opportunity to address any areas of underperformance while also recognizing and rewarding (more on that next) standout talent.

One critical aspect for HR leaders and managers to consider during this phase is unconscious biases , which can be caused by:

• How similar or different demographically the person being reviewed is
• How the current person compares to the last person they reviewed 
• How the person performed in the last cycle  
• Your first impression of the person on review
• A sense of sympathy for the person

Bias can influence performance reviews, especially when a manager is solely responsible for rating an employee's overall performance. To reduce bias and create a fairer performance appraisal, many organizations adopt 360-degree feedback . This incorporates peer reviews to provide a broad and diverse perspective of performance.

Regularly recognizing hard work isn't just a gesture, it's a key final step in this cycle.

Recognition boosts motivation , employee engagement, productivity, and loyalty. Yet, only one-third of employees feel their work is currently being recognized.

Here are some ways to celebrate employees' accomplishments:

• Host an awards ceremony to provide public recognition 
• Build a peer-to-peer recognition program
• Offer personalized gifts related to hobbies, favorite foods, etc.
• Gift a VIP parking spot for a month
• Offer access to personal development programs
• Extend additional paid time off
• Offer compensation in the form of stock options, a bonus, or a raise
• Grant a promotion

Tiering your approach to provide rewards commensurate with improvements or achievements can make this phase of the cycle even more impactful. 

Key roles in the performance management cycle

There are 3 key roles that are involved in performance management. Let’s take a look at each role’s responsibilities and how they interact with each other.

HR Professionals

Ultimately, strategic HR teams should be the drivers of the cycle by overseeing and leading performance management at a high level.

Their core job is creating the structure, education, and support that make the cycle function effectively.

This involves: 

• Putting performance rating system into place
• Ensuring that managers and employees understand their roles and responsibilities throughout this process
• Setting dates and reminders for each step of the performance cycle process
• Training managers on using the performance rating system, giving actionable feedback, having productive conversations, and setting goals collaboratively
• Educating on biases to ensure consistent and equitable employee ratings and rewards 
• Remaining available for guidance

Managers are the boots-on-the-ground leaders who work with the performance cycles. Their buy-in and participation is key because it will trickle down to the employees and create a culture of always-on performance management.

This involves: 

• Collaborating with direct reports to set performance expectations and solidify goals
• Conducting regular check-ins to monitor progress, address obstacles, and provide coaching
• Gathering feedback to ensure a fair performance assessment and develop relevant, actionable next steps
• Finalizing and delivering employee ratings, rewards, and feedback
• Assisting in creating performance improvement plans (as needed) and continuing to monitor and support progress

Employees are primarily on the receiving end of the activities that take place in the performance management cycle. However, HR and management should also solicit feedback from employees in the form of 360-degree reviews as well as pulse surveys . This is vital to make sure that the performance management system is driving employee engagement.

In addition, there are several ways in which employees can participate in their own career development and contribute to improving the performance management process. 

• Working alongside managers to create performance objectives that align with their professional development plans where possible
• Regularly updating management on goal progress and requesting help on any hurdles affecting it 
• Maintaining their own record of professional achievements to ensure a fair and comprehensive review, rating, and reward at the end of the cycle

Performance management software

It’s no secret that HR teams are already stretched pretty thin and often under resourced. This has historically posed a barrier to  implementing continuous performance management cycles. But this is quickly changing.

Thanks to new HR software, HR leaders are able to now roll out smooth and collaborative performance management cycles. The key to this is being able to connect your data as well as all the various modules of your HR systems (HCM, HRIS, etc.).

With Rippling’s performance management software , HR teams can now align on goals, automate review cycles, calibrate consistent and fair ratings, manage shifting roles and compensation, and report on performance , all from one platform. And, when you have Rippling connected with the rest of your systems, employee performance is always easy to track across multiple modules. This means any new data can simply be pushed from one place and quickly populated everywhere .

Creating an effective performance management cycle can significantly impact organizational success in terms of productivity, retention, career growth, and overall business results.

Rippling is a best in class tool that strategic HR leaders can apply to help managers align expectations, monitor progress, foster employee development, conduct fair evaluations, and reward achievements in a way that creates a positive, motivated, and goals-driven team.

It’s time to spin up effective, lasting performance management cycles. Request a live demo or view a video tour of Rippling today.

Senior Content Marketing Manager, HR

Bogdan is a content marketer with over 8 years of B2B experience writing for some of the most innovative brands in tech.

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Enterprise performance management: Everything you need to know to fuel business growth

Fine-tune your business operations and practice financial prudence by implementing enterprise performance management (EPM) software solutions.

Discover key challenges today's marketing teams are facing, as well as opportunities for businesses in 2024.

Streamline business operations at all levels — from executives to interns — with the analytical power of enterprise performance management.

Coordinating a company’s different roles and departments to work together effectively is challenging. Teams often operate in silos, have distinct goals, and rely on separate data sources, leading to misaligned strategies and missed opportunities.

This fragmented approach hampers overall productivity and dilutes your company’s vision. But enterprise performance management (EPM) can bridge these operational gaps. By integrating data across departments, aligning objectives, and offering actionable insights, EPM systems ensure that every team moves harmoniously toward shared goals.

What’s enterprise performance management?

Enterprise performance management is a set of strategies that teams use to manage and improve performance and efficiency. It’s an umbrella term for multiple approaches to monitoring and refining business operations at every level. And EPM software — powerful tools designed to centralize, analyze, and present data in meaningful ways across an organization — is at the core of implementing these strategies.

The evolution of enterprise performance management software

EPM has a rich history spanning several decades. In the 1970s, before the first EPM systems introduced systematic financial data collection, teams depended on manual data entry and form filling conducted through meetings and phone calls. This drastically changed when VisiCorp launched VisiCalc, the first spreadsheet computer program, and turned the Apple II into a vital business tool.

But the real breakthrough came with Lotus Software’s release of Lotus 1-2-3 in 1983. This was a revolutionary development because their software automated tasks such as budgeting and reporting — ultimately pushing businesses away from labor-intensive data entry.

A few years later, the 1990s ushered in the age of email, which transformed how we share information and collaborate. Instead of saving data locally, users sent it across the internet almost instantaneously, saving time and resources. Entering the 2000s, EPM software built on these foundations and shifted from localized client-server systems to internet-powered, web-based platforms that make data transfer faster, more remote, and more convenient for collaboration.

Today, cloud-based EPM solutions, or software as a service (SaaS ) solutions, dominate the business world. These tools use sophisticated algorithms to optimize financial processes, reduce human error, and increase overall team productivity. Examples of these cloud-based solutions include advanced data analytics platforms, collaborative project management tools, and comprehensive financial planning and reporting systems.

Half a century after their birth, EPM tools are must-haves for organizations that want to optimize their operations and scale.

Why is enterprise performance management important?

At first, enterprise performance management systems were designed to transition finance departments from spreadsheets to platforms with superior data analysis and reporting capabilities. But this newfound power for analysis often drowned organizations in data.

Modern EPM solutions address this gap. Harnessing the capabilities of artificial intelligence (AI) and machine learning (ML), they also automate routine, manual tasks like data entry and organization and drive insightful decision-making by detecting complex patterns in data.

For example, today’s EPM platforms offer instant visibility into multiple business areas, such as financial metrics — like revenue growth, expense tracking, and profit margins — and operational metrics, like supply chain efficiency, production downtime, and customer satisfaction rates. These ready-made reports and integrated analytic tools help you proactively respond to market shifts so you can minimize risks and capitalize on emerging opportunities.

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The 5 key components of enterprise performance management

The EPM process involves several key elements working together, including:

1. Data centralization

EPM systems unify data from multiple departments such as marketing, sales, customer service, human resources, information technology, and more. Automation algorithms draw this data from websites, ecommerce platforms, and other external sources and consolidate it within the EPM system to allow access to all teams.

Your marketing team, for example, might access sales data to see which campaigns yield the highest return on investment (ROI). This condensed view ensures everyone operates from a unified knowledge base, leading to more informed decisions.

2. Business strategy optimization

Modern EPM systems use AI and ML to provide predictive analytics. These advanced capabilities help teams anticipate future trends and challenges so they can strategize proactively. Instead of merely reacting to current data, these tools empower organizations to plan ahead and make informed decisions for their upcoming business activities and strategies.

For example, your EPM system might predict that smart home products will surge in demand after reviewing historical sales data and current market trends. This insight lets you prepare and invest in this product segment for the upcoming year, ensuring adequate inventory, tailored marketing campaigns, and a trained sales team ready to capitalize on this anticipated demand.

3. Efficient resource allocation

EPM systems analyze extensive data sets and generate detailed financial reports that help guide budget allocation across departments and projects. For example, an EPM analysis might reveal that your customer service department needs more resources to handle growing user counts. This broad data analysis encourages teamwork between different departments and with external vendors, promoting efficient and effective resource use.

4. Progress monitoring and reporting

EPM systems continuously measure performance against predetermined budgets and goals. They allow you to compare historical data with real-time figures so you can gauge progress against your target objectives and make timely adjustments to achieve them.

For example, if an email marketing campaign promoting a new product line collects lower click-through rates than anticipated, you can identify this shortfall through EPM data. This insight allows you to reevaluate the email’s design, content, or distribution list and realign your efforts, perhaps by segmenting your audience more effectively or adjusting the call to action (CTA).

You can also create in-depth reports, such as customer segmentation analyses, conversion funnel breakdowns, and ROI comparisons. These reports provide insights on past and present campaigns and are valuable references when planning future marketing strategies because they help you build on successes and avoid repeating mistakes.

5. Informed decision-making

By offering a comprehensive view of your business’s performance and profitability metrics, EPM systems empower you to make data-driven decisions. For example, if your EPM system flags an underperforming product line, you can delve deeper into the data to pinpoint the cause, whether it’s pricing, competition, or market saturation. Similarly, the system might highlight specific marketing channels as high-growth areas, suggesting a need to redirect resources to maximize engagement.

The benefits of enterprise performance management

EPM systems provide several advantages that help an organization maximize productivity and optimize the decision-making process. These include:

• Automated financial operations. Modern EPM software lowers the need for manual data entry, which reduces human error and streamlines financial processes through automation. This helps with budgeting and forecasting because it gives teams more time to focus on big-picture processes and analyses.
• Increased profitability. EPMs offer a comprehensive view of your financial operations by integrating and analyzing data from multiple sources. Revealing overstocked items, for example, minimizes inventory costs by reducing unnecessary storage expenses, preventing product obsolescence, and allowing for better cash flow management by freeing up funds in excess inventory. With these savings, you can redirect resources to more profitable areas, like research and development, to enhance overall efficiency and ROI.
• Integrated operational strategy. EPM systems help align your overarching goals with day-to-day operations. By centralizing data and key performance indicators (KPIs), multiple departments and employees can see how their tasks contribute to the larger vision and tweak their activities accordingly.
• Swift account reconciliation. Instead of manually sifting through individual financial accounts and entries, EPM software instantly compares transaction records from different sources, identifies mismatches or outliers, and alerts you for review. This automation accelerates the reconciliation process and minimizes the risk of human errors, ensuring accurate and compliant financial statements.
• Tax alignment. Evolving tax legislation causes companies to rethink their tax planning and management approach. EPM planning ensures tax reporting aligns with the organization’s financial reporting, allowing you to strategize finance-related activities for the short term. When new tax laws and regulations are enacted, for example, EPM modeling can predict the tax implications and their impact on your company’s financial statements.

EPM systems allow organizations to meet regulatory requirements, make data-driven decisions, and practice financial prudence. They offer a modern, automated financial and data management approach that boosts productivity and strategically aligns personnel.

Optimize your business for success with Webflow

Achieving success requires precision, strategy, and the flexibility to take on unexpected challenges. EPM helps you improve performance and streamline operations — but to truly unlock its full potential, you need a platform that complements its capabilities.

Webflow Enterprise serves as that essential partner to EPM tools by offering a sophisticated platform for data visualization, reporting, and communication. With Webflow, you can develop custom webpages that turn complex data from your EPM tool into visually appealing, intuitive charts, graphs, and dashboards.

Beyond enhancing internal reporting and making it seamless for teams to access, comprehend, and act on critical data, Webflow’s robust content management system (CMS) ensures that these visualizations remain current and relevant and always reflect the latest insights from your EPM tools. Whether they’re for internal team collaboration or external partner engagement, we also offer resources on the Webflow blog that teach you how to optimize your EPM-driven presentations and webpages for the highest functionality .

Explore how Webflow Enterprise can elevate your EPM implementation by transforming complex data into actionable insights through compelling web design. Start with Webflow today to scale your business and build a data-driven web presence that aligns with your strategic goals.

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The MoSCoW Method

Understanding project priorities.

By the Mind Tools Content Team

(Also Known As MoSCoW Prioritization and MoSCoW Analysis)

You probably use some form of prioritized To-Do List to manage your daily tasks. But what happens when you're heading up a project that has various stakeholders, each of whom has a different opinion about the importance of different requirements? How do you identify the priority of each task, and communicate that to team members, stakeholders and customers alike?

This is when it's useful to apply a prioritizing tool such as the MoSCoW method. This simple project-management approach helps you, your team, and your stakeholders agree which tasks are critical to a project's success. It also highlights those tasks that can be abandoned if deadlines or resources are threatened.

In this article, we'll examine how you can use the MoSCoW method to prioritize project tasks more efficiently, and ensure that everyone expects the same things.

What Is the MoSCoW Method?

The MoSCoW method was developed by Dai Clegg of Oracle® UK Consulting in the mid-1990s. It's a useful approach for sorting project tasks into critical and non-critical categories.

MoSCoW stands for:

• Must – "Must" requirements are essential to the project's success, and are non-negotiable. If these tasks are missing or incomplete, the project is deemed a failure.
• Should – "Should" items are critical, high-priority tasks that you should complete whenever possible. These are highly important, but can be delivered in a second phase of the project if absolutely necessary.
• Could – "Could" jobs are highly desirable but you can leave them out if there are time or resource constraints.
• Would (or "Won't") – These tasks are desirable (for example, "Would like to have…") but aren't included in this project. You can also use this category for the least critical activities.

The "o"s in MoSCoW are just there to make the acronym pronounceable.

Terms from Clegg, D. and Barker, R. (1994). ' CASE Method Fast-Track: A RAD Approach ,' Amsterdam: Addison-Wesley, 1994. Copyright © Pearson Education Limited. Reproduced with permission.

People often use the MoSCoW method in Agile Project Management . However, you can apply it to any type of project.

MoSCoW helps you manage the scope of your project so that it isn't overwhelmingly large. It is particularly useful when you're working with multiple stakeholders, because it helps everyone agree on what's critical and what is not. The four clearly labeled categories allow people to understand a task's priority easily, which eliminates confusion, misunderstanding, conflict, and disappointment.

For example, some project management tools sort tasks into "high-," "medium-," and "low-" priority categories. But members of the team might have different opinions about what each of these groupings means. And all too often, tasks are labeled "high" priority because everything seems important. This can put a strain on time and resources, and ultimately lead to the project failing.

Using the MoSCoW Method

Follow the steps below to get the most from the MoSCoW method. (This describes using MoSCoW in a conventional "waterfall" project, however the approach is similar with agile projects.)

Step 1: Organize Your Project

It's important that you and your team fully understand your objectives before starting the project.

Write a business case to define your project's goals, its scope and timeline, and exactly what you will deliver. You can also draw up a project charter to plan how you'll approach it.

Next, conduct a stakeholder analysis to identify key people who are involved in the project and to understand how its success will benefit each of them.

Step 2: Write out Your Task List

Once you understand your project's objectives, carry out a Gap Analysis to identify what needs to happen for you to meet your goals.

Step 3: Prioritize Your Task List

Next, work with your stakeholders to prioritize these tasks into the four MoSCoW categories: Must, Should, Could, and Would (or Won't). These conversations can often be "difficult," so brush up on your conflict resolution, group decision making and negotiating skills beforehand!

Rather than starting with all tasks in the Must category and then demoting some of them, it can be helpful to put every task in the Would category first, and then discuss why individual ones deserve to move up the list.

Step 4: Challenge the MoSCoW List

Once you've assigned tasks to the MoSCoW categories, critically challenge each classification.

Be particularly vigilant about which items make it to the Must list. Remember, it is reserved solely for tasks that would result in the project failing if they're not done.

Aim to keep the Must list below 60 percent of the team's available time and effort. The fewer items you have, the higher your chance of success.

Try to reach consensus with everyone in the group. If you can't, you then need to bring in a key decision-maker who has the final say.

Step 5: Communicate Deliverables

Your last step is to share the prioritized list with team members, key stakeholders and customers.

It's important that you communicate the reasons for each categorization, particularly with Must items. Encourage people to discuss any concerns until people fully understand the reasoning.

Zhen is a project manager for a large IT organization. She's working with a team of designers, marketers and developers to redesign a large corporate client's website.

At the initial meeting, each group has strong opinions about which tasks are most important to the project's success, and no one wants to give up their "high priority" objective.

For example, the marketing team is adamant that the new website should gather visitors' personal information, for use in future marketing campaigns.

Meanwhile, the designers are arguing that, while this is important, the site may be more successful if it had a professionally produced streaming video. They also want a feed streaming onto the website's home page from the client's social networking accounts.

The developers counter that the current prototype design won't translate well onto mobile devices, so the top priority is retrofitting the site so people can view it on these.

Zhen can see that, while each priority is important, they're not all critical to the project's success. She decides to use the MoSCoW method to help the group reach consensus on which task is truly "mission critical."

She starts with a key question: "If I came to you the night before rollout and the following task was not done, would you cancel the project?" This question helped everyone in the group drill down to the project's most important priority.

The group finally agreed on the following priorities:

• Must – The retrofit website must be easily viewable on mobile devices.
• Should – There should be a social networking stream included.
• Could – There could be a streaming video on the site to help users.
• Would – Personal information would be gathered for future marketing efforts, but not on this occasion.

The MoSCoW method helped everyone agree on what was truly important for the project's final success.

The MoSCoW method is a simple and highly useful approach that enables you to prioritize project tasks as critical and non-critical. MoSCoW stands for:

• Must – These are tasks that you must complete for the project to be considered a success.
• Should – These are critical activities that are less urgent than Must tasks.
• Could – These items can be taken off the list if time or resources are limited.
• Would – These are tasks that would be nice to have, but can be done at a later date.

The benefit of the MoSCoW approach is that it makes it easy for team members and key stakeholders to understand how important a task is for a project's success.

Apply This to Your Life

Try using the MoSCoW method to prioritize your daily tasks. Look at what you completed at the end of the day. Did prioritizing enable you to get more done?

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Product Management

What is the moscow prioritization method .

February 13, 2024

As far as mnemonics go, MoSCoW prioritization is one of the most effective acronyms in agile scrum software development. The name briefly summarizes a critical and oft-repeated practice of prioritizing items during product planning.

So, what is it? Why do you need it? How to use it? Let’s find out.

What is MoSCoW Prioritization?

Origins and history of moscow prioritization, applicability, communication, drawbacks of the moscow method, #1 must-have, #2 should-have, #3 could-have, #4 won’t-have (this time), when to use the moscow prioritization method, 1. create your product backlog, 2. add details to the product backlog, 3. set definitions for priority categories, 4. collaboratively decide the priorities, 5. set priorities, 6. validate feasibility.

MoSCoW prioritization is a powerful technique used in agile project management for setting priorities for tasks and initiatives. MoSCoW is an acronym that stands for 

• Should-have

Each of these is a category of prioritization, which guides what the team will develop in upcoming sprints. MoSCoW prioritization can be applied to anything within the agile framework, including requirements, test use cases, user stories, bugs/defects, acceptance criteria, or tasks. 

Even beyond agile product development, the MoSCoW model can help prioritize work. Across industries, the MoSCoW method is included in operations management software to help project teams make better decisions.

When there are various other prioritization methods, including the most straightforward high-medium-low scale, why do we need another one? Let’s see how it originated and evolved.

The MoSCoW prioritization technique was developed by Dai Clegg of Oracle in 1994 to help his team sort project tasks into critical and non-critical ones in rapid application development (RAD) processes. He used it specifically in time-boxed projects to prioritize the project’s requirements.

Over the years, this method has become a staple in agile project management . It has been adopted and appreciated for its simplicity and direction on what a team needs to prioritize while running the entire project.

Benefits of the MoSCoW Prioritization Method

Despite being two decades old, the MoSCoW prioritization technique continues to be popular among teams using the ​​Dynamic Systems Development Method (DSDM). Here’s why.

The MoSCoW technique is ridiculously simple to understand. It helps clarify the options available in front of them to eliminate distractions. (It is not as simple to use, as there can be differences of opinion about what’s must-have and what’s should-have, for instance. We’ll get to that a bit later.) 

The categories provide clarity and reduce confusion. If it’s not a must-have, it’s not going in the next sprint. This ensures the team is stress-free and can focus on doing their best work.

The MoSCoW method helps managers and teams see what is important and needs immediate attention. By classifying a high-priority task as a “must-have,” managers can ensure they have everything they need to finish it. They can also discuss competing priorities as a team. 

The MoSCoW method is nearly universally applicable. It can be used to prioritize anything. For example, a team lead can mark ten developers as must-have and three more as could-have to let their superiors know how many people they need. 

Assigning priority levels in this method is a great starting point for conversations in project planning and sprint planning sessions. Defining something as must-have or won’t-have encourages people to agree or disagree specifically.

MoSCoW prioritization is very effective in preventing scope creep. The clear priorities ensure that any newly added feature goes through the prioritization process, helping project managers manage expectations.

Despite its benefits, the MoSCoW Prioritization method is not without its challenges. We’ll discuss them below.

Ambiguity : Must-haves and won’t-haves are easy to agree on. But should-haves and could-haves might be more ambiguous. While the framework lays out clear definitions, it can turn complex in practice. Moreover, teams often disagree on the definition of won’t-haves—are they left out of this sprint or the entire product?

Oversimplification : This method risks oversimplifying complex agile projects, where tasks cannot be easily categorized into discrete buckets and might not adequately address the interdependencies between tasks.

Subjectivity: Like all methods, MoSCoW prioritization is also subjective. The team has to come together to make task prioritization decisions. Its drawback is that it doesn’t do much to bring objectivity into the process.

Demanding : To prioritize a task in the MoSCoW framework, each must have detailed descriptions and context. For example, a ‘tagging’ feature in an agile project management tool might be a must-have for specific use cases while appearing non-critical. Product owners need to invest time and energy into definitions to categorize accurately.

Single-level : Within the four categories, there is no way to prioritize items further. This assumes equal priority for all must-have items, making it ineffective in planning.

Categories of the MoSCoW Prioritization Method

The MoSCoW prioritization method has four categories: must-have, should-have, could-have, and won’t-have.

“Must-have” tasks are critical items for the duration of the current sprint. ‘Must’ in the must-have category is sometimes defined as ‘minimum usable subset.’ This ensures that the iteration enables a minimum level of usability of the features.

A must-have feature typically is critical for the customers, a compliance requirement, or a safety/accessibility prerogative. Without these features, the product itself would be pointless to take to market.

Tasks considered to be “should-have” are second in priority. These tasks are important but not critical for the current timebox and can be deferred if necessary. 

A could-have feature is typically a minor bug fix or performance improvement, without which the product functions, even if not optimally. Teams often use some kind of temporary workaround to manage these items.

The third category is “could-have” tasks, i.e., desirable but unnecessary. The critical difference between should-have and could-have is that the former is important and can considerably impact product success (customer satisfaction, revenue, profitability, etc.), while the latter can be comfortably left out without much damage.

Teams prioritize could-have tasks only if they can be delivered without affecting the development team’s cost or effort. As the situation evolves, could-have items are often re-prioritized and developed.

“Won’t-have” tasks are recognized as not necessary for the project’s current scope. These tasks or features are of the lowest priority and omitted at the first sign of resistance. 

Won’t-have features have a very low impact on the project’s success. They neither harm outcomes nor create additional value. 

As helpful as this technique might be, it’s not universally effective. Here are the situations in which it works best.

MoSCoW prioritization is a great decision-making tool for several personal and professional scenarios. When decluttering your home, instead of asking if an item “sparks joy,” you can ask if it is a “must-have.”

For an agile project manager, it can be a lot more valuable than that. Here’s how.

Time : The primary determinant of MoSCoW analysis is time. The categorization is for the current sprint or timebox. It is highly effective for time-sensitive projects with tight deadlines.

Resources : What if you have a limited team of developers? Use MoSCoW as it helps maximize deliverables within available resources.

Product initiation : Early in the project, you must decide what to focus on first and what makes your minimum viable product (MVP). MoSCoW prioritization can be incredibly useful in guiding these conversations.

However, it’s important to note that MoSCoW may not be suitable for all projects, especially those with complex interdependencies or where all tasks are equally critical. 

How to Implement the MoSCoW Prioritization Method

Successful MoSCoW prioritization needs clear and effective processes. Here is an outline of a process and pointers on how to prioritize your work with any free project management software like ClickUp to get it right.

Before you prioritize tasks for the future release, it is essential to create a list of possibilities. Typically, this is outlined in the product backlog. Based on research and input from cross-functional teams, build a select few from the backlog.

On ClickUp, you can set these as tasks, milestones, features, defects, and more to facilitate better prioritization.

Like we mentioned earlier, one of the non-negotiable factors of MoSCoW prioritization is adequate information about the task. Without the what, why, how, when, and who, it would be impossible to prioritize right. So, add all the information you can gather. This could be:

• Description of the user story
• Business impact
• Engineering impact, such as time/effort estimate
• Measures of success
• Dependencies for other tasks

ClickUp tasks allow you to add sub-tasks, checklists, time estimates, users, tags, custom fields, and more. Use ClickUp’s hierarchy guide to organize information effectively.

What does must-have mean? What parameters should a task have to be considered a must-have? Does the entire team have to agree to categorize something as won’t-have?

The most commonly used methodologies are weighted scoring, the Kano model, or buy-a-feature. If that feels like another layer of frameworks/models, here are a few project prioritization templates you can use. 

Choose yours carefully. It is essential to set these definitions before getting into prioritizing tasks. This would help process standardization for proper priority management . Also, place an escalation matrix so that someone can make a decision in case of disagreements.

To ensure everyone understands and follows your priority definitions, document and publish them on ClickUp Docs . Collaborate on them to ensure the team agrees on them. You can also use ClickUp AI within Docs to summarize longer definitions for easy reference.

With all the foundational work done, it’s time to prioritize. Bring the team together to evaluate every option and set priorities.

Choose from any of ClickUp’s views to see the information that suits your needs. For instance, most agile teams typically use the Kanban board view to have all the uncategorized items in one column and then drag-and-drop them into their relevant priorities. You can also filter items on the Kanban board based on what you’d like to see.

Discuss business requirements openly. Here are a few things to consider.

• Set all tasks as won’t-have and then debate about why you must have it
• For must-have requirements, ask, “Without this item, is the increment as good as canceled?”
• If there is a workaround, even if it’s manual, don’t categorize it as a must-have
• If a must-have has a dependency on anything other than another must-have, re-evaluate it

Remember that something you categorized as a could-have in the previous increment might become a must-have for the next. For example, while building the MVP, you might have categorized some items as could-have because they are not crucial for the current sprint. Once the MVP is launched, these features might become a must-have now.

Once you’ve agreed, set them up on your prioritization tools . ClickUp priorities give you four options: Urgent, high, normal, and low. You can make these MoSCoW priorities.

Alternatively, you can use the MoSCoW method with custom statuses . While setting task priorities on ClickUp, add a line or two in the comments about why you made the decision. This will help future prioritization sessions.

Priorities are not just about what’s important, they’re equally about what can be built within that timebox. You don’t want to overcommit and underdeliver just because you think everything is a must-have.

Before committing to a plan, look for each team member’s current workload and capacity. Use the time estimates for each task to simulate capacity. Use the Workload view to ensure no one is over-stacked.

Prioritize The Right Things with ClickUp

Product teams must remain laser-focused on what’s good for the business and the customer. They need to eliminate distractions. So, project prioritization is a superpower. Good prioritization is as much a choice about what to do as it is about what not to. 

ClickUp’s project management tool is designed to enable exactly this. The hierarchy, task management, priorities, and custom statuses help teams effectively understand and prioritize their work.

The Workload views help ensure the prioritized tasks are deliverable, and the ClickUp Dashboards help keep the priorities on track.  Try ClickUp for free today and build the right thing.

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Access financial, operational and transactional data from across the organization. Easily customize dashboards, reports and visual analytics to provide a summary-level overview or an in-depth account of business activity.

Simplify Your Business

Manage accounting, inventory, operations, distribution and more from a single application. Automate manual processes to save time and free up resources to better serve customers, identify new opportunities and outpace the competition.

Run a Global Business With Ease

Effortlessly manage multiple subsidiaries, business units and legal entities with one ERP solution. Get real-time visibility at local, regional and headquarter levels, and standardize business processes across all divisions and subsidiaries. NetSuite ERP is used in more than 200 countries, supports over 27 languages and 190 currencies — and can handle your global business with ease.

The company could have handled the growth without an ERP system, but we would have been forced to hire a lot more people.

Ian Larkin Controller, CentralReach

Learn How ERP Can Streamline Your Business

NetSuite ERP Benefits

• Automate Financial Processes. Improve financial operations, efficiency and productivity.
• Gain Inventory Visibility. Monitor inventory levels, minimize carrying costs and deliver orders on time.
• Supply Chain Optimization. Control the flow of goods across the value chain, from suppliers to customer.
• Flawless Order Management. Error-proof your order management and procurement.
• Increase Warehouse Efficiency. Optimize the putaway process and reduce picking errors.

NetSuite ERP Features

NetSuite ERP delivers wide-ranging benefits by automating business processes, improving operational awareness and giving organizations greater control over their resources.

Accounting Software

Financial management, global business management, enterprise performance management, inventory management, order management, supply chain management, warehouse management, procurement.

Transform your general ledger, optimize AR, automate AP and streamline tax management. Get a complete view of cash flow and financial performance.

Expedite daily financial transactions, accelerate the financial close process and ensure compliance. Get a complete, real-time view of your business’s financial performance, from a consolidated level down to individual transactions.

NetSuite OneWorld helps companies manage global operations, including multiple currencies, taxation rules and reporting requirements, across geographies and subsidiaries, all while providing real-time financial consolidation and visibility.

NetSuite Enterprise Performance Management brings together planning, budgeting, forecasting, account reconciliation, financial close, and reporting processes from across the entire organization.

Automate the management of your inventory. Keep inventory costs low while meeting customer delivery expectations. NetSuite delivers tools for tracking inventory in multiple locations, determining reorder points, managing replenishment and optimizing safety stock.

Streamline order processing by eliminating manual bottlenecks, preventing errors and establishing a smooth flow from sales quote to order fulfillment. The result: timely invoicing and payment.

Where an item is produced or stored shouldn't keep a business from meeting customer needs. NetSuite eases the process of moving goods or materials through an extended supply chain.

Optimize warehouse operations with RF-device-directed putaway and picking tasks, driven by customized, user-defined strategies and advanced capabilities like wave management, cartonization, cycle count planning, real-time inventory updates and shipping system integrations.

Buy goods and services at the best price and in a timely manner. Save time, reduce costs and improve visibility into spending and vendor performance by centrally managing procurement. Ensure clear communication throughout the procure-to-pay process.

Challenges NetSuite ERP Solves

• Manual Processes. Automate and streamline manual processes that waste time and resources.
• Data Accessibility. Quickly and easily access real-time data across the organization.
• Data Integrity. Provide stakeholders with timely, accurate financial statements, inventory reports and more.
• Meeting Expectations. Deliver promised order accuracy, on-time delivery and cost savings.
• Balancing Supply and Demand. Manage supply chains in the face of rapid change, rising costs and shifting buyer behavior.
• Inventory Insights. Plan and balance inventory to meet demand.

Faster Time to Value

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

How Much Does NetSuite ERP Cost?

Companies of every size, from pre-revenue startups to fast-growing businesses, have made the move to NetSuite. Looking for a better way to run your business but wondering about the cost?

Users subscribe to NetSuite for an annual license fee. Your license is made up of three main components: core platform, optional modules and the number of users. There is also a one-time implementation fee for initial setup. As your business grows, you can easily activate new modules and add users — that’s the beauty of cloud software.

Get started now with Industry Editions of NetSuite ERP that include accounting capabilities and modules to address industry-specific needs.

Contact NetSuite Now (opens in new tab)

Customer Stories

Product demos, guides & blogs, essential learning.

Data Sheets

Access specifications, features and benefits of NetSuite ERP.

• NetSuite OneWorld (opens in new tab)
• NetSuite Inventory Management (opens in new tab)
• NetSuite Order Management (opens in new tab)
• NetSuite WMS (opens in new tab)

Spark ideas with success stories from NetSuite customers.

• Ambassador Foods Uses ERP to Help International Food Manufactures Break Into the U.S. Market (opens in new tab)
• Lift Off: Easy Living Elevators Shares Its Cloud ERP Implementation Lessons (opens in new tab)
• JPC Equestrian Gallops Into this Year’s Holiday Season (opens in new tab)
• Ryan’s Pet Supplies Makes a Seamless Transition to the New Rules of Retail (opens in new tab)

See NetSuite ERP in action.

• NetSuite Financial Management
• NetSuite Item Management
• NetSuite Order Management
• NetSuite Purchase Management
• NetSuite Quote Management

View our on-demand webinars, which deliver insights from NetSuite and industry experts.

• Making the Switch: From QuickBooks to NetSuite (opens in new tab)

Go deep into topics around NetSuite ERP.

• 7 Ways Cloud ERP Helps Businesses Build Resilience and Agility (Guide) (opens in new tab)
• The Value of a True Cloud ERP Platform (Guide) (opens in new tab)

Discover best practices and learn more about enterprise resource planning from beginner to advanced levels.

• What is ERP? (Video)
• 9 Key ERP Implementation Best Practices (Article)
• ERP Modules: Types, Features & Functions (Article)
• Buying an ERP System: Features, Benefits and Reasons You Should (Article)
• Pros and Cons of Using an ERP (Article)

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NetSuite ERP

Explore what NetSuite ERP can do for you.

Business Guide

Complete Guide to Cloud ERP Implementation

I was LinkedIn's first head of HR. PIPs don't work — there's a better way to help struggling employees.

• Steve Cadigan has led HR teams at top companies for over three decades.
• He has seen how performance-improvement plans (PIPs) often fracture relationships between managers and employees. 
• The better alternative to PIPs allows employees to mutually agree to separate from the company.

Over the past three decades, I've witnessed various approaches to performance-improvement plans (PIPs) as an HR executive across five different industries and three countries.

Often, the traditional approach to PIPs — slapping them on employees who are underperforming without offering sufficient support — can feel punitive rather than constructive to many employees, fostering an environment of fear and mistrust.

But PIPs often fail to achieve their intended outcomes for a variety of reasons — from inadequately prepared managers to breakdowns in communication between managers and employees to subjective judgments of performance .

In my experience, the primary reason for the failure of PIPs lies in the irreparable fracture they create in the relationship between the employee and manager. Once the PIP process begins, this fracture in trust is seldom repaired. The atmosphere becomes palpably tense, and trust begins to erode.

PIPs lead to an irreparable fracture in the relationship

Recent stories of employees feeling unfairly targeted and demoralized and complaints of mishandling of PIPs have illuminated the complexities and challenges inherent in performance management.

These stories serve as cautionary tales, highlighting the potential pitfalls of traditional PIPs and the need for organizations to rethink their approach to managing underperformance.

Even if an employee successfully meets the objectives outlined in the PIP, the underlying tension and strain on the relationship often persist, adversely impacting productivity and morale not only for the manager and the employee, but for the entire team.

Related stories

I've rarely seen managers more tense than when addressing a PIP. These conditions don't set the stage for a productive process. At their core, PIPs should reflect an organization's commitment to achieving high performance. They should identify areas for improvement, set clear expectations, and provide a roadmap for progress.

A better approach involves choice

From 1998 to 2004, I was an HR executive at Cisco Systems, where I encountered a novel approach to the traditional PIP process.

Prior to my arrival, Cisco had recognized that something was broken in the PIP process. The HR team conducted a thorough analysis of PIPs across the company and made a fascinating discovery: most individuals placed on a PIP left the company within a year , regardless of whether their performance improved.

They spoke with many of the employees who survived their PIP and improved their performance yet still chose to leave, and the story they heard had a similar refrain. The employees felt their managers did not really support them, they no longer felt they were in a safe work environment, and many felt humiliated and deeply hurt by the process.

Looking at the data and listening to employees, the HR team developed a new approach that involved choice. Employees who were not performing to an acceptable level were offered two options:

Enter a PIP and try to improve, or

Mutually agree to separate from the company and receive more severance than they would if they failed the PIP.

By presenting employees with this alternative path, Cisco empowered them to make decisions aligned with their personal circumstances. This approach also alleviated stress for managers, enabling them to focus on other priorities. The conversations became more constructive, and employees appreciated being given a choice rather than feeling cornered into a dead-end PIP.

Challenge conventional practices

In the years since leaving Cisco, I've introduced this alternative approach to other organizations, contributing to healthier cultures and more constructive environments .

Performance evaluation is inherently subjective, and no process can eliminate all conflicts or unexpected reactions. However, offering employees a choice rather than a one-way ticket to a PIP can lead to more positive outcomes and healthier work environments.

As HR professionals and organizational leaders, it's our responsibility to challenge conventional practices and explore innovative solutions. By rethinking performance management and embracing alternative approaches, we can create a culture of trust, transparency, and continuous improvement where both employees and organizations thrive.

Steve Cadigan is a talent advisor to leaders and organizations around the world. He specializes in helping firms build talent strategies for the modern workplace.

Watch: Jill Kramer, CMO of Accenture, says disability inclusion should be baked into creative briefs

• Main content

Introduction

This 60-minute tutorial introduces you to the Cloud EPM business processes. You also learn how to create Planning business processes in EPM Cloud Service: Standard and Enterprise subscriptions.

Oracle Cloud EPM provides end-to-end business processes, such as Planning, to meet the requirements of most organizations and ensure a connected and agile experience across multiple business processes.

Prerequisites

An EPM Cloud Service instance allows you to deploy and use one of the supported business processes. To deploy another business process, you must request another EPM Cloud Service instance or remove the current business process. The business processes that you deploy share the same identity domain to facilitate user management and assigning of roles. Access to resources belonging to a business process is individually controlled for each business process.

Planning is a budgeting and forecasting solution that integrates financial and operational planning processes and improves forecast accuracy.

Cloud EPM Hands-on Tutorials may require you to import a snapshot into your Cloud EPM Enterprise Service instance. Before you can import a tutorial snapshot, you must request another Cloud EPM Enterprise Service instance or remove your current application and business process. The tutorial snapshot will not import over your existing application or business process, nor will it automatically replace or restore the application or business process you are currently working with.

Before starting this tutorial, you must:

• Have Service Administrator access to Planning in EPM Standard Cloud Service or EPM Enterprise Cloud Service. The instance should not have a business process created.
• Have an OTL file for Free Form Planning.
• Have a valid snapshot of a Custom Planning business process.

Getting Started

In this section, you learn about Planning in the Cloud EPM Service.

Available Cloud EPM Subscriptions

The business processes and features available to you depend on the specific Cloud EPM service that you subscribed. Both EPM Standard Cloud Service and EPM Enterprise Cloud Service are comprised of a suite of business processes.

Generally, the EPM Enterprise Cloud Service includes everything in the EPM Standard Cloud Service as well as additional offerings as illustrated below:

Modules extend Planning with complete planning and budgeting solutions for Financials, Workforce, Capital, and Projects. These business processes include built-in best practice pre-defined content including forms, calculations, dashboards, drivers, and key performance indicators (KPIs). Forms are designed to integrate with the dashboards and reports that dynamically reflect your data, plans, and forecasts.

Module-based Planning sets up the cubes required for Capital, Financials, Projects, Workforce and Strategic Modeling. Choose this option to create a business process that supports best practices and industry standard functionality. With the exception of Strategic Modeling, Planning Modules are available with pre-seeded configurable content including dimensions, models, forms, rules, dashboards, infolets, and reports. Strategic Modeling is available with standard and industry templates that can be leveraged to create a customized scenario models with flexible blended scenario business cases.

The following business processes and features are available in the EPM Enterprise Cloud Service:

• Custom Planning, which allows a high degree of customization to support business requirements
• Use of the Groovy scripting language to create or customize business rules

EPM Cloud Service Landing Pages

The landing page is your starting point for creating a business process and for viewing video tours to help you get started. The landing page presents the business processes that you can create.

EPM Standard Cloud Service Landing Page

EPM Enterprise Cloud Service Landing Page

Business Process Overview

You develop your operational financial plan with Planning. You set up the Planning business process to include the appropriate structure for your organization's needs. Each Planning business process has a specific framework with the following structure:

• Application name—Specify the name of the business process.
• Calendar structure—Specify your organization’s calendar, such as the first month and first year for your fiscal year.
• Currency—Identify whether multiple currencies are needed and define the default currency.
• Number and names of cubes—Select and name plan types to hold combinations of metadata, forms, and business rules.

After the framework is created, dimensions and members (metadata) are added and assigned to cubes. Security is assigned so that users and groups can access Planning. Access can be further defined to secure metadata, forms, task lists, and business rules.

Creating the Standard Planning Business Process

Before you create your Planning business process, analyze your current processes and determine your organization’s requirements.

In this section, you learn how to create the following Planning business processes in EPM Standard Cloud Service:

• Module-based
• Migrated Custom
• Go to the Planning URL provided by your Service Administrator.
• Enter your user name and password.
• On the EPM Standard Cloud Service landing page, for Planning click SELECT .

The Planning landing page is displayed.

New Application: Creating a Modules-based Application

• Name your application.
• Enter a description.
• From the Application Type dropdown list, select Modules .

• Click Next .

The Details page is displayed.

• Select a Time Period.
• Select the Start and End year.
• Select the First Month of the Fiscal Year.
• Select a Weekly Distribution option: Even, 445, 454, or 544.
• For Task Flow Type, EPM Task Manager is the default option for new applications. Task lists are a classic feature which guides users through the planning process by listing tasks, instructions, and end dates.
• Select the Main Currency.
• Select whether to allow for multicurrency.
• Accept or modify the names of the input cube and reporting cube.
• Select whether to enable Sandboxes.
• Review your selections. If necessary, return to previous pages to make changes.

The Application Creation Status information message box is displayed.

Application creation may take several minutes. When completed, an Application created successfully message is displayed.

If you click OK , the Planning home page is displayed. You can access the Configure page by navigating to Application , then Configure from the home page.

If you click Configure , the Configure page for modules is displayed.

Migrating a Snapshot to Create an Application

Migration allows you to create a custom Planning business process from a snapshot that you upload to the environment.

• On the Planning landing page, click MIGRATE .

The Migration page is displayed.

• Click Snapshots .

The Snapshots tab is displayed.

• Click Upload .
• Locate and select your snapshot.
• Click Open .

• When a message stating that the File uploaded and processed successfully is displayed, click OK .

The snapshot is now listed on the Snapshots tab.

• For the snapshot you uploaded, click the Actions icon ( … ), and select Import .

• When prompted to proceed with the import, click OK .

The Migration Status Report is displayed. The migration import process may take several minutes.

• Click Refresh until the status displays Completed.

• Click Close twice to close both dialog boxes.
• Sign out and log back in to start working with Planning.

Creating the Enterprise Planning Business Process

In this section, you learn how to create the following Planning business processes in EPM Enterprise Cloud Service:

• Sample application
• On the EPM Enterprise Cloud Service landing page, for Planning click SELECT .

Sample Application

Planning provides a sample business process, called Vision, that lets you quickly deploy a business process with artifacts and data. The sample business process is only available in Planning for EPM Enterprise Cloud Service.

If you have a business process created, remove it first by following the steps in the Removing Applications section of this tutorial.

• On the Planning landing page, for Create a sample application, click CREATE .

The Planning home page is displayed.

• On the Planning landing page, for Create a new application, click START .

The Details page is displayed. The Planning Frequency is set to Monthly.

• When ready to proceed, click Create .
• Select whether to go to the Configure page and enable modules or complete that task later.

New Application: Creating a Custom Application

Custom applications support most planning and budgeting requirements through Enterprise complex business logic, such as business rules and allocations. Select this option to create a business process if your requirements would necessitate a high degree of application customization.

• Complete the required general properties:
• From the Application Type dropdown list, select Custom .

• If you selected Monthly:
• Select the first month of the fiscal year.
• If you selected Weekly or Quarterly, select the first period start date.
• Enter the Periods per Year.
• Optional: Specify a prefix.
• Select whether to enable Rolling Forecast and specify the period duration.
• Customize the required Planning dimensions, if necessary.

• Add members in the Member Names column, separating each name with a comma.
• Optional for Account, Scenario, Version, Entity, and Custom Dimensions: Import metadata using a file.
• To add a custom dimension, for the dimension type listed as Custom, enter a dimension name.
• If you need to add more dimensions, click Add Custom Dimension to add another row.

• Click Create .

When application is completed, an Application created successfully message is displayed

New Application: Creating a FreeForm application from On-Premises Essbase

Free Form Planning does not require Currency, Entity, Scenario, and Version dimensions and their member hierarchies. This business process is created using an Essbase outline file (OTL) from an on-premises deployment to import dimensions and members. The outline file name can have a maximum of eight characters because the file name is used to name the cube of the free form business process.

• From the Application Type dropdown list, select Free Form .
• From the Application Setup dropdown list, accept the default value Import Essbase OTL/LCM .
• Select a location:
• If you selected Local, for Import File, click Browse .
• Locate and select your OTL file.
• Inbox —if you have the OTL or LCM uploaded to your instance.
• If you selected Inbox, select your OTL or LCM from the Select One dropdown list.

New Application: Creating a FreeForm application using Create Cubes

You can model and build your own Hybrid BSO or ASO cubes while preserving the ability to leverage Planning functionalities.

Hybrid BSO cubes support some aggregate storage capabilities. Parent members of sparse and dense dimensions can have dynamic aggregations for calculations.

Hybrid cubes provide many benefits including:

• Smaller database and application size
• Better cube refresh performance
• Faster import and export of data
• Improved performance of business rules
• Faster daily maintenance of the application
• From the Application Setup dropdown list, select Create Cubes
• Select Is ASO for an aggregate storage Cube

• Enter a cube name.

• Select whether to enable default dimensions during the application creation process.

Migrating a Snapshot to Create an Enterprise Application

• In the Upload dialog box, click Browse to select the file.

Removing Applications

In this section, you learn how to remove applications from your Planning instance.

• From the Planning home page, click Application , and then Overview .

• On the Overview tab, click Actions and select Remove Application .

• When prompted to continue to delete the application, click Yes .

The process takes a few minutes to complete. When the application is completely removed, you will be signed out of the instance.

Recreating Service

The process of recreating your environment deletes the current business process, including all user-defined (custom) artifacts and data from the environment. If you want to preserve the data and artifacts in the current environment, you must perform a complete backup of the business process before you re-create an environment.

After re-creating the environment, you can create the same business process or a different one. You can also import a business process from a snapshot using Migration or EPM Automate.

In this section, you learn how to restore the environment into its original state, ready for you to create a new business process.

• From the Planning landing page or home page, access Settings and Actions by clicking your user name at the top right corner of the screen.

• Select Recreate Service .

The Recreate Service dialog box is displayed. Carefully read the information. The process deletes the application, including its data and artifacts.

• Select the checkboxes to confirm that you are aware of the consequences of recreating the environment.

• Click Recreate Service .

You are signed out of the instance. The instance will be inaccessible for approximately 15 minutes.

Related Links

• Documentation and related videos
• Oracle EPM Tutorials YouTube Channel

Creating the Planning Business Process

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