Research

Performance Management: Collaboration and Technology

The Financial Executives Research Foundation, in partnership with Workiva, is working on a research project focusing on the trends, opportunities and challenges private and public companies face in enhancing performance management.

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In this video, FERF speaks with Joseph Howell, Executive Vice President, Strategic Initiatives at Workiva, about the benefits of collaboration and the growing influence of technology on performance management. A transcript appears under the video.

FERF: Are finance and operations collaborating more on performance management?

Joseph Howell: We are seeing significantly more collaboration and cooperation between the financial organization and the other parts of the organization in order to produce these financial measures, and non-financial measures, that are critical to the company’s ability to meet its targets.

That collaboration becomes even more critically important when the company designs and begins to put some effort behind its performance management system. To be able to determine the measures that are important to the management team, to be able to report against those on a regular basis, and to be able to measure both how well they achieve that performance but also to step back and diagnose when they have missed a number and to understand clearly what went wrong, and how to use that information constructively to provide a mediation plan.

FERF: Do companies tend to face collaboration challenges?

Howell: People in different disciplines speak different languages. And they speak different languages in different companies as well. But they certainly speak different languages in different parts of the organization, and that can be very frustrating to people because they don’t often share the same vocabulary. That’s particularly true when operations are scattered around the world and you’re trying to gather information, and you’re trying to communicate with other parts of the organization that are dealing with similar problems but under different sets of constraints.

The importance of being able to build the communication and effective process to make sure that communication is received and understood is critical, and it’s important to be able to have systems in place that let you know when something is not working.

FERF: How does technology affect performance management?

Howell: Technology is enabling a number of things in terms of speed and understandability. We have a lot of new applications on the market that enable you to visualize data in a way that helps you make sense of it. We have other applications that enable you to, to distill and to find meaning using database technologies that are much simpler and faster to use. And to be able to aggregate information from a range of sources and be able to put them together. Much of the difficulty remains, though with information that we call unstructured. Unstructured information means that it’s not in a database usually.

One of the issues that you have in managing these information flows is that you’re not 100 percent sure where all that information came from. You think you are, but it’s surprising the number of times that information is coming from email. It’s been transcribed. Who had custody of that information? How do you know that information hasn’t been changed?

You also have the same issue of making sure the information is what you think it is. If it’s coming from a range of different sources, particularly if you have a lot of subsidiaries who may be reporting information to you that understand your request in a different way than you thought they were going to answer. You may be laboring under a complete misunderstanding and the data you have may be completely unreliable — even though the question you asked was perfectly reasonable and the answer that you gave is perfectly logical, but the piece in between where you do the calculation may in fact be flawed.

That’s where I think the issue is technology, and a proper technology implementation, where you’ve thought through the risks carefully and you have been able to create the, the clear single source of truth model that enables you to really trust that the information that comes out over here is really based on the information that went in here because there is a clear connection between them all.

Those types of data models become increasingly important as you rely more and more on that data to make decisions, and those decisions are being made quickly in environments that are changing rapidly.

FERF: What are your goals for this research project?

Howell: What I hope to learn are the kinds of measures that companies use to run their operations that are really important proxy measures that are relevant to them and to their business, and to understand why. I want to better understand where that information is coming from in the organizations, and how do they understand or how do they know that it is the information that they think that they’re dealing with?

I want to understand what kinds of controls they have built around that information so we can build a better understanding both of the kinds of metrics that companies are using to run their operations, but also the process by which they’re doing that and how those are being synthesized.