Upfront: A Strategic Look At Performance Management

The typical company spends too much money on planning and performance management processes for the value these activities generate. Despite the fact that they spend more than double the amount that a world-class company does on planning and performance management processes and operate with more than twice the staff, average companies' planning functions fail to deliver timely, relevant insights into their customers, competitors and business environment.

"They are so focused on making their numbers each quarter that they ignore the bigger picture, and aren't looking strategically at their company's performance," says John McMahan, senior business advisor with strategic advisory firm The Hackett Group in Atlanta. The firm has issued new research that quantifies precisely how much it costs a company and its shareholders to take this short-term approach.

Hackett's study found that organizations that demonstrate world-class enterprise performance management generate almost two and a half times the three-year equity market returns, including stock-price increase and dividends, of typical companies in their industry. And they outperform the equity market returns generated by typical companies in the Dow Jones Industrials.