Performance

Management control systems must adapt to instability and uncertainty. In this context, value chain cost control is the first requirement for an organisation’s sustainability. Knowing how to plan ahead provides the greatest agility when making decisions. The performance management challenge of the future is Data: more voluminous, updated more quickly, more qualitative.

 Value creation in a continuously changing environment

The biggest challenge for commercial or non-commercial organisations is to ensure their sustainability in a continuously changing environment. To control their value creation process, management control provides them with a toolset that can be used to establish genuine stability when making decisions.

Cost calculation, analysis and control: Proven tools for dynamic and interactive implementation

Organisations define their processes based on their value creation objectives. The entire value chain and the activities that make it up, must respond to the expectations of all of the organisation’s stakeholders.

These expectations determine the objectives and thus lead to activities that will contribute to this value creation. These activities consume resources, and this consumption creates costs.

Knowing how to calculate, analyse and understand these costs helps to control the value chain, meet stakeholder expectations and thus ensure the sustainability of the organisation.

The implementation of the strategy allows the organisation to put into operation and adapt its value chain process

No organisation can function with first having defined its objectives. These are first based on the organisation’s fundamental missions as well on its long-term prospects. It’s the formulation of its strategy. Once the strategic objectives have been defined, it’s a matter of identifying what the relevant means (resources) are for achieving them before implementing the strategy. Management control assists the organisation in this implementation through systems such as a balanced scorecard, business plans or budgets. In a constantly changing environment, planning ahead becomes a challenge. The tools mentioned above provide a framework in which the organisation can steer its strategic uncertainties.

Agility in the control process is as important as building the necessary systems for decision-making.

Performance management: The right data at the right time

Management control systems can only function under two conditions: the objectives have been set and the organisation has an adapted information system to gather, visualise and analyse the data relating to its performance (results) so it can compare them to the objectives and set up, if needed, corrective action plans.

This data can be presented in the form of quantitative indicators that are generally found in the management dashboards. However, it is increasingly important to know how to visualise and analyse increasingly qualitative data that is often difficult to quantify.

“Not everything that counts can be counted and not everything that can be counted counts.” (Quote attributed to Albert Einstein).

Information systems continually offer more voluminous data that is more quickly available and more often in new forms (voice, image, etc.). The real challenge for performance management systems is to identify the right data at the right time, to ensure that the data is clear and reliable and lastly to know how to visualise it.

25 January 2021
DAUSSY Charles

THE AUTHOR

DAUSSY Charles

Professor NEOMA BS

Charles DAUSSY has more than twenty-five years of professional experience in different types of organisations (large international groups, SMEs, business development) performing different functions (Management Controller, Financial Officer, Business Unit Director, Consultant). Since 2004 Charles has been Professor of Management Accounting and Management Control at NEOMA Business School. This dual experience has provided him with the knowledge to apply operational sensibility to academic subjects. Charles’ fields of research are connected to CSR and the systems that enable its operationalisation in organisations, more specifically in the cooperative banking industry.